10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 Washington, DC 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to

Commission file number 0-51176

KENTUCKY FIRST FEDERAL BANCORP

(Exact name of registrant as specified in its charter)

United States	61-1484858
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
479 Main Street, Hazard, Kentucky	41702
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (502) 223-1638

Securities registered pursuant to Section 12(b) of the Act:

Common Stock (par value $0.01 per share)	The Nasdaq Stock Market, LLC
(Title of each class)	(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. S

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller Reporting Company x
(Do not check if smaller reporting company)

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The aggregate market value of the common stock held by nonaffiliates was $21.1 million as of June 30, 2012.

Number of shares of common stock outstanding as of September 17, 2012: 7,539,564

DOCUMENTS INCORPORATED BY REFERENCE

The following lists the documents incorporated by reference and the Part of the Form 10-K into which the document is incorporated:

1. Portions of the Annual Report to Stockholders for the fiscal year ended June 30, 2012. (Part II)

2. Portions of Proxy Statement for the 2012 Annual Meeting of Stockholders. (Part III)

INDEX

		PAGE
PART I
Item 1.	Business	1
Item 1A.	Risk Factors	17
Item 1B.	Unresolved Staff Comments	21
Item 2.	Properties	22
Item 3.	Legal Proceedings	22
Item 4.	Mine Safety Disclosures	22
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	23
Item 6.	Selected Financial Data	23
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	23
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 8.	Financial Statements and Supplementary Data	24
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	24
Item 9A.	Controls and Procedures	24
Item 9B.	Other Information	25
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	26
Item 11.	Executive Compensation	26
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	26
Item 13.	Certain Relationships and Related Transactions, and Director Independence	27
Item 14.	Principal Accountant Fees and Services	27
PART IV
Item 15.	Exhibits and Financial Statement Schedules	27
SIGNATURES

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PART I

Item 1.  Business

Forward-looking Statements

This report contains certain “forward-looking statements” within the meaning of the federal securities laws. These statements are not historical facts, rather statements based on Kentucky First Federal Bancorp’s current expectations regarding its business strategies, intended results and future performance. Forward-looking statements are preceded by terms such as “expects,” “believes,” “anticipates,” “intends” and similar expressions.

Management’s ability to predict results or the effect of future plans or strategies is inherently uncertain. Factors which could affect actual results include the following: interest rate trends; the general economic climate in the market areas in which Kentucky First Federal Bancorp operates, as well as nationwide; Kentucky First Federal Bancorp’s ability to control costs and expenses; competitive products and pricing; loan delinquency rates; and changes in federal and state legislation and regulation. These factors should be considered in evaluating the forward-looking statements and undue reliance should not be placed on such statements. Kentucky First Federal Bancorp assumes no obligation to update any forward-looking statements.

General

References in this Annual Report on Form 10-K to “we,” “us” and “our” refer to Kentucky First, and where appropriate, collectively to Kentucky First, First Federal of Hazard and First Federal of Frankfort.

Kentucky First Federal Bancorp. Kentucky First Federal Bancorp (“Kentucky First” or the “Company”) was incorporated as a mid-tier holding company under the laws of the United States on March 2, 2005 upon the completion of the reorganization of First Federal Savings and Loan Association of Hazard (“First Federal of Hazard”) into a federal mutual holding company form of organization (the “Reorganization”). On that date, Kentucky First completed its minority stock offering and issued a total of 8,596,064 shares of common stock, of which 4,727,938 shares, or 55%, were issued to First Federal MHC, a federally chartered mutual holding company formed in connection with the Reorganization, in exchange for the transfer of all of First Federal of Hazard’s capital stock, and 2,127,572 shares were sold at a cash price of $10.00 per share. Also on March 2, 2005, Kentucky First completed its acquisition of Frankfort First Bancorp, Inc. (“Frankfort First Bancorp”) and its wholly owned subsidiary First Federal Savings Bank of Frankfort, Frankfort, Kentucky (“First Federal of Frankfort”) (the “Merger”). Following the Reorganization and Merger, the Company retained Frankfort First Bancorp as a wholly owned subsidiary and holds all of the capital stock of First Federal of Hazard and First Federal of Frankfort. The Company is operating First Federal of Hazard and First Federal of Frankfort as two independent, community-oriented savings institutions.

Kentucky First’s and First Federal of Hazard’s executive offices are located at 479 Main Street, Hazard, Kentucky, 41702 and the telephone number for investor relations is (888) 818-3372.

At June 30, 2012, Kentucky First had total assets of $223.0 million, deposits of $134.6 million and stockholders’ equity of $58.9 million. The discussion in this Annual Report on Form 10-K relates primarily to the businesses of First Federal of Hazard and First Federal of Frankfort (collectively, the “Banks”), as Kentucky First’s operations consist primarily of operating the Banks and investing funds retained in the Reorganization.

First Federal of Hazard and First Federal of Frankfort are subject to examination and comprehensive regulation by the Office of the Comptroller of the Currency and their savings deposits are insured up to applicable limits by the Deposit Insurance Fund, which is administered by the Federal Deposit Insurance Corporation. Both of the Banks are members of the Federal Home Loan Bank of Cincinnati, which is one of the 12 regional banks in the FHLB System. See “Regulation and Supervision.”

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First Federal Savings and Loan Association of Hazard. First Federal of Hazard was formed as a federally chartered mutual savings and loan association in 1960. First Federal of Hazard operates from a single office in Hazard, Kentucky as a community-oriented savings and loan association offering traditional financial services to consumers in Perry and surrounding counties in eastern Kentucky. It engages primarily in the business of attracting deposits from the general public and using such funds to originate, when available, loans secured by first mortgages on owner-occupied, residential real estate and occasionally other loans secured by real estate. To the extent there is insufficient loan demand in its market area, and where appropriate under its investment policies, First Federal of Hazard has historically invested in mortgage-backed and investment securities, although since the reorganization, First Federal of Hazard has been purchasing whole loans and participations in loans originated at First Federal of Frankfort. At June 30, 2012, First Federal of Hazard had total assets of $98.2 million, net loans of $74.6 million, total mortgage-backed and other securities of $4.8 million, deposits of $67.6 million and total capital of $20.8 million.

First Federal Savings Bank of Frankfort. First Federal of Frankfort is a federally chartered savings bank, which is primarily engaged in the business of attracting deposits from the general public and originating primarily adjustable-rate loans secured by first mortgages on owner-occupied and nonowner-occupied one- to four-family residences in Franklin, Anderson, Scott, Shelby, Woodford and other counties in Kentucky. First Federal of Frankfort also originates, to a lesser extent, home equity loans and loans secured by churches, multi-family properties, professional office buildings and other types of property. At June 30, 2012, First Federal of Frankfort had total assets of $137.8 million, net loans of $107.9 million, deposits of $82.3 million and total capital of $34.1 million.

First Federal of Frankfort’s main office is located at 216 W. Main Street, Frankfort, Kentucky 40602 and its main telephone number is (502) 223-1638.

Pending Merger

On November 3, 2011, Kentucky First entered into an agreement of merger with CKF Bancorp, Inc. and Central Kentucky Federal Savings Bank, whereby CFK Bancorp, Inc. will merge with and into Kentucky First with Kentucky First being the surviving corporation. In connection with the merger, Central Kentucky Federal Savings Bank will merge into First Federal of Frankfort and will operate under the name “Central Kentucky Federal Savings Bank” as a division of First Federal of Frankfort. The CKF Bancorp, Inc. stockholders approved the merger on July 3, 2012. The merger is also subject to regulatory approval and Kentucky First has filed the appropriate applications with its primary regulator, the Board of Governors of the Federal Reserve System. The merger is expected to be completed during the fourth quarter of 2012.

Market Areas

First Federal of Hazard and First Federal of Frankfort operate in two distinct market areas.

First Federal of Hazard’s market area consists of Perry County, where the business office is located, as well as the surrounding counties of Letcher, Knott, Breathitt, Leslie and Clay Counties in eastern Kentucky. The economy in its market area has been distressed in recent years. The local economy depends on the coal industry and other industries, such as health care and manufacturing. Still, the economy in First Federal of Hazard’s market area continues to lag behind the economies of Kentucky and the United States. In the most recent available data, using information from the State of Kentucky Economic Development Information System (www.thinkkentucky.com), per capita personal income in Perry County averaged $30,995 in 2010, compared to personal income of $32,316 in Kentucky and $39,937 in the United States. Total population in Perry County has remained stable over the last five years at approximately 29,000. However, as a regional economic center, Hazard tends to draw consumers and workers who commute from surrounding counties. Employment in the market area, particularly in Perry County, consists primarily of the trade, transportation and utilities industry (17.6%), the mining industry (17.3%), and the services sector, including health care (16.2%). During the last five years, the unemployment rate has been 6.9% or higher, and in June 2012, was 12.8%, compared to 8.4% in Kentucky and 8.9% in the United States.

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First Federal of Frankfort’s primary lending area includes the Kentucky counties of Franklin, Anderson, Scott, Shelby and Woodford, with the majority of lending originated on properties located in Franklin County. Franklin County has a population of approximately 49,000, of which approximately 27,000 live within the city of Frankfort, which serves as the capital of Kentucky. The primary employer in the area is the state government, which employs about 39.4% of the work force. In addition, there are several large industrial, financial and government employers in the community. Despite this large, relatively stable source of employment, the unemployment rate was 7.0% in June 2012 after having experienced an unemployment rate which had ranged from 4.5 to 9.0% in prior years.

Lending Activities

General. Our loan portfolio consists primarily of one- to four-family residential mortgage loans. As opportunities arise, we also offer loans secured by churches, commercial real estate, and multi-family real estate. We also offer loans secured by deposit accounts and, through First Federal of Frankfort, home equity loans. Substantially all of our loans are made within the Banks’ respective market areas.

Residential Mortgage Loans. Our primary lending activity is the origination of mortgage loans to enable borrowers to purchase or refinance existing homes in the Banks’ respective market areas. At June 30, 2012, residential mortgage loans totaled $165.5 million, or 90.0%, of our total loan portfolio. We offer a mix of adjustable-rate and fixed-rate mortgage loans with terms up to 40 years. Adjustable-rate loans have an initial fixed term of one, three, five or seven years. After the initial term, the rate adjustments on First Federal of Frankfort’s adjustable-rate loans are indexed to the National Average Contract Interest Rate for Major Lenders on the Purchase of Previously Occupied Homes. The interest rates on these mortgages are adjusted once a year, with limitations on adjustments of one percentage point per adjustment period, and a lifetime cap of five percentage points. We determine loan fees charged, interest rates and other provisions of mortgage loans on the basis of our own pricing criteria and competitive market conditions. Some loans originated by the Banks have an additional advance clause which allows the borrower to obtain additional funds at prevailing interest rates, subject to managements’ approval.

At June 30, 2012, the Company’s loan portfolio included $125.9 million in adjustable-rate residential mortgage loans, or 76.1%, of the Company’s residential mortgage loan portfolio.

The retention of adjustable-rate loans in the portfolio helps reduce our exposure to increases in prevailing market interest rates. However, there are unquantifiable credit risks resulting from potential increases in costs to borrowers in the event of upward repricing of adjustable-rate loans. It is possible that during periods of rising interest rates, the risk of default on adjustable-rate loans may increase due to increases in interest costs to borrowers. However, despite their popularity in some parts of the country, neither bank has offered adjustable-rate loans that contractually allow for negative amortization. Such loans, under some circumstances, can cause the balance of a closed-end loan to exceed the original balance and perhaps surpass the value of the collateral. Further, although adjustable-rate loans allow us to increase the sensitivity of our interest-earning assets to changes in interest rates, the extent of this interest sensitivity is limited by the initial fixed-rate period before the first adjustment and the periodic and lifetime interest rate adjustment limitations. Accordingly, there can be no assurance that yields on our adjustable-rate loans will fully adjust to compensate for increases in our cost of funds. Finally, adjustable-rate loans may decrease at a pace faster than decreases in our cost of funds, resulting in reduced net income.

While one- to four-family residential real estate loans are normally originated with up to 30-year terms, (with terms up to 40 years available for some products) such loans typically remain outstanding for substantially shorter periods because borrowers often prepay their loans in full upon sale of the mortgaged property or upon refinancing the original loan. Therefore, average loan maturity is a function of, among other factors, the level of purchase and sale activity in the real estate market, prevailing interest rates and the interest rates payable on outstanding loans. As interest rates declined and remained low over the past few years, we have experienced high levels of loan repayments and refinancings.

The Banks offer various programs for the purchase and refinance of one- to four-family loans. Most of these loans have loan-to-value ratios of 80% or less, based on an appraisal provided by a state licensed or certified appraiser. For owner-occupied properties, the borrower may be able to borrow up to 95% of the value if they secure and pay for private mortgage insurance or they may be able to obtain a second mortgage (at a higher interest rate) in which they borrow up to 90% of the value. On a rare case-by-case basis, the Boards of Directors of the Banks may approve a loan above the 80% loan-to-value ratio without such enhancements.

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Construction Loans. We originate loans to individuals to finance the construction of residential dwellings for personal use or for use as rental property. On limited occasions we have made construction loans to builders for the construction of a single-family residence for subsequent sale. At June 30, 2012, construction loans totaled $964,000, or 0.5%, of our total loan portfolio. Our construction loans generally provide for the payment of interest only during the construction phase, which is usually less than one year. Loans generally can be made with a maximum loan to value ratio of 80% of the appraised value. Funds are disbursed as progress is made toward completion of the construction based on site inspections by qualified bank staff.

Construction financing is generally considered to involve a higher degree of risk of loss than long-term financing on improved, occupied real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the property’s value at completion of construction or development and the estimated cost (including interest) of construction. During the construction phase, a number of factors could result in delays and cost overruns. If the estimate of construction costs proves to be inaccurate, we may be required to advance funds beyond the amount originally committed to permit completion of the development. If the estimate of value proves to be inaccurate, we may be confronted, at or before the maturity of the loan, with a project having a value which is insufficient to assure full repayment. As a result of the foregoing, construction lending often involves the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project rather than the ability of the borrower or guarantor to repay principal and interest. If we are forced to foreclose on a project before or at completion due to a default, there can be no assurance that we will be able to recover the unpaid balance and accrued interest on the loan, as well as related foreclosure and holding costs.

Multi-Family and Nonresidential Loans. As opportunities arise, we offer mortgage loans secured by multi-family (residential property comprised of five or more units) or nonresidential real estate, which is generally secured by commercial office buildings, churches, condominiums and properties used for other purposes. At June 30, 2012, multi-family and nonresidential loans totaled $15.5 million and $11.1 million, respectively, or 8.4% and 6.0%, respectively, of our total loan portfolio. We originate multi-family and nonresidential real estate loans for terms of generally 25 years or less. Loan amounts generally do not exceed 80% of the appraised value and tend to range much lower.

Loans secured by multi-family and commercial real estate generally have larger balances and involve a greater degree of risk than one- to four-family residential mortgage loans. Of primary concern in multi-family and commercial real estate lending is the borrower’s creditworthiness and the feasibility and cash flow potential of the project. Payments on loans secured by income properties often depend on successful operation and management of the properties. As a result, repayment of such loans may be subject to a greater extent than residential real estate loans to adverse conditions in the real estate market or the economy. To monitor cash flows on income properties, we require borrowers and/or loan guarantors to provide annual financial statements on larger multi-family and commercial real estate loans. In reaching a decision on whether to make a multi-family or commercial real estate loan, we consider the net cash flow of the project, the borrower’s expertise, credit history and the value of the underlying property.

Consumer Lending. Our consumer loans include home equity lines of credit and loans secured by savings deposits. At June 30, 2012, our consumer loan balance totaled $7.1 million, or 4.0%, of our total loan portfolio. Of the consumer loan balance at June 30, 2012, $4.8 million were home equity loans and $2.3 million were loans secured by savings deposits.

Our home equity loans are made at First Federal of Frankfort and are made on the security of residential real estate and have terms of up to 10 years. Most of First Federal of Frankfort’s home equity loans are second mortgages subordinate only to first mortgages also held by the bank and do not exceed 80% of the estimated value of the property, less the outstanding principal of the first mortgage. First Federal of Frankfort does offer home equity loans up to 90% of the value less the balance of the first mortgage at a premium rate to qualified borrowers. These loans are not secured by private mortgage insurance. First Federal of Frankfort’s home equity loans require the monthly payment of 2% of the unpaid principal until maturity, when the remaining unpaid principal, if any, is due. First Federal of Frankfort’s home equity loans bear variable rates of interest indexed to the prime rate for loans with 80% or less loan-to-value ratio, and 2% above the prime rate for loans with a loan-to-value ratio in excess of 80%. Interest rates on these loans can be adjusted monthly. At June 30, 2012, the total outstanding home equity loans amounted to 2.7% of the Company’s total loan portfolio.

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Loans secured by savings are originated for up to 90% of the depositor’s savings account balance. The interest rate is normally two percentage points above the rate paid on the savings account, and the account must be pledged as collateral to secure the loan. At June 30, 2012, loans on savings accounts totaled 1.3% of the Company’s total loan portfolio.

Consumer loans generally entail greater risk than do residential mortgage loans, particularly in the case of consumer loans which are unsecured or secured by rapidly depreciable assets. However, these risks are considerably reduced in our case, since all of our consumer loans are secured loans.

Loan Originations, Purchases and Sales. Loan originations come from a number of sources. The primary source of loan originations are our in-house loan originators, and to a lesser extent, advertising and referrals from customers and real estate agents. We currently do not purchase loans. First Federal of Frankfort sells fixed-rate loans with longer maturities to the Federal Home Loan Bank of Cincinnati (“FHLB-Cincinnati”). We earn income on the loans sold through fees we charge on the origination, interest spread premiums earned when we sell the loans, and loan servicing fees on an on-going basis, because servicing rights are retained on such loans. At June 30, 2012, $12.6 million in loans were being serviced by First Federal of Frankfort for the FHLB-Cincinnati.

Loan Approval Procedures and Authority. Our lending activities follow written, nondiscriminatory, underwriting standards and loan origination procedures established by each Bank’s Board of Directors and management. First Federal of Hazard’s loan committee, consisting of its two senior officers, has authority to approve loans of up to $275,000. Loans above this amount and loans with non-standard terms such as longer repayment terms or high loan-to-value ratios, must be approved by our Board of Directors. First Federal of Frankfort’s loan approval process allows for various combinations of experienced bank officers to approve or deny loans which are one- to four-family properties totaling $275,000 or less, church loans of under $150,000, home equity lines of credit of $100,000 or less and loans to individuals whose aggregate borrowings with the Bank is less than $500,000. Loans that do not conform to these criteria must be submitted to the Board of Directors or Executive Committee composed of at least three directors, for approval.

It is the Company’s practice to record a lien on the real estate securing a loan. The Banks generally do not require title insurance, although it may be required for loans made in certain programs. The Banks do require fire and casualty insurance on all security properties and flood insurance when the collateral property is located in a designated flood hazard area. First Federal of Frankfort also requires an earthquake provision in all policies for new loans.

Loans to One Borrower. The maximum amount either Bank may lend to one borrower and the borrower’s related entities is limited, by regulation, to generally 15% of that Bank’s stated capital and the allowance for loan losses. At June 30, 2012, the regulatory limit on loans to one borrower was $3.2 million for First Federal of Hazard and $3.0 million for First Federal of Frankfort. Neither of the banks had lending relationships in excess of their respective lending limits. However, loans or participations in loans may be sold among the Banks, which may allow a borrower’s total loans with the Company to exceed the limit of either individual bank.

Loan Commitments. The Banks issue commitments for the funding of mortgage loans. Generally, these commitments exist from the time the underwriting of the loan is completed and the closing of the loan. Generally, these commitments are for a maximum of 30 or 60 days but management routinely extends the commitment if circumstances delay the closing. Management reserves the right to verify or re-evaluate the borrower’s qualifications and to change the rates and terms of the loan at that time.

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If conditions exist whereby either Bank experiences a significant increase in loans outstanding or commits to originate loans that are riskier than a typical one- to four-family mortgage, management and the boards will consider reflecting the anticipated loss exposure in a separate liability. As residential loans are approved in the normal course of business, and those loans are underwritten to the standards of the Banks, management does not believe alteration of the allowance for loan losses is warranted. At June 30, 2012, no commitment losses were reflected in a separate liability.

First Federal of Frankfort offers construction loans in which the borrower obtains the loan for a short term, less than one year, and simultaneously extends a commitment for permanent financing. First Federal of Hazard offers a construction loan that is convertible to permanent financing, thus no additional commitment is made.

Interest Rates and Loan Fees. Interest rates charged on mortgage loans are primarily determined by competitive loan rates offered in our market areas and our yield objectives. Mortgage loan rates reflect factors such as prevailing market interest rate levels, the supply of money available to the savings industry and the demand for such loans. These factors are in turn affected by general economic conditions, the monetary policies of the federal government, including the Board of Governors of the Federal Reserve System, the general supply of money in the economy, tax policies and governmental budget matters.

We receive fees in connection with late payments on our loans. Depending on the type of loan and the competitive environment for mortgage loans, we may charge an origination fee on all or some of the loans we originate. We may also offer a menu of loans whereby the borrower may pay a higher fee to receive a lower rate or to pay a smaller or no fee for a higher rate.

Delinquencies. When a borrower fails to make a required loan payment, we take a number of steps to have the borrower cure the delinquency and restore the loan to current status. We make initial contact with the borrower when the loan becomes 15 days past due. Subsequently, bank staff under the direct supervision of senior management and with consultation by the Banks’ attorneys, attempt to contact the borrower and determine their status and plans for resolving the delinquency. However, once a delinquency reaches 90 days, management considers foreclosure and, if the borrower has not provided a reasonable plan (such as selling the collateral, a commitment from another lender to refinance the loan or a plan to repay the delinquent principal, interest, escrow, and late charges) the foreclosure suit may be initiated. In some cases, management may delay initiating the foreclosure suit if, in management’s opinion, the Banks’ chance of loss is minimal (such as with loans where the estimated value of the property greatly exceeds the amount of the loan) or if the original borrower is deceased or incapacitated. If a foreclosure action is initiated and the loan is not brought current, paid in full, or refinanced with another lender before the foreclosure sale, the real property securing the loan is sold at foreclosure. The Banks are represented at the foreclosure sale and in most cases will bid an amount equal to the Banks’ investment (including interest, advances for taxes and insurance, foreclosure costs, and attorney’s fees). If another bidder outbids the Bank, the Bank’s investment is received in full. If another bidder does not outbid the Banks, the Banks acquire the property and attempt to sell it to recover their investment.

A borrower’s filing for bankruptcy can alter the methods available to the Banks to seek collection. In such cases, the Banks work closely with legal counsel to resolve the delinquency as quickly as possible.

We may consider loan workout arrangements with certain borrowers under certain conditions. Management of each bank provides a report to its board of directors on a monthly basis of all loans more than 60 days delinquent, including loans in foreclosure, and all property acquired through foreclosure.

Investment Activities

We have legal authority to invest in various types of liquid assets, including U.S. Treasury obligations, securities of various federal agencies and state and municipal governments, mortgage-backed securities and certificates of deposit of federally insured institutions. We also are required to maintain an investment in FHLB-Cincinnati stock, the level of which is largely dependent on our level of borrowings from the FHLB.

At June 30, 2012, our investment portfolio consisted of mortgage-backed securities issued and guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae with stated final maturities of 30 years or less. The Company held no equity position with Fannie Mae or Freddie Mac.

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Our investment objectives are to provide an alternate source of low-risk investments when loan demand is insufficient, to provide and maintain liquidity, to maintain a balance of high quality, diversified investments to minimize risk, to provide collateral for pledging requirements, to establish an acceptable level of interest rate risk, and to generate a favorable return. The Banks’ Board of Directors has the overall responsibility for each institution’s investment portfolio, including approval of investment policies. The management of each Bank may authorize investments as prescribed in each of the Bank’s investment policies.

Bank Owned Life Insurance

First Federal of Frankfort owns several Bank Owned Life Insurance policies totaling $2.7 million at June 30, 2012. The purpose of these policies is to offset future escalation of the costs of non-salary employee benefit plans such as First Federal of Frankfort’s defined benefit retirement plan and First Federal of Frankfort’s health insurance plan. The lives of certain key Bank employees are insured, and First Federal of Frankfort is the sole beneficiary and will receive any benefits upon the employee’s death. The policies were purchased from four highly-rated life insurance companies. The design of the plan allows for the cash value of the policy to be designated as an asset of First Federal of Frankfort. The asset’s value will increase by the crediting rate, which is a rate set by each insurance company and is subject to change on an annual basis. The growth of the value of the asset will be recorded as other operating income. Management does not foresee any expense associated with the plan. Because this is a life insurance product, current federal tax laws exempt the income from federal income taxes.

Bank owned life insurance is not secured by any government agency nor are the policies’ asset values or death benefits secured specifically by tangible property. Great care was taken in selecting the insurance companies, and the bond ratings and financial condition of these companies are monitored on a quarterly basis. The failure of one of these companies could result in a significant loss to First Federal of Frankfort. Other risks include the possibility that the favorable tax treatment of the income could change, that the crediting rate will not be increased in a manner comparable to market interest rates, or that this type of plan will no longer be permitted by First Federal of Frankfort’s regulators. This asset is considered illiquid because, although First Federal of Frankfort may terminate the policies and receive the original premium plus all earnings, such an action would require the payment of federal income taxes on all earnings since the policies’ inception.

Deposit Activities and Other Sources of Funds

General. Deposits, loan repayments and maturities, redemptions, sales and repayments of investment and mortgage-backed securities are the major sources of our funds for lending and other investment purposes. Loan repayments are a relatively stable source of funds, while deposit inflows and outflows and loan prepayments are significantly influenced by general interest rates and money market conditions.

Deposit Accounts. The vast majority of our depositors are residents of the Banks’ respective market areas. Deposits are attracted from within our market areas through the offering of passbook savings and certificate accounts, and, at First Federal of Frankfort, checking accounts and individual retirement accounts (“IRAs”). We do not utilize brokered funds. Deposit account terms vary according to the minimum balance required, the time periods the funds must remain on deposit and the interest rate, among other factors. In determining the terms of our deposit accounts, we consider the rates offered by our competition, profitability to us, asset liability management and customer preferences and concerns. We review our deposit mix and pricing on an ongoing basis as needed.

Borrowings. First Federal of Hazard and First Federal of Frankfort borrow from the FHLB-Cincinnati to supplement their supplies of investable funds and to meet deposit withdrawal requirements. The Federal Home Loan Bank functions as a central reserve bank providing credit for member financial institutions. As members, each Bank is required to own capital stock in the FHLB-Cincinnati and is authorized to apply for advances on the security of such stock and certain of our mortgage loans and other assets (principally securities which are obligations of, or guaranteed by, the United States), provided certain standards related to creditworthiness have been met. Advances are made under several different programs, each having its own interest rate and range of maturities. Depending on the program, limitations on the amount of advances are based either on a fixed percentage of an institution’s net worth or on the Federal Home Loan Bank’s assessment of the institution’s creditworthiness.

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Subsidiary Activities

The Company has no other wholly owned subsidiaries other than First Federal of Hazard and Frankfort First Bancorp. Frankfort First Bancorp has one subsidiary, First Federal of Frankfort.

As federally chartered savings institutions, the Banks are permitted to invest an amount equal to 2% of assets in subsidiaries, with an additional investment of 1% of assets where such investment serves primarily community, inner-city and community-development purposes. Under such limitations, as of June 30, 2012, First Federal of Hazard and First Federal of Frankfort were authorized to invest up to $2.9 million and $4.1 million, respectively, in the stock of or loans to subsidiaries, including the additional 1% investment for community, inner-city and community development purposes.

Competition

We face significant competition for the attraction of deposits and origination of loans. Our most direct competition for deposits has historically come from the banks and credit unions operating in our market areas and, to a lesser extent, from other financial services companies, such as investment brokerage firms. We also face competition for depositors’ funds from money market funds and other corporate and government securities. Several of our competitors are significantly larger than us and, therefore, have significantly greater resources. We expect competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the financial services industry. Technological advances, for example, have lowered the barriers to enter new market areas, allowed banks to expand their geographic reach by providing services over the Internet and made it possible for non-depository institutions to offer products and services that traditionally have been provided by banks. Changes in federal law permit affiliation among banks, securities firms and insurance companies, which promotes a competitive environment in the financial services industry. Competition for deposits and the origination of loans could limit our growth in the future.

According to the Federal Deposit Insurance Corporation (“FDIC”), at June 30, 2011 (the most recent information available,) First Federal of Hazard had a deposit market share of 12.3% in Perry County. Its largest competitors, Peoples Bank & Trust Company of Hazard (approximately $290 million in assets), Community Trust Bank, Inc. (approximately $3.6 billion in assets) and 1^st Trust Bank (approximately $136 million in assets), have Perry County deposit market shares of 41.9%, 16.4% and 20.1%, respectively. First Federal of Hazard’s competition for loans comes primarily from financial institutions in its market area and, to a lesser extent, from other financial services providers, such as mortgage companies and mortgage brokers. Competition for loans also comes from the increasing number of non-depository financial services companies entering the mortgage market, such as insurance companies, securities companies and specialty finance companies.

First Federal of Frankfort’s principal competitors for deposits in its market area are other banking institutions, such as commercial banks and credit unions, as well as mutual funds and other investments. First Federal of Frankfort principally competes for deposits by offering a variety of deposit accounts, convenient business hours and branch locations, customer service and a well-trained staff. According to the FDIC, at June 30, 2011, First Federal of Frankfort had a deposit market share of 9.6%. Its largest competitors for depositors are the Farmers Bank and Capital Trust ($726 million in assets) at a 44.9% market share, Whitaker Bank ($1.5 billion in assets) at 17.6%, Mainsource Bank ($2.7 billion in assets) at 4.6%, Fifth Third Bank ($115.0 billion in assets) at 5.5%, and Republic Bank ($3.2 billion in assets) at 3.3%. The Bank also faces considerable competition from credit unions including the Commonwealth Credit Union ($924.0 million in assets) and the Kentucky Employees Credit Union ($57.9 million in assets). First Federal of Frankfort competes for loans with other depository institutions, as well as specialty mortgage lenders and brokers and consumer finance companies. First Federal of Frankfort principally competes for loans on the basis of interest rates and the loan fees it charges, the types of loans it originates and the convenience and service it provides to borrowers. In addition, First Federal of Frankfort believes it has developed strong relationships with the businesses, real estate agents, builders and general public in its market area. Despite First Federal of Frankfort’s small size relative to the many and various other depository and lending institutions in its market area, First Federal of Frankfort usually ranks first with respect to the origination of single-family purchase mortgages made on properties located in Franklin County. Nevertheless, the level of competition in First Federal of Frankfort’s market area has limited, to a certain extent, the lending opportunities in its market area.

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Personnel

At June 30, 2012, we had 40 full-time employees and no part-time employees, none of whom was represented by a collective bargaining unit. We believe our relationship with our employees is good.

Regulation and Supervision

General. First Federal of Hazard and First Federal of Frankfort are subject to extensive regulation, examination and supervision by the Office of the Comptroller of the Currency, as their primary federal regulator, and the Federal Deposit Insurance Corporation, as insurer of deposits. First Federal of Hazard and First Federal of Frankfort are each members of the Federal Home Loan Bank System and their deposit accounts are insured up to applicable limits by the Deposit Insurance Fund managed by the Federal Deposit Insurance Corporation. First Federal of Hazard and First Federal of Frankfort must each file reports with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation concerning their activities and financial condition in addition to obtaining regulatory approvals before entering into certain transactions such as mergers with, or acquisitions of, other financial institutions. There are periodic examinations by the Office of the Comptroller of the Currency and, under certain circumstances, the Federal Deposit Insurance Corporation to evaluate First Federal of Hazard’s and First Federal of Frankfort’s safety and soundness and compliance with various regulatory requirements. This regulatory structure is intended primarily for the protection of the insurance fund and depositors. The Federal Reserve Board, the agency that regulates and supervises bank holding companies, now supervises and regulates Kentucky First Federal MHC. Kentucky First and First Federal MHC, as savings and loan holding companies, are required to file certain reports with, and are subject to examination by, and otherwise are required to comply with the rules and regulations of the Federal Reserve Board.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act’) made extensive changes in the regulation of federal savings banks such as First Federal of Hazard and First Federal of Frankfort. Under the Dodd-Frank Act, the Office of Thrift Supervision was eliminated and responsibility for the supervision and regulation of federal savings banks was transferred to the Office of the Comptroller of the Currency, the agency that is primarily responsible for the regulation and supervision of national banks, on July 21, 2011. The Office of the Comptroller of the Currency assumed responsibility for implementing and enforcing many of the laws and regulations applicable to federal savings banks. Additionally, the Dodd-Frank Act created a new Consumer Financial Protection Bureau as an independent bureau of the Federal Reserve Board. The Consumer Financial Protection Bureau assumed responsibility for the implementation of the federal financial consumer protection and fair lending laws and regulations, a function currently assigned to prudential regulators, and has authority to impose new requirements. However, institutions of less than $10 billion in assets, such as First Federal of Hazard and First Federal of Frankfort, will continue to be examined for compliance with consumer protection and fair lending laws and regulations by, and be subject to the enforcement authority of, their prudential regulator.

In addition, the Dodd-Frank Act, among other things, requires changes in the way that institutions are assessed for deposit insurance, mandates the imposition of consolidated capital requirements on savings and loan holding companies, requires that originators of securitized loans retain a percentage of the risk for the transferred loans, reduces the federal preemption afforded to federal savings associations and contains a number of reforms related to mortgage origination. Many of the provisions of the Dodd-Frank Act require the issuance of regulations before their impact on operations can be assessed by management. However, there is a significant possibility that the Dodd-Frank Act will, at a minimum, result in increased regulatory burden and compliance costs for the Banks and the Company.

Certain of the regulatory requirements that are applicable to First Federal of Hazard, First Federal of Frankfort, Kentucky First and First Federal MHC are described below. This discussion does not purport to be a complete description of the laws and regulations involved, and is qualified in its entirety by the actual laws and regulations. Moreover, laws and regulations are subject to changes by the U.S. Congress or the regulatory agencies as applicable.

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Regulation of Federal Savings Institutions

Business Activities. Federal law and regulations, primarily the Home Owners’ Loan Act and the regulations of the Office of the Comptroller of the Currency, govern the activities of federal savings institutions, such as First Federal of Hazard and First Federal of Frankfort. These laws and regulations delineate the nature and extent of the activities in which federal savings banks may engage. In particular, certain lending authority for federal savings institutions, e.g., commercial, nonresidential real property loans and consumer loans, is limited to a specified percentage of the institution’s capital or assets.

Branching. Federal savings institutions are authorized to establish branch offices in any state or states of the United States and its territories, subject to the approval of the Office of the Comptroller of the Currency.

Capital Requirements. The Office of the Comptroller of the Currency’s capital regulations require federal savings institutions to meet three minimum capital standards: a 1.5% tangible capital to total assets ratio, a 4% leverage ratio (3% for institutions receiving the highest examination rating under the CAMELS examination rating system) and an 8% risk-based capital ratio. In addition, the prompt corrective action standards discussed below also establish, in effect, a minimum 2% tangible capital standard, a 4% leverage ratio (3% for institutions receiving the highest examination rating on the CAMELS system) and, together with the risk-based capital standard itself, a 4% Tier 1 risk-based capital standard. The Office of the Comptroller of the Currency regulations also require that, in meeting the tangible, leverage and risk-based capital standards, institutions must generally deduct investments in and loans to subsidiaries engaged in activities as principal that are not permissible for a national bank.

The risk-based capital standard requires federal savings institutions to maintain Tier 1 (core) and total capital (which is defined as core capital and supplementary capital, less certain specified deductions from total capital such as reciprocal holdings of depository institution capital instruments and equity instruments) to risk-weighted assets of at least 4% and 8%, respectively. In determining the amount of risk-weighted assets, all assets, including certain off-balance sheet assets, recourse obligations, residual interests and direct credit substitutes, are multiplied by a risk-weight factor of 0% to 100% assigned by capital regulation based on the risks believed inherent in the type of asset. Core (Tier 1) capital is defined as common stockholders’ equity (including retained earnings), certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries, less intangibles other than certain mortgage servicing rights and credit card relationships. The components of supplementary capital currently include cumulative preferred stock, long-term perpetual preferred stock, mandatory convertible securities, subordinated debt and intermediate preferred stock, the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets and up to 45% of unrealized gains on available-for-sale equity securities with readily determinable fair market values. Overall, the amount of supplementary capital included as part of total capital cannot exceed 100% of core capital.

The Office of the Comptroller of the Currency also has authority to establish individual minimum capital requirements in appropriate cases upon a determination that an institution’s capital level is or may become inadequate in light of the particular circumstances. At June 30, 2012, First Federal of Hazard and First Federal of Frankfort each met each of these capital requirements.

Prompt Corrective Regulatory Action. The Office of the Comptroller of the Currency is required to take certain supervisory actions against undercapitalized institutions, the severity of which depends upon the institution’s degree of undercapitalization. Generally, a savings institution that has a ratio of total capital to risk weighted assets of less than 8%, a ratio of Tier 1 (core) capital to risk-weighted assets of less than 4% or a ratio of core capital to total assets of less than 4% (3% or less for institutions with the highest examination rating) is considered to be “under-capitalized.” A savings institution that has a total risk-based capital ratio of less than 6%, a Tier 1 capital ratio of less than 3% or a leverage ratio that is less than 3% is considered to be “significantly undercapitalized” and a savings institution that has a tangible capital to assets ratio equal to or less than 2% is deemed to be “critically undercapitalized.” Subject to a narrow exception, the Office of the Comptroller of the Currency is required to appoint a receiver or conservator within specified time frames for an institution that is “critically undercapitalized.” An institution must file a capital restoration plan with the Office of the Comptroller of the Currency within 45 days of the date it receives notice that it is “undercapitalized,” “significantly undercapitalized,” or “critically undercapitalized.” Compliance with the plan must be guaranteed by any parent holding company up to the lesser of 5% of the savings institution’s total assets when it was deemed to be “undercapitalized” or the amount necessary to achieve compliance with applicable capital requirements. In addition, numerous mandatory supervisory actions become immediately applicable to an undercapitalized institution, including, but not limited to, increased monitoring by regulators and restrictions on growth, capital distributions and expansion. “Significantly undercapitalized” and “critically undercapitalized” institutions are subject to more extensive mandatory regulatory actions. The Office of the Comptroller of the Currency could also take any one of a number of discretionary supervisory actions, including the issuance of a capital directive and the replacement of senior executive officers and directors.

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Loans to One Borrower. Federal law provides that savings institutions are generally subject to the limits on loans to one borrower applicable to national banks. Generally, subject to certain exceptions, a savings institution may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of its unimpaired capital and surplus. An additional amount may be lent, equal to 10% of unimpaired capital and surplus, if secured by specified readily-marketable collateral.

Standards for Safety and Soundness. As required by statute, the federal banking agencies have adopted Interagency Guidelines prescribing Standards for Safety and Soundness. The guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. If the Office of the Comptroller of the Currency determines that a savings institution fails to meet any standard prescribed by the guidelines, the Office of the Comptroller of the Currency may require the institution to submit an acceptable plan to achieve compliance with the standard.

Limitation on Capital Distributions. Office of the Comptroller of the Currency regulations impose limitations upon all capital distributions by a savings institution, including cash dividends, payments to repurchase its shares and payments to shareholders of another institution in a cash-out merger. Under the regulations, an application to and the prior approval of the Office of the Comptroller of the Currency is required before any capital distribution if the institution does not meet the criteria for “expedited treatment” of applications under Office of the Comptroller of the Currency regulations (i.e., generally, examination and Community Reinvestment Act ratings in the two top categories), the total capital distributions for the calendar year exceed net income for that year plus the amount of retained net income for the preceding two years, the institution would be undercapitalized following the distribution or the distribution would otherwise be contrary to a statute, regulation or agreement with the Office of the Comptroller of the Currency. If an application is not required, the institution must still provide prior notice to the Federal Reserve Board of the capital distribution if, like First Federal of Hazard and First Federal of Frankfort, it is a subsidiary of a holding company as well as an informational notice to the Office of the Comptroller of the Currency. If First Federal of Hazard’s or First Federal of Frankfort’s capital were ever to fall below its regulatory requirements or the Office of the Comptroller of the Currency notified it that it was in need of increased supervision, its ability to make capital distributions could be restricted. In addition, the Office of the Comptroller of the Currency could prohibit a proposed capital distribution that would otherwise be permitted by the regulation, if the agency determines that such distribution would constitute an unsafe or unsound practice.

Qualified Thrift Lender Test. Federal law requires savings institutions to meet a qualified thrift lender test. Under the test, a savings institution is required to either qualify as a “domestic building and loan association” under the Internal Revenue Code or maintain at least 65% of its “portfolio assets” (total assets less: (i) specified liquid assets up to 20% of total assets; (ii) intangibles, including goodwill; and (iii) the value of property used to conduct business) in certain “qualified thrift investments” (primarily residential mortgages and related investments, including certain mortgage-backed securities, education loans, credit card loans and small business loans) in at least 9 months out of each 12-month period.

A savings institution that fails the qualified thrift lender test is subject to certain operating restrictions. The Dodd-Frank Act also specifies that failing the qualified thrift lender test is a violation of law that could result in an enforcement action and dividend limitations. At June 30, 2012, First Federal of Hazard and First Federal of Frankfort each met the qualified thrift lender test.

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Transactions with Related Parties. Federal law limits the authority of First Federal of Hazard and First Federal of Frankfort to lend to, and engage in certain other transactions with (collectively, “covered transactions”), “affiliates” (e.g., any company that controls or is under common control with an institution, including Kentucky First, First Federal MHC and their non-savings institution subsidiaries). The aggregate amount of covered transactions with any individual affiliate is limited to 10% of the capital and surplus of the savings institution. The aggregate amount of covered transactions with all affiliates is limited to 20% of the savings institution’s capital and surplus. Loans and other specified transactions with affiliates are required to be secured by collateral in an amount and of a type described in federal law. The purchase of low quality assets from affiliates is generally prohibited. Transactions with affiliates must be on terms and under circumstances that are at least as favorable to the institution as those prevailing at the time for comparable transactions with non-affiliated companies. In addition, savings institutions are prohibited from lending to any affiliate that is engaged in activities that are not permissible for bank holding companies and no savings institution may purchase the securities of any affiliate other than a subsidiary. Transactions between sister depository institutions that are 80% or more owned by the same holding company are exempt from the quantitative limits and collateral requirements.

The Sarbanes-Oxley Act of 2002 generally prohibits a company from making loans to its executive officers and directors. However, that law contains a specific exception for loans by a depository institution to its executive officers and directors in compliance with federal banking laws. Under such laws, First Federal of Hazard’s and First Federal of Frankfort’s authority to extend credit to executive officers, directors and 10% shareholders (“insiders”), as well as entities such persons control, is limited. The law restricts both the individual and aggregate amount of loans First Federal of Hazard and First Federal of Frankfort may make to insiders based, in part, on First Federal of Hazard’s and First Federal of Frankfort’s respective capital positions and requires certain board approval procedures to be followed. Such loans must be made on terms, including rates and collateral, substantially the same as those offered to unaffiliated individuals prevailing at the time for comparable loans with persons not related to the lender and not involve more than the normal risk of repayment. There are additional restrictions applicable to loans to executive officers.

Enforcement. The Office of The Comptroller of the Currency has primary enforcement responsibility over federal savings institutions and has the authority to bring actions against the institution and all institution-affiliated parties, including stockholders, and any attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful action likely to have an adverse effect on an insured institution. Formal enforcement action may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors to appointment of a receiver or conservator or termination of deposit insurance. Civil penalties cover a wide range of violations and can amount to $25,000 per day, or even $1 million per day in especially egregious cases. The Federal Deposit Insurance Corporation has authority to recommend to the Director of the Office of the Comptroller of the Currency that enforcement action to be taken with respect to a particular savings institution. If action is not taken by the Director, the Federal Deposit Insurance Corporation has authority to take such action under certain circumstances. Federal law also establishes criminal penalties for certain violations.

Assessments. Federal savings banks pay assessments to the Office of the Comptroller of the Currency to fund its operations. The general assessments, paid on a semi-annual basis, are based upon the savings institution’s total assets, including consolidated subsidiaries, its financial condition and the complexity of its portfolio.

Insurance of Deposit Accounts. The deposits of both First Federal of Hazard and First Federal of Frankfort are insured up to applicable limits by the Deposit Insurance Fund administered by the Federal Deposit Insurance Corporation. Under the Federal Deposit Insurance Corporation’s risk-based assessment system, insured institutions are assigned to one of four risk categories based on supervisory evaluations, regulatory capital levels and certain other factors, with less risky institutions paying lower assessments. An institution’s assessment rate depends upon the category to which it is assigned. Effective April 1, 2009, assessment rates ranged from seven to 77.5 basis points. On February 7, 2011, the Federal Deposit Insurance Corporation issued final rules, effective April 1, 2011, implementing changes to the assessment rules resulting from the Dodd-Frank Act. Initially, the base assessment rates will range from two and one half to 45 basis points. The rate schedules will automatically adjust in the future when the Deposit Insurance Fund reaches certain milestones. No institution may pay a dividend if in default of the federal deposit insurance assessment.

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The FDIC imposed on all insured institutions a special emergency assessment of five basis points of total assets minus Tier 1 capital, as of June 30, 2009 (capped at ten basis points of an institution’s deposit assessment base), in order to cover losses to the Deposit Insurance Fund. That special assessment was collected on September 30, 2009. The FDIC provided for similar assessments during the final two quarters of calendar year 2009, if deemed necessary. However, in lieu of further special assessments, the Federal Deposit Insurance Corporation required insured institutions to prepay estimated quarterly risk-based assessments for the fourth quarter of 2009 through the fourth quarter of 2012. The estimated assessments, which include an assumed annual assessment base increase of 5%, were recorded as a prepaid expense asset as of December 30, 2009. As of December 31, 2009, and each quarter thereafter, a charge to earnings will be recorded for each regular assessment with an offsetting credit to the prepaid asset.

In addition, the Federal Deposit Insurance Corporation adopted an optional Temporary Liquidity Guarantee Program by which, for a fee, noninterest- bearing transaction accounts would receive unlimited insurance coverage to December 31, 2010, and certain senior unsecured debt issued by institutions and their holding companies between October 13, 2008 and December 31, 2009 would be guaranteed by the Federal Deposit Insurance Corporation through June 30, 2012, or in some cases, December 31, 2012. The Bank and the Company made the business decision to decline participation in both programs. The Dodd-Frank Act adopted unlimited coverage for certain noninterest-bearing transactions accounts for January 1, 2011 through December 31, 2012, with no apparent opt out option.

In addition to the assessment for deposit insurance, institutions are required to make payments on bonds issued in the late 1980s by the Financing Corporation to recapitalize a predecessor deposit insurance fund. That payment is established quarterly.

The Dodd-Frank Act increased the minimum target Deposit Insurance Fund ratio from 1.15% of estimated insured deposits to 1.35% of estimated insured deposits. The FDIC must seek to achieve the 1.35% ratio by September 30, 2020. Insured institutions with assets of $10 billion or more are supposed to fund the increase. The Dodd-Frank Act eliminated the 1.5% maximum fund ratio, instead leaving it to the discretion of the FDIC.

The FDIC has authority to increase insurance assessments. A significant increase in insurance premiums would likely have an adverse effect on the operating expenses and results of operations of the Banks. Management cannot predict what insurance assessment rates will be in the future.

Insurance of deposits may be terminated by the Federal Deposit Insurance Corporation upon a finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the Federal Deposit Insurance Corporation or the Office of the Comptroller of the Currency. Management does not know of any practice, condition or violation that might lead to termination of deposit insurance.

Federal Home Loan Bank System. First Federal of Hazard and First Federal of Frankfort are members of the Federal Home Loan Bank System, which consists of 12 regional Federal Home Loan Banks. The Federal Home Loan Bank provides a central credit facility primarily for member institutions. As members of the Federal Home Loan Bank of Cincinnati, First Federal of Hazard and First Federal of Frankfort are each required to acquire and hold shares of capital stock in that Federal Home Loan Bank. First Federal of Hazard and First Federal of Frankfort were in compliance with this requirement with investments in Federal Home Loan Bank of Cincinnati stock at June 30, 2012, of $2.2 million and $3.5 million, respectively.

Community Reinvestment Act. All federal savings institutions have a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low and moderate income neighborhoods. The Community Reinvestment Act does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the Community Reinvestment Act. The Community Reinvestment Act requires the Office of the Comptroller of the Currency, in connection with its examination of a savings institution, to assess the institution’s record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by such institution.

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The Community Reinvestment Act requires public disclosure of an institution’s rating and requires the Office of the Comptroller of the Currency to provide a written evaluation of an institution’s Community Reinvestment Act performance utilizing a four-tiered descriptive rating system. First Federal of Hazard and First Federal of Frankfort each received a “Satisfactory” rating as a result of their most recent Community Reinvestment Act assessments.

Holding Company Regulation

General. Kentucky First and First Federal MHC are savings and loan holding companies within the meaning of federal law. As such, they are registered with the Federal Reserve Board and are subject to Federal Reserve Board regulations, examinations, supervision, reporting requirements and regulations concerning corporate governance and activities. In addition, the Federal Reserve Board has enforcement authority over Kentucky First and First Federal MHC and their non-savings institution subsidiaries. Among other things, this authority permits the Federal Reserve Board to restrict or prohibit activities that are determined to be a serious risk to First Federal of Hazard and/or First Federal of Frankfort.

Restrictions Applicable to Mutual Holding Companies. According to federal law and Federal Reserve Board regulations, a mutual holding company, such as First Federal MHC, may generally engage in the following activities: (1) investing in the stock of insured depository institutions and acquiring them by means of a merger or acquisition; (2) investing in a corporation the capital stock of which may be lawfully purchased by a savings association under federal law; (3) furnishing or performing management services for a savings association subsidiary of a savings and loan holding company; (4) conducting an insurance agency or escrow business; (5) holding, managing or liquidating assets owned or acquired from a savings association subsidiary of the savings and loan holding company; (6) holding or managing properties used or occupied by a savings association subsidiary of the savings and loan holding company; (7) acting as trustee under deed or trust; (8) any activity permitted for multiple savings and loan holding companies by Federal Reserve Board regulations; (9) any activity permitted by the Board of Governors of the Federal Reserve System for bank holding companies and financial holding companies; and (10) any activity permissible for service corporations. Legislation, which authorized mutual holding companies to engage in activities permitted for financial holding companies, expanded the authorized activities. Financial holding companies may engage in a broad array of financial services activities, including insurance and securities.

Federal law prohibits a savings and loan holding company, including a federal mutual holding company, from directly or indirectly, or through one or more subsidiaries, acquiring more than 5% of the voting stock of another savings institution, or its holding company, without prior written approval of the Federal Reserve Board. Federal law also prohibits a savings and loan holding company from acquiring or retaining control of a depository institution that is not insured by the Federal Deposit Insurance Corporation. In evaluating applications by holding companies to acquire savings institutions, the Federal Reserve Board must consider the financial and managerial resources and future prospects of the company and institution involved, the effect of the acquisition on the risk to the insurance funds, the convenience and needs of the community and competitive factors.

The Federal Reserve Board is prohibited from approving any acquisition that would result in a multiple savings and loan holding company controlling savings institutions in more than one state, except: (1) the approval of interstate supervisory acquisitions by savings and loan holding companies, and (2) the acquisition of a savings institution in another state if the laws of the state of the target savings institution specifically permit such acquisitions. The states vary in the extent to which they permit interstate savings and loan holding company acquisitions.

Capital Requirements. Savings and loan holding companies are not currently subject to specific regulatory capital requirements. The Dodd-Frank Act, however, requires the Federal Reserve Board to promulgate consolidated capital requirements for depository institution holding companies that are no less stringent, both quantitatively and in terms of components of capital, than those applicable to institutions themselves. This will eliminate the inclusion of certain instruments, such as trust preferred securities, from Tier 1 capital. Instruments issued prior to May 19, 2010 will be grandfathered for companies with consolidated assets of $15 billion or less. There is a five-year transition period from the July 21, 2010 date of enactment of the Dodd-Frank Act before the capital requirements will apply to savings and loan holding companies.

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Source of Strength. The Dodd-Frank Act also extends the “source of strength” doctrine to savings and loan holding companies. The Dodd-Frank Act also requires the Federal Reserve Board to promulgate regulations implementing the “source of strength” policy that holding companies act as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress.

Federal savings institutions must notify the Federal Reserve Board prior to paying a dividend to the Company. The Federal Reserve Board may disapprove a dividend if, among other things, the Federal Reserve Board determines that the federal savings institution would be undercapitalized on a pro forma basis or the dividend is determined to raise safety or soundness concerns.

Stock Holding Company Subsidiary Regulation. Federal Reserve Board regulations govern the two-tier mutual holding company form of organization and subsidiary stock holding companies that are controlled by mutual holding companies. Kentucky First is the stock holding company subsidiary of First Federal MHC. Kentucky First is only permitted to engage in activities that are permitted for First Federal MHC subject to the same restrictions and conditions.

Waivers of Dividends by First Federal MHC. Federal Reserve Board regulations require First Federal MHC to notify the Federal Reserve Board if it proposes to waive receipt of our dividends from Kentucky First. The Dodd-Frank Act addresses the issue of dividend waivers in the context of the transfer of the supervision of savings and loan holding companies to the Federal Reserve Board. The Dodd-Frank Act specified that dividends may be waived if certain conditions are met, including that the Federal Reserve Board does not object after being given written notice of the dividend and proposed waiver. The Dodd-Frank Act indicates that the Federal Reserve Board may not object to such a waiver (i) if the mutual holding company involved has, prior to December 1, 2009, reorganized into a mutual holding company structure, engaged in a minority stock offering and waived dividends; (ii) the board of directors of the mutual holding company expressly determines that a waiver of the dividend is consistent with its fiduciary duties to members and (iii) the waiver would not be detrimental to the safe and sound operation of the savings association subsidiaries of the holding company. The Federal Reserve has not previously permitted dividend waivers by mutual bank holding companies and may object to dividend waivers involving mutual savings and loan holding companies, notwithstanding the referenced language in the Dodd-Frank Act. The Federal Reserve Board will not consider the amount of dividends waived by the mutual holding company in determining an appropriate exchange ratio in the event of a full conversion to stock form. Kentucky First was granted such a waiver and dividends were paid to the Company’s shareholders on August 16 and November 22, 2011, as well as February 21, 2012. First Federal MHC was not allowed to waive its dividend with respect to the dividend paid on May 21, 2012. First Federal MHC solicited its members to vote on the proposal to waive dividends and on August 23, 2012, the members approved the waiver of the dividend. The Board of Directors of First Federal MHC subsequently adopted its resolution in accordance with the regulations and submitted it to the Federal Reserve Board. It is expected that First Federal MHC will continue to waive future dividends, except to the extent dividends are needed to fund First Federal MHC’s continuing operations, subject to the ability of First Federal MHC to obtain regulatory approval of its requests to waive dividends and to its ability to obtain member approval of dividend waivers. For more information, see Item 1A, “Risk Factors – Our ability to pay dividends is subject to the ability of First Federal of Hazard and First Federal of Frankfort to make capital distributions to Kentucky First and the waiver of dividends by First Federal MHC.”

Conversion of First Federal MHC to Stock Form. Federal Reserve Board regulations permit First Federal MHC to convert from the mutual form of organization to the capital stock form of organization. In a conversion transaction, a new holding company would be formed as successor to First Federal MHC, its corporate existence would end, and certain depositors would receive the right to subscribe for additional shares of the new holding company. In a conversion transaction, each share of common stock held by stockholders other than First Federal MHC would be automatically converted into a number of shares of common stock of the new holding company based on an exchange ratio determined at the time of conversion that ensures that stockholders other than First Federal MHC own the same percentage of common stock in the new holding company as they owned in us immediately before conversion. Under Federal Reserve Board regulations, stockholders other than First Federal MHC would not be diluted because of any dividends waived by First Federal MHC (and waived dividends would not be considered in determining an appropriate exchange ratio, provided that the mutual holding company involved was formed, engaged in a minority offering and waived dividends prior to December 1, 2009), in the event First Federal MHC converts to stock form. First Federal MHC was formed, engaged in a minority stock offering and waived dividends prior to December 1, 2009. The total number of shares held by stockholders other than First Federal MHC after a conversion transaction also would be increased by any purchases by stockholders other than First Federal MHC in the stock offering conducted as part of the conversion transaction.

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Acquisition of Control. Under the federal Change in Bank Control Act, a notice must be submitted to the Federal Reserve Board if any person (including a company), or group acting in concert, seeks to acquire “control” of a savings and loan holding company or savings association. An acquisition of “control” can occur upon the acquisition of 10% or more of the voting stock of a savings and loan holding company or savings institution or as otherwise defined by the Federal Reserve Board. Under the Change in Bank Control Act, the Federal Reserve Board has 60 days from the filing of a complete notice to act, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the anti-trust effects of the acquisition. Any company that so acquires control would then be subject to regulation as a savings and loan holding company.

Federal and State Taxation

General. We report our income on a fiscal year basis using the accrual method of accounting.

Federal Taxation. The federal income tax laws apply to us in the same manner as to other corporations with some exceptions, including particularly the reserve for bad debts discussed below. The following discussion of tax matters is intended only as a summary and does not purport to be a comprehensive description of the tax rules applicable to us. Our federal income tax returns are subject to examination for years 2009, with the exception of the 2006 return, which we amended in 2010. For the 2012 fiscal year, First Federal of Hazard’s and Frankfort First’s maximum federal income tax rate was 34.0%.

For fiscal years beginning before June 30, 1996, thrift institutions that qualified under certain definitional tests and other conditions of the Internal Revenue Code were permitted to use certain favorable provisions to calculate their deductions from taxable income for annual additions to their bad debt reserve. A reserve could be established for bad debts on qualifying real property loans, generally secured by interests in real property improved or to be improved, under the percentage of taxable income method or the experience method. The reserve for nonqualifying loans was computed using the experience method. Federal legislation enacted in 1996 repealed the reserve method of accounting for bad debts and the percentage of taxable income method for tax years beginning after 1995 and require savings institutions to recapture or take into income certain portions of their accumulated bad debt reserves. First Federal of Hazard did not qualify for such favorable tax treatment for any years through 1996. Approximately $5.2 million of First Federal of Frankfort First’s accumulated bad debt reserves would not be recaptured into taxable income unless Frankfort First makes a “non-dividend distribution” to Kentucky First as described below.

If First Federal of Hazard or First Federal of Frankfort makes “non-dividend distributions” to us, the distributions will be considered to have been made from First Federal of Hazard’s and First Federal of Frankfort’s unrecaptured tax bad debt reserves, including the balance of their reserves as of December 31, 1987, to the extent of the “non-dividend distributions,” and then from First Federal of Frankfort’s supplemental reserve for losses on loans, to the extent of those reserves, and an amount based on the amount distributed, but not more than the amount of those reserves, will be included in First Federal of Frankfort’s taxable income. Non-dividend distributions include distributions in excess of First Federal of Frankfort’s current and accumulated earnings and profits, as calculated for federal income tax purposes, distributions in redemption of stock, and distributions in partial or complete liquidation. Dividends paid out of First Federal of Frankfort’s current or accumulated earnings and profits will not be so included in First Federal of Frankfort’s taxable income.

The amount of additional taxable income triggered by a non-dividend distribution is an amount that, when reduced by the tax attributable to the income, is equal to the amount of the distribution. Therefore, if First Federal of Frankfort makes a non-dividend distribution to us, approximately one and one-half times the amount of the distribution not in excess of the amount of the reserves would be includable in income for federal income tax purposes, assuming a 34% federal corporate income tax rate. First Federal of Frankfort does not intend to pay dividends in the future that would result in a recapture of any portion of its bad debt reserves.

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State Taxation. Although First Federal MHC and Kentucky First are subject to the Kentucky corporation income tax and state corporation license tax (franchise tax), the corporation license tax is repealed effective for tax periods ending on or after December 31, 2005. Gross income of corporations subject to Kentucky income tax is similar to income reported for federal income tax purposes except that dividend income, among other income items, is exempt from taxation. For First Federal MHC and Kentucky First tax years beginning July 1, 2005, the corporations are subject to an alternative minimum income tax. Corporations must pay the greater of the income tax, the alternative tax or $175. The corporations can choose between two methods to calculate the alternative minimum; 9.5 cents per $100 of the corporation’s gross receipts, or 75 cents per $100 of the corporation’s Kentucky gross profits. Kentucky gross profits means Kentucky gross receipts reduced by returns and allowances attributable to Kentucky gross receipts, less Kentucky cost of goods sold. The corporations, in their capacity as holding companies for financial institutions, do not have a material amount of cost of good sold. Although the corporate license tax rate is 0.21% of total capital employed in Kentucky, a bank holding company, as defined in Kentucky Revised Statutes 287.900, is allowed to deduct from its taxable capital, the book value of its investment in the stock or securities of subsidiaries that are subject to the bank franchise tax.

First Federal of Hazard and First Federal of Frankfort are exempt from both the Kentucky corporation income tax and corporation license tax. However, both institutions are instead subject to the bank franchise tax, an annual tax imposed on federally or state chartered savings and loan associations, savings banks and other similar institutions operating in Kentucky. The tax is 0.1% of taxable capital stock held as of January 1 each year. Taxable capital stock includes an institution’s undivided profits, surplus and general reserves plus savings accounts and paid-up stock less deductible items. Deductible items include certain exempt federal obligations and Kentucky municipal bonds. Financial institutions which are subject to tax both within and without Kentucky must apportion their net capital.

Item 1A. Risk Factors

Rising interest rates may hurt our profits and asset values.

If interest rates rise, our net interest income would likely decline in the short term since, due to the generally shorter terms of interest-bearing liabilities, interest expense paid on interest-bearing liabilities, increases more quickly than interest income earned on interest-earning assets, such as loans and investments. In addition, a continuation of rising interest rates may hurt our income because of reduced demand for new loans, the demand for refinancing loans and the interest and fee income earned on new loans and refinancings. While we believe that modest interest rate increases will not significantly hurt our interest rate spread over the long term due to our high level of liquidity and the presence of a significant amount of adjustable-rate mortgage loans in our loan portfolio, interest rate increases may initially reduce our interest rate spread until such time as our loans and investments reprice to higher levels.

Changes in interest rates also affect the value of our interest-earning assets, and in particular our securities portfolio. Generally, the value of fixed-rate securities fluctuates inversely with changes in interest rates. Unrealized gains and losses on securities available for sale are reported as separate components of equity. Decreases in the fair value of securities available for sale resulting from increases in interest rates therefore could have an adverse effect on stockholders’ equity.

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Future FDIC assessments will hurt our earnings.

FDIC insurance assessments decreased significantly during the fiscal year ended June 30, 2012. We may pay higher FDIC premiums in the future. See “Regulation and Supervision - Insurance of Deposit Accounts.” Higher recurring premiums assessed by the FDIC and any additional emergency special assessments imposed by the FDIC will further hurt the Company's earnings.

A larger percentage of our loans are collateralized by real estate and further disruptions in the real estate market may result in losses and hurt our earnings.

Approximately 96.0% of our loan portfolio at June 30, 2012 was comprised of loans collateralized by real estate. The declining economic conditions have caused a decrease in demand for real estate, which has resulted in an erosion of some real estate values in our markets. Further disruptions in the real estate market could significantly impair the value of our collateral and our ability to sell the collateral upon foreclosure. The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower and may deteriorate in value during the time the credit is extended. If real estate values decline further, it will become more likely that we would be required to increase our allowance for loan losses. If during a period of reduced real estate values, we are required to liquidate the collateral securing a loan to satisfy the debt or to increase our allowance for loan losses, it could materially reduce our profitability and adversely affect our financial condition.

Strong competition within our market area could hurt our profits and slow growth.

Although we consider ourselves competitive in our market areas, we face intense competition both in making loans and attracting deposits. Price competition for loans and deposits might result in our earning less on our loans and paying more on our deposits, which reduces net interest income. Some of the institutions with which we compete have substantially greater resources than we have and may offer services that we do not provide. We expect competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the financial services industry. Our profitability will depend upon our continued ability to compete successfully in our market areas.

The distressed economy in First Federal of Hazard’s market area could hurt our profits and slow our growth.

First Federal of Hazard’s market area consists of Perry and surrounding counties in eastern Kentucky. The economy in this market area has been distressed in recent years due to the decline in the coal industry on which the economy has been dependent. While the region has seen improvement in the economy from the influx of other industries, such as health care and manufacturing, and the competition provided by new methods of extracting natural gas has recently hurt the coal industry. As a consequence, the economy in First Federal of Hazard’s market area continues to lag behind the economies of Kentucky and the United States and First Federal of Hazard has experienced insufficient loan demand in its market area. While First Federal of Hazard will seek to use excess funds to purchase loans from First Federal of Frankfort, we expect the redeployment of funds from securities into loans to take several years. Moreover, the slow economy in First Federal of Hazard’s market area will limit our ability to grow our asset base in that market.

Recently enacted regulatory reform may have a material impact on our operations.

On July 21, 2010, the President signed into law the Dodd-Frank Act. The Dodd-Frank Act restructured the regulation of depository institutions. Under the Dodd-Frank Act, the Office of Thrift Supervision was merged into the Office of the Comptroller of the Currency, the agency which regulates national banks, on July 21, 2011. Savings and loan holding companies are now regulated by the Federal Reserve Board. The Dodd-Frank Act contains various provisions designed to enhance the regulation of depository institutions and prevent the recurrence of a financial crisis such as occurred in 2008-2009. Also included is the creation of a new federal agency to administer and enforce consumer and fair lending laws, a function that is now performed by the depository institution regulators. The federal preemption of state laws currently accorded federally chartered depository institutions will be reduced as well. The Dodd-Frank Act also imposes consolidated capital requirements on savings and loan holding companies to be effective in five years, which will limit our ability to borrow at the holding company and invest the proceeds from such borrowings as capital in First Federal of Hazard or First Federal of Frankfort that could be leveraged to support additional growth. The full impact of the Dodd-Frank Act on our business and operations will not be known for years until regulations implementing the statute are written and adopted. The Dodd-Frank Act may have a material impact on our operations, particularly through increased compliance costs resulting from possible future consumer and fair lending regulations.

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We expect that our return on equity will be low compared to other companies as a result of our high level of capital.

Return on average equity, which equals net income divided by average equity, is a ratio used by many investors to compare the performance of a particular company with other companies. For the year ended June 30, 2012, our return on average equity was 2.91%. We also intend to continue managing excess capital through our stock repurchase program, which has been successful, given relatively low market prices of the Company’s common stock. However, this program could be curtailed or rendered less effective if the market price of our stock increases, or if the Company’s liquid funds are deployed elsewhere. Our goal of generating a return on average equity that is competitive with other publicly-held subsidiaries of mutual holding companies, by increasing earnings per share and book value per share, without assuming undue risk, could take a number of years to achieve, and we cannot assure that our goal will be attained. Consequently, you should not expect a competitive return on average equity in the near future. Failure to achieve a competitive return on average equity might make an investment in our common stock unattractive to some investors and might cause our common stock to trade at lower prices than comparable companies with higher returns on average equity.

Additional annual employee compensation and benefit expenses may reduce our profitability and stockholders’ equity.

We will continue to recognize employee compensation and benefit expenses for employees and executives under our benefit plans. With regard to the employee stock ownership plan, applicable accounting practices require that the expense be based on the fair market value of the shares of common stock at specific points in the future, therefore we will recognize expenses for our employee stock ownership plan when shares are committed to be released to participants’ accounts. We will also recognize expenses for restricted stock awards and options over the vesting periods of those awards. In addition, employees of both subsidiary Banks participate in a defined-benefit plan through Pentegra. Costs associated with the defined-benefit plans could increase or legislation could be enacted that would increase the Banks’ obligations under the plan or change the methods the Banks use in accounting for the plans. Those changes could adversely affect personnel expense and the Company’s balance sheet.

First Federal MHC owns a majority of our common stock and is able to exercise voting control over most matters put to a vote of stockholders, including preventing sale or merger transactions you may like or a second-step conversion by First Federal MHC.

First Federal MHC owns a majority of our common stock and, through its Board of Directors, is able to exercise voting control over most matters put to a vote of stockholders. As a federally chartered mutual holding company, the board of directors of First Federal MHC must ensure that the interests of depositors of First Federal of Hazard are represented and considered in matters put to a vote of stockholders of Kentucky First. Therefore, the votes cast by First Federal MHC may not be in your personal best interests as a stockholder. For example, First Federal MHC may exercise its voting control to prevent a sale or merger transaction in which stockholders could receive a premium for their shares, prevent a second-step conversion transaction by First Federal MHC or defeat a stockholder nominee for election to the Board of Directors of Kentucky First. However, implementation of a stock-based incentive plan will require approval of Kentucky First’s stockholders other than First Federal MHC. Federal Reserve Board regulations would likely prevent an acquisition of Kentucky First other than by another mutual holding company or a mutual institution.

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There may be a limited market for our common stock which may lower our stock price.

Although our shares of common stock are listed on the Nasdaq Global Market, there is no guarantee that the shares will be regularly traded. If an active trading market for our common stock does not develop, you may not be able to sell all of your shares of common stock on short notice and the sale of a large number of shares at one time could temporarily depress the market price.

Our ability to pay dividends is subject to the ability of First Federal of Hazard and First Federal of Frankfort to make capital distributions to Kentucky First and the waiver of dividends by First Federal MHC.

Our long-term ability to pay dividends to our stockholders is based primarily upon the ability of the Banks to make capital distributions to Kentucky First, and also on the availability of cash at the holding company level in the event earnings are not sufficient to pay dividends according to the cash dividend payout policy. Under Office of the Comptroller of the Currency safe harbor regulations, the Banks may each distribute to Kentucky First capital not exceeding net income for the current calendar year and the prior two calendar years. First Federal MHC owns a majority of Kentucky First’s outstanding stock. First Federal MHC has historically waived its right to dividends on the Kentucky First common shares it owns, in which case the amount of dividends paid to public stockholders is significantly higher than it would be if First Federal MHC accepted dividends. First Federal MHC is not required to waive dividends, but Kentucky First expects this practice to continue. As such, First Federal MHC is required to obtain a waiver from the Federal Reserve Board allowing it to waive its right to dividends.

The Federal Reserve Board in 2011 issued regulations that govern the activities of Kentucky First and First Federal MHC and the regulations were implemented in the fourth quarter of 2011. Under Section 239.8(d) of the Federal Reserve Board’s proposed Regulation MM governing dividend waivers, a mutual holding company may waive its right to dividends on shares of its subsidiary if the mutual holding company gives written notice of the waiver to the Federal Reserve Board and the Federal Reserve Board does not object. For a company such as First Federal MHC that waived dividends prior to December 1, 2009, the Federal Reserve Board may not object to a dividend waiver if such waiver would not be detrimental to the safety and soundness of the savings association subsidiary and the board of directors of the mutual holding company expressly determines that such dividend waiver is consistent with the board’s fiduciary duties to the members of the mutual holding company.

To address concerns with respect to the conflict of interest created by dividend waivers, Regulation MM requires the board of directors of the mutual holding company to adopt a resolution that describes the conflict of interest that exists because of a director’s ownership of stock in the subsidiary declaring the dividends and any actions the mutual holding company board have taken to eliminate the conflict of interest, such as the directors’ waiving their right to receive dividends. Also, the resolution must contain an affirmation that a majority of the mutual members eligible to vote have, within the 12 months prior to the declaration date of the dividend, voted to approve the waiver of dividends.

First Federal MHC solicited its members to vote on the proposal to waive dividends and on August 23, 2012, the members approved the waiver of the dividend. The Board of Directors of First Federal MHC subsequently adopted its resolution in accordance with the regulations and submitted it to the Federal Reserve Board. It is expected that First Federal MHC will continue to waive future dividends, except to the extent dividends are needed to fund First Federal MHC’s continuing operations, subject to the ability of First Federal MHC to obtain regulatory approval of its requests to waive dividends and its ability to obtain member approval of dividend waivers.

Historically, the Federal Reserve Board has not allowed mutual holding companies to waive the receipt of dividends from their mid-tier holding company subsidiaries. While First Federal MHC is grandfathered for purposes of the dividend waiver provisions of Regulation MM and has complied with all additional requirements imposed, we cannot predict whether the Federal Reserve Board will grant a dividend waiver request and, if granted, there can be no assurance as to the conditions, if any, the Federal Reserve Board will place on future dividend waiver requests by grandfathered mutual holding companies such as First Federal MHC. If First Federal MHC is unable to waive the receipt of dividends, our ability to pay dividends to our stockholders may be substantially impaired and the amounts of any such dividends may be significantly reduced.

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With respect to the proposed merger, Kentucky First may be unable to successfully integrate CKF Bancorp, Inc.’s operations and retain CKF Bancorp, Inc.’s employees.

The proposed merger between Kentucky First and CKF Bancorp, Inc. involves the integration of two companies that have previously operated independently. The difficulties of combining the operations of the two companies include:

· integrating personnel with diverse business backgrounds;

· combining different corporate cultures; and

· retaining key employees.

The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of the business and the loss of key personnel. The integration of the two companies will require the experience and expertise of certain key employees of CKF Bancorp, Inc. who are expected to be retained by Kentucky First. Kentucky First may not be successful in retaining these employees for the time period necessary to successfully integrate CKF Bancorp, Inc.’s operations with those of Kentucky First. The diversion of management’s attention and any delays or difficulties encountered in connection with the merger and the integration of the two companies’ operations could have an adverse effect on the business and results of operations of Kentucky First following the merger.

Failure to complete the proposed merger with CKF Bancorp, Inc. could negatively impact the stock prices and future businesses and financial results of Kentucky First.

If the merger is not completed, Kentucky First may experience negative reactions from the financial markets and from its customers and employees. Kentucky First also could be subject to litigation related to any failure to complete the merger or to enforcement proceedings commenced against it to perform its obligations under the agreement of merger.

Item 1B. Unresolved Staff Comments

None.

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Item 2.  Properties

We conduct our business through four offices. The following table sets forth certain information relating to our offices at June 30, 2012.

	Year Opened/Acquired		Owned or Leased		Net Book Value at June 30, 2012		Approximate Square Footage
	(Dollars in thousands)
First Federal of Hazard Main Office:
479 Main Street Hazard, Kentucky 41701		1960		Owned	$	230		15,000
First Federal of Frankfort Main Office: 216 West Main Street Frankfort, Kentucky 40601		2005		Owned	$	1,234		14,000
East Branch 1980 Versailles Road Frankfort, Kentucky 40601		2005		Owned	$	497		1,800
West Branch 1220 US 127 South Frankfort, Kentucky 40601		2005		Owned	$	482		2,480

The net book value of our investment in premises and equipment was $2.6 million at June 30, 2012. See Note E of Notes to Consolidated Financial Statements.

Item 3. Legal Proceedings

From time to time, we may be defendants in claims and lawsuits against us, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business. We are not a party to any pending legal proceedings that we believe could have a material adverse effect on our financial condition, results of operations or cash flows.

Item 4.  Mine Safety Disclosures

Not applicable.

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PART II

Item 5.  Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

(a)    The information contained under the sections captioned “Market Information” in the Company’s Annual Report to Stockholders for the Fiscal Year Ended June 30, 2012 (the “Annual Report”) filed as Exhibit 13 hereto is incorporated herein by reference.

(b)    Not applicable.

(c)    The Company repurchased the following equity securities registered under the Securities Exchange Act of 1934, as amended, during the fourth quarter of the fiscal year ended June 30, 2012.

Period	(a) Total Number of Shares Purchased		(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (1)
April 2012		—		—		—		87,500
Beginning date: April 1
Ending date: April 30
May 2012		10,000	$	9.00		10,000		77,500
Beginning date: May 1
Ending date: May 31
June 2012		—		—		—		77,500
Beginning date: June 1
Ending date: June 30
Total

(1) On May 14, 2010, the Company announced a program (its seventh) to repurchase up to 150,000 shares of its Common Stock. It is estimated that this program will be completed within one year from June 30, 2012.

Item 6.  Selected Financial Data

This item is not applicable, as the Company is a smaller reporting company.

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report, is incorporated herein by reference.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

This item is not applicable, as the Company is a smaller reporting company.

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Item 8.  Financial Statements and Supplementary Data

The Consolidated Financial Statements, Notes to Consolidated Financial Statements, Report of Independent Registered Public Accounting Firm and Selected Financial Data, which are listed under Item 15 herein, are included in the Annual Report and are incorporated herein by reference.

Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

(a) Disclosure Controls and Procedures

The Company’s management including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15€ promulgated under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”)(1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, a appropriate to allow timely decisions regarding required disclosure.

(b) Internal Control Over Financial Reporting

Parent Company of First Federal Savings and Loan of Hazard and First Federal Savings Bank of Frankfort

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL

OVER FINANCIAL REPORTING

Management of Kentucky First Federal Bancorp (the “Company”) is responsible for the preparation, integrity, and fair presentation of the consolidated financial statements included in this annual report. The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and, as such, include some amounts that are based on the best estimates and judgments of management.

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The internal control system is designed to provide reasonable assurance to management and the Board of Directors regarding the reliability of the company’s financial reporting and the preparation and presentation of financial statements for external reporting purposes in conformity with accounting principles generally accepted in the United States of America, as well as to safeguard assets from unauthorized use or disposition. The system of internal control over financial reporting is evaluated for effectiveness by management and tested for reliability through a program of internal audit with actions taken to correct potential deficiencies as they are identified. Because of inherent limitations in any internal control system, no matter how well designed, misstatements due to error or fraud may occur and not be detected, including the possibility of the circumvention or overriding controls. Accordingly, even an effective internal control system can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, internal control effectiveness may vary over time.

Management assessed the effectiveness of the company’s internal control over financial reporting as of June 30, 2012, based upon criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based on this assessment and on the forgoing criteria, management has concluded that, as of June 30, 2012, the Company’s internal control over financial reporting is effective.

In our 2011 annual report, we noted a material weakness related to our method of calculating shares required to be released to participants of our ESOP. The incorrect method of calculating shares was in place from March 2, 2005 through June 30, 2010. To remediate the material weakness described above and enhance our internal controls over financial reporting, management revised our procedures related to calculation of the number of shares to be released from the employee stock ownership plan and implemented review procedures to ensure the accuracy of the share release calculation. Our review of the procedures related to this material weakness indicates that the weakness has been effectively remediated as of June 30, 2012.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the exemption provided to issuers that are not “large accelerated filers” or “accelerated filers” under the Dodd-Frank Wall Street Reform and Consumer Protection Act. .

/s/ Tony D. Whitaker	/s/ R. Clay Hulette
Chief Executive Officer and Chairman	Vice President, Chief Financial Officer and
	Treasurer

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(a) Changes to Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

Not Applicable.

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PART III

Item 10.  Directors, Executive Officers, and Corporate Governance

Directors

The information contained under the section captioned “Proposal I — Election of Directors” in the Company’s definitive proxy statement for the Company’s 2012 Annual Meeting of Stockholders (the “Proxy Statement”) is incorporated herein by reference.

Executive Officers

The information regarding the Company’s executive officers is incorporated herein by reference to “Proposal I – Election of Directors” in the Proxy Statement.

Corporate Governance

Information regarding the Company’s Audit Committee and Audit Committee financial expert is incorporated herein by reference to the section captioned “Proposal I ─ Election of Directors ─ Committees of the Board of Directors” in the Proxy Statement.

Compliance with Section 16(a) of the Exchange Act

Information regarding compliance with Section 16(a) of the Exchange Act is incorporated by reference to section captioned “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement.

Disclosure of Code of Ethics

Kentucky First has adopted a Code of Ethics and Business Conduct that applies to all of its directors, officers and employees. To obtain a copy of this document at no charge, please write to Kentucky First Federal Bancorp, P.O. Box 535, Frankfort, Kentucky 40602-0535, or call toll-free (888) 818-3372 and ask for Investor Relations.

Item 11.  Executive Compensation

The information contained under the section captioned “Executive Compensation” in the Proxy Statement is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

(a) Security Ownership of Certain Beneficial Owners. Information required by this item is incorporated herein by reference to the section captioned “Voting Securities and Security Ownership” in the Proxy Statement.

(b) Security Ownership of Management. Information required by this item is incorporated herein by reference to the sections captioned “Voting Securities and Security Ownership” in the Proxy Statement.

(c) Changes in Control. Management of the Company knows of no arrangements, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.

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(d) Equity Compensation Plans. The following table sets forth certain information with respect to the Company’s equity compensation plans as of June 30, 2012.

	(a)		(b)		(c)
	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders		325,800	$	10.10		95,416
Equity compensation plans not approved by security holders		—		—		—
Total		325,800	$	10.10		95,416

Item 13.  Certain Relationships and Related Transactions, and Director Independence

Certain Relationships and Related Transactions

The information required by this item is incorporated herein by reference to the section captioned “Transactions with Related Persons” in the Proxy Statement.

Corporate Governance

For information regarding director independence, the section captioned “Proposal I – Election of Directors” is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

The information required by this item is incorporated herein by reference to the section captioned “Audit and Other Fees Paid to Independent Accountant” in the Proxy Statement.

PART IV

Item 15.  Exhibits and Financial Statement Schedules

(a) List of Documents Filed as Part of This Report

(1) Financial Statements. The following consolidated financial statements are incorporated by reference from Item 8 hereof (see Exhibit 13):

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of June 30, 2012 and 2011

Consolidated Statements of Income for the Years Ended June 30, 2012 and 2011

Consolidated Statements of Comprehensive Income for the Years Ended June 30, 2012 and 2011

Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended June 30, 2012 and 2011

Consolidated Statements of Cash Flows for the Years Ended June 30, 2012 and 2011

Notes to Consolidated Financial Statements

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(2) Financial Statement Schedules. All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are omitted because of the absence of conditions under which they are required or because the required information is included in the consolidated financial statements and related notes thereto.

(3) Exhibits. The following is a list of exhibits filed as part of this Annual Report on Form 10-K and is also the Exhibit Index.

No.	Description
3.11	Charter of Kentucky First Federal Bancorp
3.2	Bylaws of Kentucky First Federal Bancorp
4.11	Specimen Stock Certificate of Kentucky First Federal Bancorp
10.12	Employment Agreement between Kentucky First Federal Bancorp and Tony D. Whitaker, as amended†
10.22	Employment Agreement between First Federal Savings and Loan Association of Hazard and Tony D. Whitaker, as amended†
10.32	Employment Agreement between Kentucky First Federal Bancorp and Don D. Jennings, as amended†
10.42	Employment Agreement between First Federal Savings Bank of Frankfort and Don D. Jennings, as amended†
10.52	Employment Agreement between Kentucky First Federal Bancorp and R. Clay Hulette, as amended†
10.62	Employment Agreement between First Federal Savings Bank of Frankfort and R. Clay Hulette, as amended†
10.72	Employment Agreement between First Federal Savings Bank of Frankfort and Teresa Kuhl, as amended†
10.82	Amended and Restated First Federal Savings and Loan Association of Hazard Change in Control Severance Compensation Plan†
10.92	Amended and Restated First Federal Savings Bank of Frankfort Change in Control Severance Compensation Plan†
10.102	Amended and Restated First Federal Savings and Loan Association Supplemental Executive Retirement Plan†
10.113	Kentucky First Federal Bancorp 2005 Equity Incentive Plan†
10.124	Form of Restricted Stock Award Agreement†
10.134	Form of Incentive Stock Option Award Agreement†
10.144	Form of Non-Statutory Option Award Agreement†
10.155	Agreement of Merger dated as of November 3, 2011 by and among Kentucky First Federal Bancorp and CKF Bancorp, Inc. and Central Kentucky Federal Savings Bank
13	Annual Report to Stockholders for the year ended June 30, 2012
21	Subsidiaries
23.1	Consent of Crowe Horwath LLP
31.1	Rule 13a-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a) Certification of Chief Financial Officer
32	Section 1350 Certifications

† Management contract or compensation plan or arrangement.

⁽¹⁾ Incorporated herein by reference to the Company’s Registration Statement on Form S-1 (File No. 333-119041).

⁽²⁾ Incorporated herein by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2008 (File No. 0-51176).

⁽³⁾ Incorporated herein by reference to the Company’s definitive additional proxy solicitation materials filed with the Securities and Exchange Commission on October 24, 2005.

⁽⁴⁾ Incorporated herein by reference to the Company’s Registration Statement on Form S-8 (File No. 333-130243).

⁽⁵⁾ Incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 8, 2011 (File No. 0-51176).

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(b) Exhibits. The exhibits required by Item 601 of Regulation S-K are either filed as part of this Annual Report on Form 10-K or incorporated by reference herein.

(c) Financial Statements and Schedules Excluded from Annual Report. There are no other financial statements and financial statement schedules which were excluded from the Annual Report to Stockholders pursuant to Rule 14a-3(b) which are required to be included herein.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	KENTUCKY FIRST FEDERAL BANCORP
September 28, 2012	By:	/s/ Tony D. Whitaker
		Tony D. Whitaker
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Tony D. Whitaker	September 28, 2012
Tony D. Whitaker
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
/s/ R. Clay Hulette	September 28, 2012
R. Clay Hulette
Vice President, Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
/s/ Don D. Jennings	September 28, 2012
Don D. Jennings
Director
/s/ Stephen G. Barker	September 28, 2012
Stephen G. Barker
Director
/s/ Walter G. Ecton, Jr.	September 28, 2012
Walter G. Ecton, Jr.
Director
/s/ David R. Harrod	September 28, 2012
David R. Harrod
Director
/s/ Herman D. Regan, Jr.	September 28, 2012
Herman D. Regan, Jr.
Director
/s/ William D. Gorman, Jr.	September 28, 2012
William D. Gorman, Jr.
Director

EX-3.2

EXHIBIT 3.2

AMENDED AND RESTATED BYLAWS OF

KENTUCKY FIRST FEDERAL BANCORP

ARTICLE I. HOME OFFICE

The home office of Kentucky First Federal Bancorp (the “Subsidiary Holding Company”) is 479 Main Street, Hazard, Kentucky, in the County of Perry, in the Commonwealth of Kentucky.

ARTICLE II. SHAREHOLDERS

Section l. Place of Meetings. All annual and special meetings of shareholders shall be held at the home office of the Subsidiary Holding Company or at such other convenient place as the board of directors may determine.

Section 2. Annual Meeting. A meeting of the shareholders of the Subsidiary Holding Company for the election of directors and for the transaction of any other business of the Subsidiary Holding Company shall be held annually within 150 days after the end of the Subsidiary Holding Company’s fiscal year on such date as the board of directors may determine.

Section 3. Special Meetings. Special meetings of the shareholders for any purpose or purposes, unless otherwise prescribed by the regulations of the Office of Thrift Supervision (“OTS”) or the Federal Stock Charter of the Subsidiary Holding Company, may be called at any time by the chairman of the board, the president or a majority of the board of directors, and shall be called by the chairman of the board, the president or the secretary upon the written request of the holders of not less than one-tenth of all of the outstanding capital stock of the Subsidiary Holding Company entitled to vote at the meeting. Such written request shall state the purpose or purposes of the meeting and shall be delivered to the home office of the Subsidiary Holding Company addressed to the chairman of the board, the president or the secretary.

Section 4. Conduct of Meetings. Annual and special meetings shall be conducted by the person designated by the board of directors to preside at such meetings in accordance with the written procedures agreed to by the board of directors. The board of directors shall designate, when present, either the chairman of the board or such other person as designated by the board of directors to preside at such meetings.

Section 5. Notice of Meetings. Written notice stating the place, day and hour of the meeting and the purpose(s) for which the meeting is called shall be delivered not fewer than 20 nor more than 50 days before the date of the meeting, either personally or by mail, by or at the direction of the chairman of the board, the president, the secretary or the directors calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the mail, addressed to the shareholder at the address as it appears on the stock transfer books or records of the Subsidiary Holding Company as of the record date prescribed in Section 6 of this Article II, with postage prepaid. When any shareholders’ meeting, either annual or special, is adjourned for 30 days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. It shall not be necessary to give any notice of the time and place of any meeting adjourned for less than 30 days or of the business to be transacted at the meeting, other than an announcement at the meeting at which such adjournment is taken.

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Section 6. Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board of directors shall fix in advance a date as the record date for any such determination of shareholders. Such date in any case shall be not more than 60 days and, in case of a meeting of shareholders, not fewer than 10 days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment.

Section 7. Voting Lists. At least 20 days before each meeting of the shareholders, the officer or agent having charge of the stock transfer books for shares of the Subsidiary Holding Company shall make a complete list of the shareholders entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address and the number of shares held by each. This list of shareholders shall be kept on file at the home office of the Subsidiary Holding Company and shall be subject to inspection by any shareholder of record or the shareholder’s agent at any time during usual business hours, for a period of 20 days prior to such meeting. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to inspection by any shareholder of record or any shareholder’s agent during the entire time of the meeting. The original stock transfer book shall constitute prima facie evidence of the shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders.

In lieu of making the shareholder list available for inspection by shareholders as provided in the preceding paragraph, the board of directors may elect to follow the procedures prescribed in § 552.6(d) of the OTS’s Regulations as now or hereafter in effect.

Section 8. Quorum. A majority of the outstanding shares of the Subsidiary Holding Company entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If less than a majority of the outstanding shares is represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to constitute less than a quorum. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, unless the vote of a greater number of shareholders voting together or voting by classes is required by law or the charter. Directors, however, are elected by a plurality of the votes cast at an election of directors.

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Section 9. Proxies. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his duly authorized attorney in fact. Proxies may be given telephonically or electronically as long as the holder uses a procedure for verifying the identity of the shareholder. Proxies solicited on behalf of the management shall be voted as directed by the shareholder or, in the absence of such direction, as determined by a majority of the board of directors. No proxy shall be valid more than eleven months from the date of its execution except for a proxy coupled with an interest.

Section 10. Voting of Shares in the Name of Two or More Persons. When ownership stands in the name of two or more persons, in the absence of written directions to the Subsidiary Holding Company to the contrary, at any meeting of the shareholders of the Subsidiary Holding Company any one or more of such shareholders may cast, in person or by proxy, all votes to which such ownership is entitled. In the event an attempt is made to cast conflicting votes, in person or by proxy, by the several persons in whose names shares of stock stand, the vote or votes to which those persons are entitled shall be cast as directed by a majority of those holding such and present in person or by proxy at such meeting, but no votes shall be cast for such stock if a majority cannot agree.

Section 11. Voting of Shares by Certain Holders. Shares standing in the name of another corporation may be voted by any officer, agent or proxy as the bylaws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation may determine. Shares held by an administrator, executor, guardian or conservator may be voted by him or her, either in person or by proxy, without a transfer of such shares into his or her name. Shares standing in the name of a trustee may be voted by him or her, either in person or by proxy, but no trustee shall be entitled to vote shares held by him or her without a transfer of such shares into his or her name. Shares held in trust in an IRA or Keogh Account, however, may be voted by the Subsidiary Holding Company if no other instructions are received. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his or her name if authority to do so is contained in an appropriate order of the court or other public authority by which such receiver was appointed.

A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.

Neither treasury shares of its own stock held by the Subsidiary Holding Company, nor shares held by another corporation, if a majority of the shares entitled to vote for the election of directors of such other corporation are held by the Subsidiary Holding Company, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time for purposes of any meeting.

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Section 12. No Cumulative Voting. Each holder of shares of common stock shall be entitled to one vote for each share held by such holder. No holder of such shares shall be entitled to cumulative voting for any purpose.

Section 13. Inspectors of Election. In advance of any meeting of shareholders, the board of directors may appoint any persons other than nominees for office as inspectors of election to act at such meeting or any adjournment. The number of inspectors shall be either one or three. Any such appointment shall not be altered at the meeting. If inspectors of election are not so appointed, the chairman of the board or the president may, or on the request of not fewer than 10 percent of the votes represented at the meeting shall, make such appointment at the meeting. If appointed at the meeting, the majority of the votes present shall determine whether one or three inspectors are to be appointed. In case any person appointed as inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment by the board of directors in advance of the meeting, or at the meeting by the chairman of the board or the president.

Unless otherwise prescribed by regulations of the OTS, the duties of such inspectors shall include:  determining the number of shares of stock and the voting power of each share, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies; receiving votes, ballots, or consents; hearing and determining all challenges and questions in any way arising in connection with the rights to vote; counting and tabulating all votes or consents; determining the result; and such acts as may be proper to conduct the election or vote with fairness to all shareholders.

Section 14. Nominating Committee. Except in the case of a nominee substituted as a result of the death or other incapacity of a management nominee, the nominating committee shall deliver written nominations to the secretary at least 20 days prior to the date of the annual meeting. Upon delivery, such nominations shall be posted in a conspicuous place in each office of the Subsidiary Holding Company. No nominations for directors except those made by the nominating committee shall be voted upon at the annual meeting unless other nominations by shareholders are made in writing and delivered to the secretary of the Subsidiary Holding Company at least 30 days prior to the date of the annual meeting; provided, however, that in the event that less than 40 days notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder must be received not later than the close of business on the 10^th day following the day on which notice of the date of the annual meeting was mailed or such public disclosure was made. Upon delivery, such nominations shall be posted in a conspicuous place in each office of the Subsidiary Holding Company. Ballots bearing the names of all persons nominated by the nominating committee and by shareholders shall be provided for use at the annual meeting. However, if the nominating committee shall fail or refuse to act at least 20 days prior to the annual meeting, nominations for directors may be made at the annual meeting by any shareholder entitled to vote and shall be voted upon.

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Section 15. New Business. Any new business to be taken up at the annual meeting shall be stated in writing and filed with the secretary at least 30 days before the date of the annual meeting; provided, however, that in the event that less than 40 days notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder must be received not later than the close of business on the 10^th day following the day on which notice of the date of the annual meeting was mailed or such public disclosure was made, and all business so stated, proposed and filed shall be considered at the annual meeting so long as such business relates to a proper subject matter for shareholder action. Any shareholder may make any other proposal at the annual meeting and the same may be discussed and considered, but unless stated in writing and filed with the secretary at least 30 days before the meeting, such proposal shall be laid over for action at an adjourned, special or annual meeting of the shareholders taking place 30 days or more thereafter. A shareholder’s notice to the secretary shall set forth as to each matter the shareholder proposed to bring before the annual meeting (a) a brief description of the proposal desired to be brought before the annual meeting and (b) the name and address of such shareholder and the class and number of shares of the Subsidiary Holding Company which are owned of record or beneficially by such shareholder. This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, directors and committees; but in connection with such reports, no new business shall be acted upon at such annual meeting unless stated and filed as herein provided.

Section 16. Informal Action by Shareholders. Any action required to be taken at a meeting of shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting if consent in writing, setting forth the action so taken, shall be given by all of the shareholders entitled to vote with respect to the subject matter thereof.

ARTICLE III. BOARD OF DIRECTORS

Section l. General Powers. The business and affairs of the Subsidiary Holding Company shall be under the direction of its board of directors. The board of directors shall annually elect a chairman of the board from among its members and, when present, the chairman of the board shall preside at its meetings. If the chairman of the board is not present, the board shall select one of its members to preside at its meeting.

Section 2. Number and Term. The board of directors shall consist of seven members and shall be divided into three classes as nearly equal in number as possible. The members of each class shall be elected for a term of three years and until their successors are elected and qualified. One class shall be elected by ballot annually.

Section 3. Regular Meetings. A regular meeting of the board of directors shall be held without other notice than this bylaw following the annual meeting of shareholders. The board of directors may provide, by resolution, the time and place, for the holding of additional regular meetings without other notice than such resolution. Directors may participate in a meeting by means of a conference telephone or similar communications device through which all persons participating can hear each other at the same time. Participation by such means shall constitute presence in person for all purposes.

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Section 4. Qualification. Each director shall at all times be the beneficial owner of not less than 100 shares of capital stock of the Subsidiary Holding Company unless the Subsidiary Holding Company is a wholly owned subsidiary of a holding company.

Section 5. Special Meetings. Special meetings of the board of directors may be called by or at the request of the chairman of the board or by one-third of the directors. The persons authorized to call special meetings of the board of directors may fix any place as the place for holding any special meeting of the board of directors called by such persons.

Members of the board of directors may participate in special meetings by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear and speak to each other. Such participation shall constitute presence in person for all purposes.

Section 6. Notice. Written notice of any special meeting shall be given to each director at least 24 hours prior thereto when delivered personally or by telegram, or at least five days prior thereto when delivered by mail at the address at which the director is most likely to be reached. Such notice shall be deemed to be delivered when deposited in the mail so addressed, with postage prepaid if mailed, when delivered to the telegraph company if sent by telegram or when the Subsidiary Holding Company receives notice of delivery if electronically transmitted. Any director may waive notice of any meeting by a writing filed with the secretary. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the board of directors need be specified in the notice or waiver of notice of such meeting.

Section 7. Quorum. A majority of the number of directors fixed by Section 2 of this Article III shall constitute a quorum for the transaction of business at any meeting of the board of directors, but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time. Notice of any adjourned meeting shall be given in the same manner as prescribed by Section 6 of this Article III.

Section 8. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors, unless a greater number is prescribed by regulation of the OTS or by these bylaws.

Section 9. Action Without a Meeting. Any action required or permitted to be taken by the board of directors at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors.

Section 10. Resignation. Any director may resign at any time by sending a written notice of such resignation to the home office of the Subsidiary Holding Company addressed to the chairman of the board. Unless otherwise specified, such resignation shall take effect upon receipt by the chairman of the board. More than three consecutive absences from regular meetings of the board of directors, unless excused by resolution of the board of directors, shall automatically constitute a resignation, effective when such resignation is accepted by the board of directors.

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Section 11. Vacancies. Any vacancy occurring in the board of directors may be filled by the affirmative vote of a majority of the remaining directors, although less than a quorum of the board of directors. A director elected to fill a vacancy shall be elected to serve until the next election of directors by the shareholders. Any directorship to be filled by reason of an increase in the number of directors may be filled by election by the board of directors for a term of office continuing only until the next election of directors by the shareholders.

Section 12. Compensation. Directors, as such, may receive a stated fee for their services. By resolution of the board of directors, a reasonable fixed sum, and reasonable expenses of attendance, if any, may be allowed for actual attendance at each regular or special meeting of the board of directors. Members of either standing or special committees may be allowed such compensation as the board of directors may determine.

Section 13. Presumption of Assent. A director of the Subsidiary Holding Company who is present at a meeting of the board of directors at which action on any Subsidiary Holding Company matter is taken shall be presumed to have assented to the action taken unless his dissent or abstention shall be entered in the minutes of the meeting or unless he or she shall file a written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the Subsidiary Holding Company within five days after the date a copy of the minutes of the meeting is received. Such right to dissent shall not apply to a director who voted in favor of such action.

Section 14. Removal of Directors. At a meeting of shareholders called expressly for that purpose, any director may be removed only for cause by a vote of the holders of a majority of the shares then entitled to vote at an election of directors. Whenever the holders of the shares of any class are entitled to elect one or more directors by the provisions of the Charter or supplemental sections thereto, the provisions of this section shall apply, in respect to the removal of a director or directors so elected, to the vote of the holders of the outstanding shares of that class and not to the vote of the outstanding shares as a whole.

Section 15. Integrity of Directors. A person is not qualified to serve as a director if he or she: (1) is under indictment for, or has ever been convicted of, a criminal offense involving dishonesty or breach of trust and the penalty for such offense could be imprisonment for more than one year, or (2) is a person against who a banking agency has, within the past ten years, issued a cease and desist order for conduct involving dishonesty or breach of trust and that order is final and not subject to appeal, or (3) has been found either by a regulatory agency whose decision is final and not subject to appeal or by a court to have (i) breached a fiduciary duty involving personal profit or (ii) committed a willful violation of any law, rule or regulation governing banking, securities, commodities or insurance, or any final cease and desist order issued by a banking, securities, commodities or insurance regulatory agency.

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ARTICLE IV. EXECUTIVE AND OTHER COMMITTEES

Section l. Appointment. The board of directors, by resolution adopted by a majority of the full board, may designate the chief executive officer and two or more of the other directors to constitute an executive committee. The designation of any committee pursuant to this Article IV and the delegation of authority shall not operate to relieve the board of directors, or any director, of any responsibility imposed by law or regulation.

Section 2. Authority. The executive committee, when the board of directors is not in session, shall have and may exercise all of the authority of the board of directors except to the extent, if any, that such authority shall be limited by the resolution appointing the executive committee; and except also that the executive committee shall not have the authority of the board of directors with reference to:  the declaration of dividends; the amendment of the Charter or bylaws of the Subsidiary Holding Company, or recommending to the shareholders a plan of merger, consolidation, or conversion; the sale, lease or other disposition of all or substantially all of the property and assets of the Subsidiary Holding Company otherwise than in the usual and regular course of its business; a voluntary dissolution of the Subsidiary Holding Company; a revocation of any of the foregoing; or the approval of a transaction in which any member of the executive committee, directly or indirectly, has any material beneficial interest.

Section 3. Tenure. Subject to the provisions of Section 8 of this Article IV, each member of the executive committee shall hold office until the next regular annual meeting of the board of directors following his or her designation and until a successor is designated as a member of the executive committee.

Section 4. Meetings. Regular meetings of the executive committee may be held without notice at such times and places as the executive committee may fix from time to time by resolution. Special meetings of the executive committee may be called by any member thereof upon not less than one day’s notice stating the place, date and hour of the meeting, which notice may be written or oral. Any member of the executive committee may waive notice of any meeting and no notice of any meeting need be given to any member thereof who attends in person. The notice of a meeting of the executive committee need not state the business proposed to be transacted at the meeting.

Section 5. Quorum. A majority of the members of the executive committee shall constitute a quorum for the transaction of business at any meeting thereof, and action of the executive committee must be authorized by the affirmative vote of a majority of the members present at a meeting at which a quorum is present.

Section 6. Action Without a Meeting. Any action required or permitted to be taken by the executive committee at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the members of the executive committee.

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Section 7. Vacancies. Any vacancy in the executive committee may be filled by a resolution adopted by a majority of the full board of directors.

Section 8. Resignations and Removal. Any member of the executive committee may be removed at any time with or without cause by resolution adopted by a majority of the full board of directors. Any member of the executive committee may resign from the executive committee at any time by giving written notice to the president or secretary of the Subsidiary Holding Company. Unless otherwise specified, such resignation shall take effect upon its receipt; the acceptance of such resignation shall not be necessary to make it effective.

Section 9. Procedure. The executive committee shall elect a presiding officer from its members and may fix its own rules of procedure which shall not be inconsistent with these bylaws. It shall keep regular minutes of its proceedings and report the same to the board of directors for its information at the meeting held next after the proceedings shall have occurred.

Section 10. Other Committees. The board of directors may by resolution establish an audit, loan, or other committees composed of directors as they may determine to be necessary or appropriate for the conduct of the business of the Subsidiary Holding Company and may prescribe the duties, constitution and procedures thereof.

ARTICLE V. OFFICERS

Section l. Positions. The officers of the Subsidiary Holding Company shall be a chief executive officer, a president, one or more vice presidents, a secretary and a treasurer or comptroller, each of whom shall be elected by the board of directors. The board of directors may also designate the chairman of the board as an officer. The offices of the secretary and treasurer or comptroller may be held by the same person and a vice president may also be either the secretary or the treasurer or comptroller. The board of directors may designate one or more vice presidents as executive vice president or senior vice president. The board of directors may also elect or authorize the appointment of such other officers as the business of the Subsidiary Holding Company may require. The officers shall have such authority and perform such duties as the board of directors may from time to time authorize or determine. In the absence of action by the board of directors, the officers shall have such powers and duties as generally pertain to their respective offices.

Section 2. Election and Term of Office. The officers of the Subsidiary Holding Company shall be elected annually at the first meeting of the board of directors held after each annual meeting of the shareholders. If the election of officers is not held at such meeting, such election shall be held as soon thereafter as possible. Each officer shall hold office until a successor has been duly elected and qualified or until the officer’s death, resignation or removal in the manner hereinafter provided. Election or appointment of an officer, employee or agent shall not of itself create contractual rights. The board of directors may authorize the Subsidiary Holding Company to enter into an employment contract with any officer in accordance with regulations of the OTS; but no such contract shall impair the right of the board of directors to remove any officer at any time in accordance with Section 3 of this Article V.

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Section 3. Removal. Any officer may be removed by the board of directors whenever in its judgment the best interests of the Subsidiary Holding Company will be served thereby, but such removal, other than for cause, shall be without prejudice to the contractual rights, if any, of the person so removed.

Section 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the board of directors for the unexpired portion of the term.

Section 5. Remuneration. The remuneration of the officers shall be fixed from time to time by the board of directors or the compensation committee of the board of directors.

ARTICLE VI. CONTRACTS, LOANS, CHECKS AND DEPOSITS

Section l. Contracts. To the extent permitted by regulations of the OTS, and except as otherwise prescribed by these bylaws with respect to certificates for shares, the board of directors may authorize any officer, employee, or agent of the Subsidiary Holding Company to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Subsidiary Holding Company. Such authority may be general or confined to specific instances.

Section 2. Loans. No loans shall be contracted on behalf of the Subsidiary Holding Company and no evidence of indebtedness shall be issued in its name unless authorized by the board of directors. Such authority may be general or confined to specific instances.

Section 3. Checks, Drafts, Etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Subsidiary Holding Company shall be signed by one or more officers, employees or agents of the Subsidiary Holding Company in such manner as shall from time to time be determined by the board of directors.

Section 4. Deposits. All funds of the Subsidiary Holding Company not otherwise employed shall be deposited from time to time to the credit of the Subsidiary Holding Company in any duly authorized depositories as the board of directors may select.

ARTICLE VII. CERTIFICATES FOR SHARES

AND THEIR TRANSFER

Section l. Certificates for Shares. Certificates representing shares of capital stock of the Subsidiary Holding Company shall be in such form as shall be determined by the board of directors and approved by the OTS. Such certificates shall be signed by the chief executive officer or by any other officer of the Subsidiary Holding Company authorized by the board of directors, attested by the secretary or an assistant secretary, and sealed with the corporate seal or a facsimile thereof. The signatures of such officers upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar, other than the Subsidiary Holding Company itself or one of its employees. Each certificate for shares of capital stock shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Subsidiary Holding Company.

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Notwithstanding anything to the contrary herein, the Board of Directors may provide by resolution that some or all of any or all classes or series of the Subsidiary Holding Company’s capital stock may be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Subsidiary Holding Company.

In the case of certificated shares, all certificates surrendered to the Subsidiary Holding Company for transfer shall be cancelled and no new certificate or evidence of the issuance of uncertificated shares shall be issued until the former certificate for a like number of shares has been surrendered and cancelled. In the case of uncertificated shares, proper transfer instructions for the number of shares involved shall be received before a new certificate or evidence of the issuance of uncertificated shares is issued thereof. In the case of a lost or destroyed certificate, a new certificate or uncertificated shares may be issued upon such terms and indemnity to the Subsidiary Holding Company as the board of directors may prescribe.

Section 2. Transfer of Shares. Transfer of shares of capital stock of the Subsidiary Holding Company shall be made only on its stock transfer books. Authority for such transfer shall be given only by the holder of record or by his or her legal representative, who shall furnish proper evidence of such authority, or by his or her attorney authorized by a duly executed power of attorney and filed with the Subsidiary Holding Company. Such transfer shall be made only, in the case of certificated shares, on surrender for cancellation of the certificate for such shares or, in the case of uncertificated shares, on delivery of proper transfer instructions for the number of shares involved. The person in whose name shares of capital stock stand on the books of the Subsidiary Holding Company shall be deemed by the Subsidiary Holding Company to be the owner for all purposes.

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ARTICLE VIII. FISCAL YEAR

The fiscal year of the Subsidiary Holding Company shall end on June 30^th of each year. The appointment of accountants shall be subject to annual ratification by the shareholders.

ARTICLE IX. DIVIDENDS

Subject to the terms of the Subsidiary Holding Company’s Charter and the regulations and orders of the OTS, the board of directors may, from time to time, declare, and the Subsidiary Holding Company may pay, dividends on its outstanding shares of capital stock.

ARTICLE X. CORPORATE SEAL

The board of directors shall provide a Subsidiary Holding Company seal, which shall be two concentric circles between which shall be the name of the Subsidiary Holding Company. The year of incorporation or an emblem may appear in the center.

ARTICLE XI. INDEMNIFICATION

The Subsidiary Holding Company shall indemnify all officers, directors and employees of the Subsidiary Holding Company, and their heirs, executors and administrators, to the fullest extent permitted under federal law against all expenses and liabilities reasonably incurred by them in connection with or arising out of any action, suit or proceeding in which they may be involved by reason of their having been a director or officer of the Subsidiary Holding Company, whether or not they continue to be a director or officer at the time of incurring such expenses or liabilities, such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys’ fees and the cost of reasonable settlements.

ARTICLE XII. AMENDMENTS

These bylaws may be amended in a manner consistent with regulations of the OTS and shall be effective after: (i) approval of the amendment by a majority vote of the authorized board of directors, or by a majority vote of the votes cast by the shareholders of the Subsidiary Holding Company at any legal meeting, and (ii) receipt of any applicable regulatory approval. When the Subsidiary Holding Company fails to meet its quorum requirements, solely due to vacancies on the board, then the affirmative vote of a majority of the sitting board will be required to amend the bylaws.

12

EX-13

Parent company of

First Federal Savings and Loan Association of Hazard

and

First Federal Savings Bank of Frankfort

2012

Annual Report

KENTUCKY FIRST FEDERAL BANCORP

Kentucky First Federal Bancorp (“Kentucky First” or the “Company”) was formed under federal law in March 2005 and is the holding company for First Federal Savings and Loan Association of Hazard, Hazard, Kentucky (“First Federal of Hazard”) and First Federal Savings Bank of Frankfort, Frankfort, Kentucky (“First Federal of Frankfort”) (collectively, the “Banks”). Kentucky First’s operations consist primarily of operating the Banks as two independent, community-oriented savings institutions.

First Federal of Hazard is a federally chartered savings and loan association offering traditional financial services to consumers in Perry and surrounding counties in eastern Kentucky. First Federal of Hazard engages primarily in the business of attracting deposits from the general public and using such funds to originate, when available, loans secured by first mortgages on owner-occupied, residential real estate and, occasionally, other loans secured by real estate. To the extent there is insufficient loan demand in its market area, and where appropriate under its investment policies, First Federal of Hazard has historically invested in mortgage-backed and other securities, although since the reorganization, First Federal of Hazard has been purchasing whole loans and participations in loans originated at First Federal of Frankfort.

First Federal of Frankfort is a federally chartered savings bank which is primarily engaged in the business of attracting deposits from the general public and the origination primarily of adjustable-rate loans secured by first mortgages on owner-occupied and non-owner-occupied one-to four-family residences in Franklin, Anderson, Scott, Shelby, Woodford and other counties in Kentucky. First Federal of Frankfort also originates, to a lesser extent, home equity loans and loans secured by churches, multi-family properties, professional office buildings and other types of property.

MARKET INFORMATION

The Company’s common stock began trading under the symbol “KFFB” on the Nasdaq National Market on March 3, 2005. There are currently 7,725,703 shares of common stock outstanding and approximately 645 holders of record of the common stock. Following are the high and low closing prices, by fiscal quarter, as reported on the Nasdaq National Market during the periods indicated, as well as dividends declared on the common stock during each quarter.

	High		Low		Dividends  Per Share
Fiscal 2012
First quarter	$	9.18	$	6.10	$	0.10
Second quarter		9.24		6.08		0.10
Third quarter		9.26		8.76		0.10
Fourth quarter		9.24		7.35		0.10

	High		Low		Dividends Per Share
Fiscal 2011
First quarter	$	10.40	$	7.95	$	0.10
Second quarter		10.38		9.00		0.10
Third quarter		9.95		8.40		0.10
Fourth quarter		9.25		7.73		0.10

ii

TABLE OF CONTENTS

Kentucky First Federal Bancorp	(ii)
Market Information	(ii)
Letter to Shareholders	1
Selected Consolidated Financial and Other Data	2
Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Consolidated Financial Statements	25
Corporate Information	66

iii

Dear Shareholder:

We are pleased to present the 2012 Annual Report for Kentucky First Federal Bancorp. We encourage you to read both the Annual Report and Proxy Statement. We strongly encourage you to vote and, if possible, to attend our annual meeting on November 15, 2012.

The Boards, Officers, and Employees of the Company and its subsidiary banks continue to be very pleased with our arrangement under Kentucky First Federal. We believe that we have continued to demonstrate to our communities that our primary focus continues to be meeting the financial needs of our hometowns. We had a strong year with earnings slightly below the 2011 level—which was primarily the result of a tax refund pushing the prior year’s earnings up.  We continue to be concerned about asset quality, although no large concentrated problems have developed, other than the continuing struggles of the coal industry in eastern Kentucky and its effect on the Hazard economy.  We enjoy a strong net interest margin at the moment, although the interest rate market will eventually change.  And we are particularly concerned about our ability to maintain our loan balances and originate new loans in the face of record low lending rates.  

We are not pleased with our current stock price and hope that financial stocks will eventually be looked upon somewhat more favorably than the perspective wrought by the recent round of poor earnings, regulatory excess, and overall poor perception of the industry as a safe investment.  

On November 3, 2011, we announced plans to merge with Central Kentucky Federal, the oldest thrift charter in Kentucky and community-based institution serving the Boyle County (Danville) and Garrard County (Lancaster) communities of the bluegrass region. We are confident that our alignment with the experienced management and talented staff of Central Kentucky Federal will help us to build on the successful partnership we began back in 2005 when Hazard and Frankfort joined forces. The merger has not been consummated as of this mailing as we work with regulators to obtain the proper approvals.  However, our staffs have made significant progress on the assimilation of Central Kentucky Federal into our company.

Another milestone from the year was the announcement on August 23 of the approval of a dividend waiver by a majority of First Federal MHC members. The ability to waive dividends was a key part of our operating strategy when this company was formed in 2005.  A regulatory change made the waiver much harder to obtain, but our MHC took the bold step of holding what we believe was the first member vote in the country to approve a dividend waiver.  Although we are still waiting for final regulatory approval, I cannot fully express my thanks for the work of our staff in Hazard to help explain this complicated issue to the members so that they could cast informed votes.  

On August 23, I officially announced my retirement from day-to-day activity.  I will still serve as Chairman of the Company and of the Hazard Bank Board, and I will continue to mentor our management teams in Frankfort and in Hazard.  However, I will spend less time in the office and more time with my family.  After 40 years in banking, 15 years in Hazard, and the last 7 years with KFFB, I could not have imagined a more fulfilling career, but it’s time to move forward.  I appreciate all the support I’ve received from the bank customers and shareholders and enjoyed every opportunity we’ve had to talk about our business.

The new management team has my full confidence.  Don Jennings will step into my role as CEO.  Don has been President and Chief Operating Officer since the company was founded and before that was the President and CEO of Frankfort First Bancorp.  Clay Hulette will maintain his role as Vice President Chief Financial Officer.  Effective with the merger, Bill Johnson and Russell Brooks will assume roles as Vice President of the company with Clay and Bill serving, respectively, as Frankfort Area President and Danville-Lancaster Area President for First Federal Savings Bank.  As she assumes the presidency of First Federal of Hazard, Lou Ella Farler will rely on a wealth of experience with the bank as well as a lifetime of residency in Hazard.  I have no doubt that they will continue to run our banks in a safe and profitable manner and continue to value the trust you have placed in us by virtue of your investment. Please call any of us with any problems or questions—we would be glad to hear from you.

Sincerely,

Tony Whitaker

Chairman and C.E.O.

1

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

Selected Financial Condition Data

	At June 30,
	2012		2011		2010		2009		2008
	(In thousands)
Total assets	$	222,949	$	226,135	$	236,939	$	240,901	$	247,655
Cash and cash equivalents		5,735		5,049		8,362		4,217		15,966
Interest-bearing deposits		100		100		100		100		100
Securities held to maturity		4,756		6,810		9,435		14,999		16,959
Securities available for sale		189		203		246		5,451		5,480
Loans, net		182,473		182,796		190,618		188,931		182,051
Deposits		134,552		139,940		144,969		139,743		137,634
Federal Home Loan Bank advances		27,065		25,261		32,009		40,156		47,801
Shareholders’ equity		58,853		58,697		57,808		58,538		60,017
Allowance for loan losses		875		764		1,535		678		666
Nonperforming loans (90 days delinquent and nonaccrual)		1,794		876		7,783		3,872		1,277

Selected Operating Data

	Year Ended June 30,
	2012		2011		2010		2009		2008
	(Dollars in thousands, except per share data)
Total interest income	$	10,156	$	10,749	$	11,378	$	12,226	$	13,087
Total interest expense		2,179		3,181		4,980		5,902		7,565
Net interest income		7,977		7,568		6,398		6,324		5,522
Provision for losses on loans		139		668		1,044		46		12
Net interest income after provision for losses on loans		7,838		6,900		5,354		6,278		5,510
Total non-interest income		140		242		289		241		182
Total non-interest expenses		5,423		5,282		5,039		4,608		4,321
Income before federal income taxes		2,555		1,860		604		1,911		1,371
Federal income taxes		840		104		203		1,183		439
Net income	$	1,715	$	1,756	$	401	$	728	$	932
Net earnings per share – basic	$	0.23	$	0.23	$	0.05	$	0.10	$	0.12
Net earnings per share – diluted	$	0.23	$	0.23	$	0.05	$	0.10	$	0.12
Cash dividends declared per common share	$	0.40	$	0.40	$	0.40	$	0.40	$	0.40

2 

Selected Financial Ratios and Other Data (1)

	Year Ended June 30,
	2012			2011			2010			2009			2008
Performance Ratios:
Return on average assets (net income divided by average total assets)		0.75	%		0.75	%		0.17	%		0.30	%		0.35	%
Return on average equity (net income divided by average equity)		2.91			3.04			0.69			1.23			1.53
Interest rate spread (combined weighted average interest rate earned less combined weighted average interest rate cost)		3.68			3.29			2.46			2.29			1.65
Net interest margin (net interest income divided by average interest-earning assets)		3.93			3.61			2.96			2.87			2.29
Ratio of average interest-earning assets to average interest-bearing liabilities		123.34			121.00			121.62			121.53			120.28
Ratio of total general administrative and other expenses to average total assets		2.39			2.26			2.11			1.90			1.64
Efficiency ratio (1)		66.81			67.63			75.36			70.19			75.75
Dividend payout ratio (2)		93.53			63.58			283.29			160.58			126.82
Asset Quality Ratios:
Nonperforming loans as a percent of total loans at end of period (3)		0.98			0.48			4.05			2.05			0.70
Nonperforming assets as a percent of total assets at end of period (3)		1.90			2.29			3.60			1.65			0.52
Allowance for loan losses as a percent of total loans at end of period		0.48			0.42			0.80			0.36			0.36
Allowance for loan losses as a percent of nonperforming loans at end of period		48.77			87.21			19.72			17.51			52.15
Provision for loan losses to total loans		0.08			0.36			0.54			0.02			0.01
Net charge-offs to average loans outstanding		0.02			0.76			0.10			0.02			0.04
Capital Ratios:
Average equity to average assets		25.91			24.76			24.27			24.40			23.03
Shareholders’ equity or capital to total assets at end of period		26.40			25.96			24.40			24.30			24.23
Regulatory Capital Ratios:
Tangible capital		21.27			20.85			19.39			17.48			16.33
Core capital		21.27			20.85			19.39			17.48			16.33
Risk-based capital		38.57			39.01			37.35			34.34			34.03
Number of banking offices		4			4			4			4			4

(1) Efficiency ratio represents the ratio of non-interest expenses divided by the sum of net interest income and total non-interest income.

(2) Represents dividends paid as a percent of net earnings. Dividends paid does not include dividends waived by First Federal MHC. In May 2012 dividends of $473,000 were paid to First Federal MHC.

(3) Nonperforming loans consist of nonaccrual loans, accruing loans greater than 90 days delinquent, and restructured loans not performing according to their revised terms, while nonperforming assets consist of nonperforming loans and real estate acquired through foreclosure.

3

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

References in this Annual Report to “we,” “us,” and “our” refer to Kentucky First Federal Bancorp and where appropriate, collectively to Kentucky First Federal Bancorp, First Federal of Hazard and First Federal of Frankfort.

Forward-Looking Statements

Certain statements contained in this Annual Report that are not historical facts are forward-looking statements that are subject to certain risks and uncertainties.  When used herein, the terms “anticipates,” “plans,” “expects,” “believes,” and similar expressions as they relate to the Company or its management are intended to identify such forward-looking statements.  The Company’s actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements.  Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, general economic conditions, prices for real estate in the Company’s market areas, interest rate environment, competitive conditions in the financial services industry, changes in law, governmental policies and regulations, rapidly changing technology affecting financial services and the risk factors described in Item 1A of our Annual Report on Form 10-K for the year ended June 30, 2012. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We wish to advise readers that the factors listed above could affect our financial performance and could cause our actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

We do not undertake, and specifically disclaim any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

General

The Company was incorporated as a mid-tier holding company under the laws of the United States on March 2, 2005 upon the completion of the reorganization of First Federal of Hazard into a federal mutual holding company form of organization (the “Reorganization”). On that date, Kentucky First completed its minority stock offering and issued a total of 8,596,064 shares of common stock, of which 4,727,938 shares, or 55%, were issued to First Federal MHC, a federally chartered mutual holding company formed in connection with the Reorganization, in exchange for the transfer of all of First Federal of Hazard’s capital stock, and 2,127,572 shares were sold at a cash price of $10.00 per share. On such date, Kentucky First completed its acquisition of Frankfort First and its wholly owned subsidiary, First Federal of Frankfort (the “Merger”). First Federal of Hazard and First Federal of Frankfort are operated as two independent savings institutions with separate charters. Each bank retains its own management and boards of directors. The members of management of Kentucky First also serve in a management capacity at one of the two subsidiary Banks, and the directors of Kentucky First also serve on the board of one of the two subsidiary Banks.

Our results of operations are dependent primarily on net interest income, which is the difference between the income earned on our loans and securities and our cost of funds, consisting of the interest paid on deposits and borrowings. Results of operations are also affected by the provision for losses on loans and service charges and fees collected on our deposit accounts. Our general, administrative and other expense primarily consists of employee compensation and benefits expense, occupancy and equipment expense, data processing expense, other operating expenses and state franchise and federal income taxes. Results of operations are also significantly affected by general economic and competitive conditions, particularly changes in interest rates, government policies and actions of regulatory authorities.

4

Income. We have two primary sources of pre-tax income. The first is net interest income, which is the difference between interest income, the income that we earn on our loans and investments, and interest expense, the interest that we pay on our deposits and borrowings.

To a much lesser extent, we also recognize pre-tax income from fee and service charges, which is the compensation we receive from providing financial products and services.

Expenses.The expenses we incur in operating our business consist of compensation, taxes and benefits, office occupancy, data processing fees, taxes and other expenses.

Compensation, taxes and benefits consist primarily of the salaries and wages paid to our employees and directors, payroll taxes and expenses for retirement and other employee benefits.

Office occupancy expenses, which are the fixed and variable costs of buildings and equipment, consist primarily of taxes, depreciation charges, maintenance and costs of utilities.

Data processing fees primarily include fees paid to our third-party data processing providers.

Taxes consist of the current and deferred portion of federal income taxes as well as franchise taxes paid to the Commonwealth of Kentucky by the subsidiary Banks.

Other expenses include expenses for attorneys, accountants and consultants, advertising, telephone, employee training and education, charitable contributions, insurance, office supplies, postage and other miscellaneous operating activities.

Critical Accounting Policies

Our accounting and reporting policies comply with U.S. GAAP and conform to general practices within the banking industry. We believe that of our significant accounting policies, the following may involve a higher degree of management assumptions and judgments that could result in materially different amounts to be reported if conditions or underlying circumstances were to change.

Allowance for Loan Losses

The allowance for loan losses is the estimated amount considered necessary to cover probably incurred credit losses in the loan portfolio at the balance sheet date. The allowance is established through the provision for losses on loans, which is charged against income.

The management and the Boards of the Company and of First Federal of Hazard and First Federal of Frankfort review the allowance for loan losses on a quarterly basis. Consideration is given to a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial strength of the borrower, results of internal loan reviews, volume and mix of the loan portfolio and other relevant factors. This evaluation is inherently subjective, as it requires material estimates that may be susceptible to change. Management considers the economic climate in the Banks’ respective lending areas to be among the factors most likely to have an impact on the level of the required allowance for loan losses.

Management continues to monitor and evaluate factors which could have an impact on the required level of the allowance. Management watches for national issues that may negatively affect a significant percentage of homeowners in the Banks’ lending areas. These may include significant increases in unemployment or significant depreciation in home prices. Management reviews employment statistics periodically when determining the allowance for loan losses and generally finds the unemployment rates in both lending areas to be high in relation to historical trends. Management has no current plans to alter the type of lending or collateral currently offered, but if such plans change or market conditions result in large concentrations of certain types of loans, such as commercial real estate or high loan-to-value ratio residential loans, management would respond with an increase in the overall allowance for loan losses.

5

The analysis has two components, specific and general allocations. Loans are classified as either homogenous or other. Homogenous loans are analyzed in the aggregate according to various criteria. Non-homogenous loans receive additional scrutiny and are classified as impaired or unimpaired. Specific allocations are made for loans that are determined to be impaired. Impairment is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses. A loan is considered to be collateral-dependent when the circumstances of the borrower indicate that we can no longer rely upon the overall financial strength of that borrower to comply with the terms of the loan and that the loan will likely be repaid in whole or in part by proceeds from the sale of the collateral. Updated independent appraisals are ordered in most situations where management has determined to evaluate a loan for impairment. The general allocation is determined by segregating the remaining loans by type of loan, risk weighting (if applicable) and payment history. We also analyze historical loss experience, delinquency trends, general economic conditions and geographic and industry concentrations. This analysis establishes factors that are applied to the loan groups to determine the amount of the general reserve. Actual loan losses may be significantly more than the allowances we have established and, if so, this could have a material negative effect on our financial results.

Goodwill

We test goodwill for impairment at least annually and more frequently, if circumstances indicate its value may not be recoverable. We test goodwill for impairment by comparing the fair value of the reporting unit to the book value of the reporting unit. If the fair value, net of goodwill, exceeds book value, then goodwill is not considered to be impaired. Based on the annual goodwill impairment test as of March 31, 2012, management does not believe any of the goodwill is impaired Different conditions or assumptions, or changes in cash flows or profitability, if significantly negative or unfavorable, could have a material adverse effect on the outcome of the impairment evaluation and financial condition or future results of operations.

Deferred Tax Asset

We evaluate deferred tax assets quarterly. We will realize this asset to the extent profitable or carry back tax losses to periods in which we paid income taxes. Our determination of the realization of the deferred tax asset will be based upon management’s judgment of various future events and uncertainties, including the timing and amount of future income we will earn and the implementation of various tax plans to maximize realization of the deferred tax assets. Management believes the Company will generate sufficient operating earnings to realize the deferred tax benefits. Examinations of our income tax returns or changes in tax law may impact the tax liabilities and resulting provisions for income taxes.

6

Our Operating Strategy

Our mission is to operate and grow profitable, community-oriented financial institutions serving primarily retail customers in our market areas. We plan to pursue a strategy of:

· operating two community-oriented savings institutions, First Federal of Hazard, which serves customers in Perry and surrounding counties in eastern Kentucky, and First Federal of Frankfort, which serves customers primarily in Franklin County and surrounding counties in central Kentucky. Each Bank emphasizes traditional thrift activities of accepting deposits and originating residential mortgage loans for portfolio;

· continuing our historic heavy reliance on our deposit base to fund our lending and investment activities and to supplement deposits with Federal Home Loan Bank of Cincinnati (“FHLB”) advances when advantageous or necessary. We expect our projected deposit mix to generally retain its existing composition of passbook, transaction and certificate of deposit accounts;

· gradually pursuing opportunities to increase and diversify lending in our market areas;

· applying conservative underwriting practices to maintain the high quality of our loan portfolios;

· managing our net interest margin and interest rate risk; and

· entertaining possibilities of expansion into other markets through branching or acquisition, if such possibilities are beneficial to the Company’s shareholders, provide a good fit within the Company’s mutual holding company framework and can be accomplished without undue encumbrance of the Company’s other operational areas. In November 2011 we entered into an agreement to acquire CKF Bancorp, Inc., with two offices in Danville, KY and one office in Lancaster, KY.

Market Risk Analysis

Qualitative Aspects of Market Risk. Our most significant form of market risk is interest rate risk. We manage the interest rate sensitivity of our interest-bearing liabilities and interest-earning assets in an effort to minimize the adverse effects of changes in the interest rate environment. Deposit accounts typically react more quickly to changes in market interest rates than mortgage loans because of the shorter maturities of deposits. As a result, sharp increases in interest rates may adversely affect our earnings while decreases in interest rates may beneficially affect our earnings. To reduce the potential volatility of our earnings, we have sought to improve the match between asset and liability maturities (or rate adjustment periods), while maintaining an acceptable interest rate spread. Still, when market rates increase rapidly, increases in the cost of deposits and borrowings outpace the increases in the return on assets. The Company’s assets are primarily comprised of adjustable rate mortgages (all of which have some contractual limits in their ability to react to market changes) and short-term securities. Those assets will, over time, re-price to counteract the increased costs of deposits and borrowings.

Asset/Liability Management. Management and the boards of the subsidiary Banks are responsible for the asset/liability management issues that affect the individual Banks. Either Bank may work with its sister Bank to mitigate potential asset/liability risks to the Banks and to the Company as a whole. Prior to 2012 interest rate risk was monitored using model results produce by the Office of Thrift Supervision (“OTS”) Net Portfolio Value (“NPV”). NPV represents the fair value of portfolio equity and is equal to the fair value of assets minus the fair value of liabilities, with adjustments made for off-balance sheet items. For periods after December 31, 2011, the OTS model is no longer available. Management utilizes a third-party to perform interest rate risk calculations for both Banks on a consolidated basis, because the results more accurately reflect the unitary management philosophy with regard to the assets, liabilities and earnings streams of the Banks. Management monitors and considers methods of managing the rate sensitivity and repricing characteristics of the Banks’ consolidated balance sheet components in an effort to maintain acceptable levels of change in the economic value of equity (“EVE”) as well as evaluating the impact on earnings in the event of changes in prevailing market interest rates. Interest rate sensitivity analysis is used to measure our interest rate risk by computing estimated changes in EVE that are a result of changes in the net present value of its cash flows from assets, liabilities, and off-balance sheet items. These changes in cash flow are estimated based on hypothetical instantaneous and permanent increases and decreases in market interest rates.

7

Because the interest rates at June 30, 2012, are practically zero, we believe our risk was associated with rising interest rates is minimal. The model PREDICTS that at June 30, 2012, in the event of a sudden and sustained increase in prevailing market interest rates OF 300 basis points, our EVE would be expected to decrease $8.1 million or 13.6% to $51.0 million, at which level our fair value of equity to fair value of tangible assets would be expected to be 24.3% and our fair vaule of equity to fair value of risk weighted assets would be expected to be 45.6%. The projected decrease in EVE in the event of a sudden and sustained 300 basis point increase in prevailing interest rates is within the parameters established by each subsidiary Bank’s Board of Directors. 

Computations or prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, loan prepayments, and deposit run-offs. These computations should not be relied upon as indicative of actual results. Further, the computations do not contemplate any actions the Banks may undertake in response to changes in interest rates. Certain shortcomings are inherent in this method of computing EVE. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in differing degrees to changes in market interest rates. The interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates.

8

Statement of Financial Condition

General. At June 30, 2012, total assets were $222.9 million, a decrease of $3.2 million, or 1.4%, from the $226.1 million total at June 30, 2011. The decrease in total assets was comprised primarily of decreases in investment securities held-to-maturity and other real estate owned. At June 30, 2012, total liabilities were $164.1 million, a decrease of $3.3 million, or 2.0%, from total liabilities at June 30, 2011. The decrease in total liabilities was comprised primarily of decreases in deposits.

Loans. Our primary lending activity is the origination of loans for the purchase, refinance or construction of one- to four-family residential real estate located in our market areas. As opportunities arise, we also originate church loans, commercial real estate loans, and multi-family and nonresidential real estate loans. At June 30, 2012, one- to four- family residential real estate loans totaled $149.1 million, or 81.1% of total loans, compared to $158.8 million, or 86.4% of total loans, at June 30, 2011. The decrease in our one- to four-family residential real estate loans was attributed to some customers opting for long-term, fixed rate loans, which we sell to the FHLB of Cincinnati and some customers refinancing to lower rates offered by our competitors. Construction real estate loans totaled $964,000, or 0.5% of total loans, at June 30, 2012, compared to $1.1 million, or 0.6% of total loans at June 30, 2011. At June 30, 2012, multi-family real estate loans totaled $15.5 million, or 8.4% of total loans, compared to $4.5 million or 2.5% of total loans at June 30, 2011, and nonresidential real estate and other loans totaled $11.1 million, or 6.0% of total loans at June 30, 2012, compared to $12.2 million, or 6.6% of total loans, at June 30, 2011. The increase in multi-family real estate is due primarily to two credits involving relatively large rental operations, borrowers who are financially strong and relatively low loan-to-value ratios. Also contributing to the increase in multi-family real estate loans is the sale of one parcel of other real estate owned. The increase in multi-family real estate does not signal an intentional shift in our lending composition, but rather is a response to the way the market is rebounding from the recent recession. We believe that, before demand returns for owner-occupied housing, rents must firm up, which will eventually lead consumers to choose to buy versus rent. We also originate consumer loans, comprised of home equity lines of credit and loans secured by deposit accounts, which totaled $7.1 million, or 4.0% of total loans at June 30, 2012, compared to consumer loans of $7.2 million or 3.9% of total loans at June 30, 2011.

The following table sets forth the composition of our loan portfolio at the dates indicated.

	At June 30,
	2012						2011						2010						2009						2008
	Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent
	(Dollars in thousands)
Real estate loans:
One- to four-family	$	149,086			81.1	%	$	158,821			86.4	%	$	165,818			86.0	%	$	163,108			85.8	%	$	158,007			86.1	%
Construction		964			0.5	%		1,062			0.6	%		1,916			0.9	%		735			0.4	%		3,528			1.9	%
Multi-family		15,495			8.4	%		4,504			2.5	%		6,689			3.5	%		7,303			3.8	%		2,684			1.5	%
Nonresidential and other		11,098			6.0	%		12,211			6.6	%		10,943			5.7	%		11,460			6.1	%		11,318			6.2	%
Consumer:
Consumer and other		4,865			2.7	%		4,824			2.6	%		4,802			2.5	%		4,497			2.4	%		4,503			2.5	%
Loans on deposits		2,281			1.3	%		2,405			1.3	%		2,754			1.4	%		2,909			1.5	%		3,384			1.8	%
Total loans		183,789			100	%		183,827			100	%		192,922			100	%		190,012			100	%		183,424			100	%
Allowance for loan losses		(875	)					(764	)					(1,535	)					(678	)					(666	)
Undisbursed construction loans		(544	)					(353	)					(631	)					(404	)					(696	)
Deferred loan origination costs (fees)		103						86						(138	)					1						(11	)
Loans receivable, net	$	182,473					$	182,796					$	190,618					$	188,931					$	182,051

The following table sets forth certain information at June 30, 2012 regarding the dollar amount of loans repricing or maturing during the periods indicated. The table does not include any estimate of prepayments which significantly shorten the average life of all loans and may cause our actual repayment experience to differ from that shown below. Demand loans having no stated maturity are reported as due in one year or less.

	Real Estate Loans		Consumer Loans		Total Loans
	(In thousands)
One year or less	$	51,658	$	7,146	$	58,804
More than one year to five years		64,821		—		64,821
More than five years		60,164		—		60,164
Total	$	176,643	$	7,146	$	183,789

9

As of June 30, 2012, there were $50.6 million fixed-rate and $125.8 million adjustable-rate real estate loans maturing in more than a year.

The following table shows loan origination activity during the periods indicated.

	Year Ended June 30,
	2012			2011			2010
	(In thousands)
Net loans at beginning of year	$	182,796		$	190,618		$	188,931
Loans originated:
Real estate loans:
Residential		22,643			29,996			33,643
Construction		286			1,324			1,277
Multi-family		9,598			2,264			315
Nonresidential and other		355			2,065			1,077
Consumer loans		1,003			4,349			962
Total loans originated		33,885			39,998			37,274
Deduct:
Real estate loan principal repayments and other		(33,984	)		(43,935	)		(33,644	)
Decrease (increase) in allowance		(111	)		771			(857	)
Transfer to real estate acquired through foreclosure		(96	)		(4,648	)		(1,076	)
Other		(17	)		(8	)		(10	)
Net loan activity		(323	)		(7,822	)		1,687
Net loans at end of period	$	182,473		$	182,796		$	190,618

Allowance for Loan Losses and Asset Quality. The allowance for loan losses is a valuation allowance for the probable incurred losses in the loan portfolio. We evaluate the allowance for loan losses no less than quarterly. When additional allowances are needed a provision for losses on loans is charged against earnings. The recommendations for increases or decreases to the allowance are presented by management to the Banks’ boards of directors. The Company’s board of directors oversees the overall allowance level for the Company and may propose increases or decreases for allowance levels at the banks.

The allowance for loan losses is established to recognize the probable incurred losses associated with lending activities. Loss and risk factors are based on our historical loss experience and industry averages and are adjusted for significant factors that in management’s judgment affect the collectibility of the portfolio as of the evaluation date. These significant factors may include changes in lending policies and procedures, changes in existing general economic and business conditions affecting our primary lending area, credit quality trends, collateral value, loan volumes and concentrations, seasoning of the loan portfolio, recent loss experience, duration of the current business cycle and bank regulatory examination results.

At June 30, 2012, the allowance for loan losses were $875,000, or 0.48% of total loans, compared to $764,000, or 0.42% of total loans at June 30, 2011. The allowance at June 30, 2012 included $97,000 designated as specific reserves compared to $55,000 designated as specific reserves at June 30, 2011. Such reserves are calculated when a non-homogenous loan is considered impaired. An impaired loan is one in which it is likely that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. All of the Company’s loans are collateral-based, and in case of impairment, the loans are carried at the lower of cost or fair value less disposal costs.

Nonperforming loans, which consist of all loans 90 days or more past due and nonaccrual loans, totaled $1.8 million at June 30, 2012 and $876,000 at June 30, 2011, an increase of $918,000. The increase was attributed to a cyclical movement as well as a localized economic downturn in one of our markets. At June 30, 2011 non-performing loans hit their lowest point since June 30, 2008, due to a confluence of circumstances including various arrangements with borrowers and completion of the foreclosure cycle. Adding to this cyclical movement was an increase in substandard loans particularly among those loans originated in our Hazard market, where the local economy has been roiled by uncertainty in the coal industry. The new asset issue is primary related to individual consumers falling behind on their payments due to job loss, illness or the death of the borrower rather than a systemic decline across a particular asset category. The allowance for loan losses totaled 48.8% and 87.2% of nonperforming loans at June 30, 2012 and 2011, respectively. In determining the allowance for loan losses at any point in time, management and the boards of directors of the subsidiary Banks apply a systematic process focusing on the risk of loss in the portfolio. First, the loan portfolio is segregated by loan types to be evaluated collectively and loan types to be evaluated individually. Delinquent multi-family and nonresidential loans are evaluated individually for potential impairment. Second, the allowance for loan losses is evaluated using historic loss experience adjusted for significant factors by applying these loss percentages to the loan types to be evaluated collectively in the portfolio. To the best of management’s knowledge, all known and probable incurred losses that can be reasonably estimated have been recorded at June 30, 2012. Although management believes that its allowance for loan losses conforms with generally accepted accounting principles based upon the available facts and circumstances, there can be no assurance that additions to the allowance will not be necessary in future periods, which would adversely affect our results of operations.

10

Our banking regulators, as an integral part of their examination process, periodically review our allowance for loan losses. The examinations may require us to make additional provisions for loan losses based on judgments different from ours. In addition, because further events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate or that increases will not be necessary should the quality of any loans deteriorate as a result of the factors discussed above. Any material increase in the allowance for loan losses may adversely affect our financial condition and results of operations.

Summary of Loan Loss Experience. The following table sets forth an analysis of the allowance for loan losses for the periods indicated. Where specific loan loss allowances have been established, any difference between the loss allowance and the amount of loss realized has been charged or credited to the allowance. 

	Year Ended June 30,
	2012			2011			2010			2009			2008
	(Dollars in thousands)
Allowance at beginning of period	$	764		$	1,535		$	678		$	666		$	720
Provision for loan losses		139			668			1,044			46			12
Charge-offs:
Real estate loans		(28	)		(1,439	)		(187	)		(34	)		(66	)
Consumer loans		—			—			—			—			—
Total charge-offs		(28	)		(1,439	)		(187	)		(34	)		(66	)
Recoveries:
Real estate loans		—			—			—			—			—
Consumer loans		—			—			—			—			—
Total recoveries		—			—			—			—			—
Net charge-offs	$	(28	)	$	(1,439	)	$	(187	)	$	(34	)	$	(66	)
Allowance at end of period	$	875		$	764		$	1,535		$	678		$	666
Allowance to nonperforming loans		48.8	%		87.21	%		19.72	%		17.51	%		52.15	%
Allowance to total loans outstanding at end of period		0.48	%		0.42	%		0.80	%		0.36	%		0.36	%
Net charge-offs to average loans outstanding during the period		0.02	%		0.76	%		0.10	%		0.02	%		0.04	%

11

The following table sets forth the breakdown of the allowance for loan losses by loan category, which management believes can be allocated on an approximate basis, at the dates indicated.

	At June 30,
	2012								2011								2010								2009								2008
	Amount		% of Allowance to Total Allowance			% of Loans in Category To Total Loans			Amount		% of Allowance to Total Allowance			% of Loans in Category To Total Loans			Amount		% of Allowance to Total Allowance			% of Loans in Category To Total Loans			Amount		% of Allowance to Total Allowance			% of Loans in Category To Total Loans			Amount		% of Allowance to Total Allowance			% of Loans in Category To Total Loans
(Dollars in thousands)
Loans category:
Residential	$	565		64.6	%		81.1	%	$	494		64.7	%		86.4	%	$	1,200		78.2	%		86.0	%	$	542		80.0	%		85.8	%	$	584		87.7	%		86.1	%
Construction		3		0.3			0.5			3		0.4			0.6			6		0.4			0.9			2		0.3			0.4			13		2.0			1.9
Multi-family		49		5.6			8.4			13		1.7			2.5			277		18.1			3.5			81		11.9			3.8			10		1.4			1.5
Nonresidential & other		35		4.0			6.0			34		4.4			6.6			36		2.3			5.7			38		5.6			6.1			42		6.3			6.2
Consumer and other		16		1.8			2.7			13		1.7			2.6			16		1.0			2.5			15		2.2			2.4			17		2.6			2.5
Loans secured by deposits		7		0.8			1.3			7		0.9			1.3			—		—			—			—		—			—			—		—			—
Unallocated		200		22.9			—			200		26.2			—			—		—			1.4			—		—			1.5			—		—			1.8
Total allowance for loan losses	$	875		100	%		100	%	$	764		100	%		100	%	$	1,535		100.0	%		100.0	%	$	678		100.0	%		100.0	%	$	666		100.0	%		100.0	%

12

Nonperforming and Classified Assets. When a loan becomes 90 days delinquent, the loan may be placed on nonaccrual status at which time the accrual of interest ceases, the interest previously accrued to income is reversed and interest income is thereafter recognized on a cash basis. Payments on a nonaccrual loan are applied to the outstanding principal and interest as determined at the time of collection of the loan. In situations where management believes collection of interest due is likely even if the loan is more than 90 days delinquent, then management may decide not to place the loan on non-accrual status.

We consider repossessed assets and loans that are 90 days or more past due to be nonperforming assets. Real estate that we acquire as a result of foreclosure or by deed-in-lieu of foreclosure is classified as real estate owned until it is sold. When property is acquired it is recorded at fair market value less estimated selling costs at the date of foreclosure. Holding costs and declines in fair value after acquisition of the property are charged against income.

Under current accounting guidelines, a loan is defined as impaired when, based on current information and events, it is probable that the creditor will be unable to collect all amounts due under the contractual terms of the loan agreement. We consider one- to four-family mortgage loans and deposit loans to be homogeneous and collectively evaluate them for impairment. Other loans are evaluated for impairment on an individual basis. At June 30, 2012, ten loans were considered impaired with valuations.

The following table provides information with respect to our nonperforming assets at the dates indicated. We did not have any non-performing troubled debt restructurings at any of the dates presented.

	Year Ended June 30,
	2012			2011			2010			2009			2008
	(Dollars in thousands)
Nonaccrual loans:
Real estate loans	$	1,593		$	876		$	7,671		$	435		$	666
Consumer loans		—			—			—			—			—
Total		1,593			876			7,671			435			666
Accruing loans past due 90 days or more:
Real estate loans		201			—			112			3,437			611
Consumer loans		—			—			—			—			—
Total of accruing loans past due 90days or more		201			—			112			3,437			611
Restructured loans not performing as agreed		—			—			—			—			—
Total nonperforming loans		1,794			876			7,783			3,872			1,277
Real estate acquired through foreclosure		2,445			4,304			748			109			21
Total nonperforming assets	$	4 ,239		$	5,180		$	8,531		$	3,981		$	1,298
Restructured loans performing as agreed	$	187		$	—		$	—		$	—		$	—
Total nonperforming loans to total loans		0.98	%		0.48	%		4.05	%		2.05	%		0.70	%
Total nonperforming loans to total assets		1.10	%		0.39	%		3.29	%		1.61	%		0.52	%
Total nonperforming assets to total assets		1.90	%		2.29	%		3.60	%		1.65	%		0.52	%

Interest income that would have been recorded for the years ended June 30, 2012 and 2011, had nonaccrual loans been current according to their original terms amounted to $148,000, and $350,000, respectively. Income related to nonaccrual loans included in interest income for the years ended June 30, 2012 and 2011 amounted to $72,000, and $137,000, respectively.

13

Federal regulations require us to regularly review and classify our assets. In addition, our regulators have the authority to identify problem assets and, if appropriate, require them to be classified. There are three classifications for problem assets: substandard, doubtful and loss. “Substandard assets” must have one or more defined weaknesses and are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. “Doubtful assets” have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified “loss” is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. The regulations also provide for a “special mention” category, described as assets which do not currently expose us to a sufficient degree of risk to warrant classification but do possess credit deficiencies or potential weaknesses deserving our close attention. Special mention assets totaled $331,000 and $335,000 at June 30, 2012 and 2011, respectively.

The following table shows the aggregate amounts of our assets classified for regulatory purposes at the dates indicated.

	At June 30,
	2012		2011		2010
	(In thousands)
Substandard assets	$	8,305	$	6,484	$	7,840
Doubtful assets		—		—		—
Loss assets		—		—		—
Total classified assets	$	8,305	$	6,484	$	7,840

Substandard assets at June 30, 2012, consisted of 67 loans totaling $5.9 million and 20 parcels of real estate owned with an aggregate carrying value of $2.4 million. Substandard assets increased $1.8 million or 28.1% from year to year. At June 30, 2012, 29.4% of the Company’s substandard assets were represented by real estate acquired through foreclosure compared to 66.4% at June 30, 2011. In August 2011, the Company sold property with a carrying value of $1.55 million for $2.2 million. The Company made the loan to the purchaser of the property and, as such, will defer recognition of the gain until the proper time in the future. The deferred gain on the sale of this particular property at June 30, 2012 was $639,000. Although this loan to facilitate the sale of other real estate owned is operating as scheduled, the $1.5 million outstanding principal was included in substandard loans.

The table below summarizes other real estate owned at June 30, 2012:

			Net
	Number of		Carrying
	Properties		Value
(dollars in thousands)
Single family, non-owner occupied		7	$	765
2-4 family, owner occupied		11		1,432
5 or more family, non-owner occupied		1		233
Building lot		1		15
Total other real estate owned in substandard assets		20	$	2,445

14

All substandard loans were secured by residential property on which the banks have priority lien position. The table below summarizes substandard loans at June 30, 2012:

			Net
	Number of		Carrying
	Properties		Value
(dollars in thousands)
Single family, owner occupied		57	$	5,190
Single family, non-owner occupied		9		633
2-4 family, owner occupied		1		37
Total substandard loans		67	$	5,860

Other than disclosed above, there are no other loans at June 30, 2012 that we have serious doubts about the ability of the borrowers to comply with the present loan repayment terms.

Delinquencies. The following table provides information about delinquencies in our loan portfolios at the dates indicated.

	At June 30,
	2012				2011
	30-59 Days Past Due		60-89 Days Past Due		30-59 Days Past Due		60-89 Days Past Due
	(In thousands)
Real estate loans	$	3,096	$	1,236	$	1,861	$	1,320
Consumer loans		—		—		—		—
Total	$	3,096	$	1,236	$	1,861	$	1,320

Securities. Our securities portfolio consists primarily of mortgage-backed securities with maturities of 30 years or less. Investment and mortgage-backed securities totaled $4.9 million at June 30, 2012, a decrease of $2.1 million, or 29.5%, compared to the $7.0 million total at June 30, 2011. The reduction in these securities resulted from maturities, calls and prepayments of investments and mortgage-backed securities. All of our mortgage-backed securities were issued by Ginnie Mae, Fannie Mae or Freddie Mac.

The following table sets forth the carrying values and fair values of our securities portfolio at the dates indicated.

	At June 30,
	2012				2011				2010
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Mortgage-backed securities:
Available-for-sale securities	$	185	$	189	$	199	$	203	$	240	$	246
Held to maturity securities	$	4,756	$	5,144	$	6,810	$	7,257	$	9,435	$	10,026

At June 30, 2012 and 2011, we did not own any securities that had an aggregate book value in excess of 10% of our equity at that date.

15

The following table sets forth the maturities and weighted average yields of securities at June 30, 2012. At June 30, 2012, we had no U.S. Government agency securities with adjustable rates.  

	One Year or Less					More Than One Year to Five Years					More Than Five Years to Ten Years					More Than Ten Years					Total Investment Portfolio
	Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Fair Value		Weighted Average Yield
	(Dollars in thousands)
Available for sale securities:
Mortgage-backed securities	$	7		2.36	%	$	30		2.36	%	$	41		2.36	%	$	107		2.36	%	$	185	$	189		2.36	%
Held to maturity securities:
Mortgage-backed securities	$	537		4.20	%	$	2,394		4.21	%	$	1,170		4.34	%	$	655		5.34	%	$	4,756	$	5,144		4.39	%

16

Other Assets. Other assets at June 30, 2012, include goodwill of $14.5 million, which was a result of the Company’s acquisition of Frankfort First and bank owned life insurance policies with a carrying value of $2.7 million and $2.6 million at June 30, 2012 and 2011, respectively, of which First Federal of Frankfort is the owner and beneficiary. Both subsidiary Banks are members and stockholders of the Federal Home Loan Bank of Cincinnati (“FHLB”). FHLB stock, at cost, totaled $5.6 million at both June 30, 2012 and 2011.

Deposits. Our primary source of funds is retail deposit accounts held primarily by individuals within our market areas. Deposits totaled $134.6 million at June 30, 2012, a decrease of $5.4 million or 3.9%, compared to the $139.9 million total at June 30, 2011. The decrease in deposits occurred primarily as a result of retail deposit customers seeking yields offered by other institutions. Although management generally strives to maintain a moderate rate of growth in deposits, primarily through marketing and pricing strategies, market conditions and competition may curtail growth opportunities. Rather than striving to offer the highest interest rate on deposit products in our market area, management of the Banks offer deposit products that fit the Banks’ funding strategies.

The following table sets forth the balances of our deposit products at the dates indicated.

	At June 30,
	2012		2011		2010
	(In thousands)
Certificate of deposit accounts	$	83,483	$	93,036	$	102,666
Demand, transaction and passbook savings accounts		51,069		46,904		42,303
Total	$	134,552	$	139,940	$	144,969

The following table indicates the amount of certificate of deposit accounts with balances equal to or greater than $100,000, by time remaining until maturity at June 30, 2012. The Federal Deposit Insurance Corporation (“FDIC”) currently insures deposits up to $250,000 in most cases, making certificate of deposit accounts with balances equal to or greater than $100,000 less volatile as before the limit was raised.

Maturity Period	Certificates  of Deposit
	(In thousands)
Three months or less	$	3,971
Over three months through six months		5,938
Over six months through twelve months		9,722
Over twelve months		9,069
Total	$	28,700

The following table sets forth our certificate of deposit accounts classified by rates at the dates indicated.

	At June 30,
	2012		2011		2010
	(In thousands)
Rate
0.01 -  0.99%	$	38,230	$	7,472	$	1,507
1.00 -  1.99		34,801		56,141		21,326
2.00 -  2.99		8,646		18,533		51,586
3.00 -  3.99		428		2,669		12,337
4.00 -  4.99		1,290		7,272		7,962
5.00 -  5.99		88		949		7,948
Total	$	83,483	$	93,036	$	102,666

17

The following table sets forth the amount and maturities of certificate accounts at June 30, 2012.

	Amount Due
	Less Than One Year		More Than One Year to Two Years		More Than Two Years to Three Years		More Than Three Years		Total		Percentage of Total Certificate Accounts
	(Dollars in thousands)
0.01 –0.99%	$	33,715	$	4,515	$	—	$	—	$	38,230		45.8	%
1.00 – 1.99		18,288		8,649		7,371		493		34,801		41.7
2.00 – 2.99		2,464		1,734		2,235		2,213		8,646		10.4
3.00 – 3.99		332		58		38		—		428		0.5
4.00 – 4.99		1,181		94		5		10		1,290		1.5
5.00 – 5.99		88		—		—		—		88		0.1
Total	$	56,068	$	15,050	$	9,649	$	2,716	$	83,483		100.0	%

The following table sets forth the average balances and rates paid on deposits.

	Year Ended June 30,
	2012					2011					2010
	Average		Average			Average		Average			Average		Average
	Balance		Rate			Balance		Rate			Balance		Rate
	(Dollars in thousands)
Noninterest-bearing demand	$	1,219		0.00	%	$	994		0.00	%	$	1,012		0.00	%
Interest-bearing demand		12,538		0.24	%		14,442		0.10	%		11,973		0.87	%
Passbook savings accounts		36,092		0.78	%		30,941		1.07	%		29,433		1.00	%
Certificates of deposit		88,159		1.43	%		98,574		2.17	%		100,723		3.01	%

The following table sets forth the deposit activities for the periods indicated.

	Year Ended June 30,
	2012			2011			2010
	(In thousands)
Beginning balance	$	139,940		$	144,969		$	139,743
Increase (decrease) before interest credited		(6,955	)		(7,515	)		1,793
Interest credited		1,567			2,486			3,433
Net increase (decrease) in deposits		(5,388	)		(5,029	)		5,226
Ending balance	$	134,552		$	139,940		$	144,969

Borrowings. Advances from the Federal Home Loan Bank of Cincinnati amounted to $27.1 million and $25.3 million at June 30, 2012 and 2011, respectively.

18

The following table presents certain information regarding our Federal Home Loan Bank of Cincinnati advances during the periods and at the dates indicated.

	Year Ended June 30,
	2012			2011			2010
	(Dollars in thousands)
Balance outstanding at end of period	$	27,065		$	25,261		$	32,009
Maximum amount of advances outstanding at any month end during the period	$	39,016		$	38,503		$	37,564
Average advances outstanding during the period	$	27,928		$	29,524		$	35,325
Weighted average interest rate during the period		2.19	%		2.35	%		4.38	%
Weighted average interest rate at end of period		2.27	%		2.50	%		3.58	%

Shareholders’ Equity. Shareholders’ equity totaled $58.9 million at June 30, 2012, a $156,000 or 0.3%, increase compared to June 30, 2011. The increase resulted primarily from earnings exceeding dividends paid in the year and repurchases of the Company’s common stock.

The Banks are required to maintain minimum regulatory capital pursuant to federal regulations. At June 30, 2012, both First Federal of Hazard’s and First Federal of Frankfort’s regulatory capital substantially exceeded all minimum regulatory capital requirements. Management is not aware of any recent event that would cause this classification to change.

Results of Operations for the Years Ended June 30, 2012 and 2011

General. Net earnings totaled $1.7 million for the fiscal year ended June 30, 2012, a decrease of $41,000, or 2.3%, from the net earnings recorded for the fiscal year ended June 30, 2011. The decrease in earnings year over year was due primarily to higher income tax expense. Although net income before taxes increased $695,000 or 37.4% to $2.6 million for the year ended June 30, 2012, compared to the prior year period, income tax expense increased a disproportional $736,000 to $840,000 for the recently ended year. Effective income tax rates for the years ended June 30, 2012 and 2011, were 32.9% and 5.6%, respectively, due to recognition of a $403,000 tax refund in the prior year.

Interest Income. Total interest income for the fiscal year ended June 30, 2012 was $10.2 million, a decrease of $593,000, or 5.5%, compared to the fiscal year ended June 30, 2011. The decrease in interest income was due primarily to a decrease in interest income on loans, which decreased by $482,000, or 4.8% to $9.7 million for the fiscal year ended June 30, 2012, compared to fiscal 2011. Also contributing to the reduction in interest income was a decrease in interest income from mortgage-backed securities and interest-bearing deposits and other. Compared to fiscal 2011, interest income on mortgage-backed securities decreased $99,000 or 27.9% to $256,000 for the year just ended. Interest-bearing deposits and other earned $235,000, a decrease of $11,000 or 4.5%, compared to fiscal 2011, due to a decrease in volume.

Interest income from loans decreased chiefly due to a reduction in the average rate earned on the loan portfolio, while the average balance of loans also decreased year to year. The average rate earned on loans decreased by 15 basis points to 5.24% for the 2012 year, as the average balance of loans outstanding decreased by $3.7 million or 2.0% to $184.5 million. The decrease in the average rate earned on loans for fiscal 2012 occurred primarily as a result of borrowers refinancing to lower rates and to a lesser degree by loans repricing as scheduled. Many loans are at their rate floors, which kept them from repricing during the past year. The decrease in interest income from mortgage-backed securities was attributable primarily to a $2.3 million, or 27.6%, decrease in the average balance of mortgage-backed securities outstanding. Payoff speeds accelerated for mortgage-backed securities, as there were no sales of those securities during fiscal 2012. The average balance of other interest-earning assets decreased $1.8 million or 14.7% to $10.5 million, while the average yield increased by 24 basis points to 2.23% for fiscal 2012.

19

Interest Expense. Interest expense totaled $2.2 million for the fiscal year ended June 30, 2012, a decrease of $1.0 million, or 31.5%, from fiscal 2011. The decrease in interest expense resulted primarily from lower costs of deposits, while lower interest expense was also experienced from borrowings. Interest expense on deposits decreased $919,000 or 37.0% to $1.6 million for the 2012 fiscal year, while the cost of borrowings decreased $83,000 or 11.9% to $612,000 for the 2012 fiscal year. Decreased costs on deposits and borrowings were attributable primarily to a decrease in rate paid on those deposits and borrowings during the year. The average rates paid on deposits decreased 52 basis points to 1.21% for the year just ended, while the average deposits outstanding decreased $7.2 million or 5.0% from year to year. Average borrowings decreased by $1.6 million to $27.9 million for the year ended June 30, 2012, while the average rate paid on borrowings decreased 16 basis points to 2.19% for fiscal 2012.

Net Interest Income. As a result of the aforementioned changes in interest income and interest expense, net interest income before provision for loan losses increased $409,000 or 5.4% to $8.0 million for the 2012 year. As indicated on the following table, our net interest margin increased from 3.61% for the 2011 fiscal year to 3.93% for the year just ended, primarily as a result of interest-bearing liabilities repricing to lower interest rates at a faster pace than our interest-earning assets repriced to lower interest rates. We likely cannot sustain the pace at which the rates for interest-bearing liabilities has declined, because as those liabilities reprice ever closer to nil, they will likely level off at the lowest levels. Also in the current historically-low interest rate environment, we might be forced to meet competing lenders’ low rates in order to retain our loan portfolio.

20

Average Balances and Yields. The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends, the total dollar amount of interest expense and the resulting average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. For purposes of this table, average balances have been calculated using the average of daily balances and nonaccrual loans are included in average balances only. We did not hold any non-taxable securities during any of the periods presented in the table.

	2012							2011							2010
			Interest							Interest							Interest
	Average		And		Yield/			Average		And		Yield/			Average		And		Yield/
(Dollars in thousands)	Balance		Dividends		Cost			Balance		Dividends		Cost			Balance		Dividends		Cost
Interest-earning assets:
Loans	$	184,532	$	9,664		5.24	%	$	188,237	$	10,146		5.39	%	$	190,372	$	10,475		5.50	%
Mortgage-backed securities		6,036		256		4.24			8,341		355		4.26			11,139		474		4.26
Other securities		2,047		1		0.05			974		2		0.21			4,961		169		3.41
Other interest-earning assets		10,546		235		2.23			12,359		246		1.99			9,354		260		2.78
Total interest-earning assets		203,161		10,156		5.00			209,911		10,749		5.12			215,826		11,378		5.27
Noninterest-earning assets		24,199							23,617							22,952
Total assets	$	227,360						$	233,528						$	238,778
Interest-bearing liabilities:
Demand deposits	$	12,538	$	30		0.24	%	$	14,442	$	14		0.10	%	$	11,973	$	104		0.87	%
Savings		36,092		281		0.78			30,941		330		1.07			29,433		294		1.00
Certificates of deposit		88,159		1,256		1.43			98,574		2,142		2.17			100,723		3,035		3.01
Total deposits		136,789		1,567		1.15			143,957		2,486		1.73			142,129		3,433		2.42
Borrowings		27,928		612		2.19			29,524		695		2.35			35,325		1,547		4.38
Total interest-bearing liabilities		164,717		2,179		1.32			173,481		3,181		1.83			177,454		4,980		2.81
Noninterest-bearing demand deposits		1,219							994							1,012
Noninterest-bearing liabilities		2,516							1,227							2,353
Total liabilities		168,452							175,702							180,819
Shareholders’ equity		58,908							57,826							57,959
Total liabilities and shareholders’ equity	$	227,360						$	233,528						$	238,778
Net interest income/average yield			$	7,977		3.68	%			$	7,568		3.29	%			$	6,398		2.46	%
Net interest margin						3.93	%						3.61	%						2.96	%
Average interest-earning assets to
Average interest-bearing liabilities						123.34	%						121.00	%						121.62	%

21

Rate/Volume Analysis.The following table sets forth the effects of changing rates and volumes on our net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). For purposes of this table, changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionately based on the changes due to rate and the changes due to volume. The total column represents the sum of the prior columns.

	Twelve months ended June 30,									Twelve months ended June 30,
	2012 to June 30, 2011									2011 to June 30, 2010
	Increase (Decrease)									Increase (Decrease)
	Due to Changes In									Due to Changes In
(in thousands)	Volume			Rate			Total			Volume			Rate			Total
Interest-earning assets:
Loans receivable	$	(197	)	$	(285	)	$	(482	)	$	(117	)	$	(212	)	$	(329	)
Mortgage-backed securities		(98	)		(1	)		(99	)		(119	)		—			(119	)
Investment securities		—			—			—			(77	)		(90	)		(167	)
Other interest-earning assets		(60	)		49			(11	)		(121	)		107			(14	)
Total interest-earning assets		(355	)		(237	)		(592	)		(434	)		(195	)		(629	)
Interest-bearing liabilities:
Checking accounts		(2	)		18			16			27			(117	)		(90	)
Savings accounts		79			(128	)		(49	)		15			21			36
Certificates of deposit		(208	)		(677	)		(885	)		(63	)		(830	)		(893	)
FHLB Advances		(36	)		(47	)		(83	)		(223	)		(629	)		(852	)
Total interest-bearing liabilities		(167	)		(834	)		(1,001	)		(244	)		(1,555	)		(1,799	)
Increase in net interest income	$	(188	)	$	597		$	409		$	(190	)	$	1,360		$	1,170

Provision for Losses on Loans. A provision for losses on loans is charged to earnings to maintain the total allowance for loan losses at a level calculated by management based on historical experience, the volume and type of lending conducted by the Banks, the status of past due principal and interest payments and other factors related to the collectibility of the loan portfolio. Based upon an analysis of these factors, management recorded a provision of $139,000 for losses on loans for the fiscal year ended June 30, 2012, a decrease of $529,000 compared to a provision of $668,000 for fiscal 2011. The reduced provision recorded during the fiscal year ended June 30, 2012 generally reflects how abnormal fiscal 2011 was. In fiscal 2011 we wrote down by $700,000 an atypical parcel of residential real estate after having written that same credit down by $580,000 in the prior fiscal year. This credit, which is many times larger than the next largest loss in the Company’s history, is the reason for such disparate results for the provision for losses on loans. During fiscal 2012 this particular property was sold via a loan to facilitate. That loan has performed as scheduled and there were no additional charges associated with that property in the 2012 year. Management believes all nonperforming loans are adequately collateralized or have been written down to their realizable value; however, there can be no assurance that the loan loss allowance will be adequate to absorb losses on known nonperforming assets or that the allowance will be adequate to cover losses on nonperforming assets in the future. See discussion about Allowance Loan Losses and Asset Quality.

Non-interest Income. Other non-interest income decreased $102,000 or 42.1%, to $140,000 for the fiscal year ended June 30, 2012, due primarily to a $132,000 or 85.2% decline in gains on sales of loans, which totaled $23,000 for the recently-ended year. We were able to sell fewer long-term, fixed rate loans into the secondary market during the year because of the market demand. We sold other real estate during the 2012 fiscal year at a gain, but because we financed the sales, the gains are being deferred until future periods when we expect to recognize them. However, the $1,000 gain on sale of other real estate recognized in the year just ended compares favorably to the $36,000 loss on sale of other real estate in the 2011 year. Other-than-temporary impairment charges on other real estate declined from $71,000 for the 2011 fiscal year to $67,000 for the year just ended. These charges were taken as updated appraisals continue to reflect continued weakness in the real estate market.

22

Non-interest Expense. Non-interest expense increased $141,000 or 2.7% to $5.4 million for the fiscal year ended June 30, 2012 compared to fiscal 2011. The increase in non-interest expense is primarily attributed to an increase in legal and outside service fees, which totaled $365,000 and $267,000, respectively for the year just ended. Legal fees increased $230,000 or 170.4%, compared to fiscal 2011, while outside service fees increased $167,000 or 167.0% to $267,000 for the year ended June 30, 2012. Legal fees and outside service fees increased as a result of the Company’s acquisition and merger efforts. Such expenses can no longer be included in the total acquisition costs, but rather must be expensed in the period the expenses are incurred. Also increasing was employee compensation and benefits expense, which increased $181,000 or 5.9% to $3.2 million for the year just ended. The increase in employee compensation and benefits expense was related to increased retirement contribution expense. Foreclosure and OREO expenses declined $173,000 or 34.2% from $159,000 from the year ended June 30, 2011, to a net gain of $14,000 for the recent year ended. The decrease in foreclosure costs and OREO was attributed primarily to significantly fewer foreclosures completed during the recent year and improved operating performance of rental property in OREO. Expenses for the OREO property were higher in the initial operating months as deferred maintenance was performed and occupancy rates were strengthened.

Federal Income Taxes. The provision for federal income tax increased $736,000 from $104,000 for the fiscal year ended June 30, 2011 to $840,000 for the fiscal year ended June 30, 2012, primarily due to a $403,000 tax refund recognized pursuant to the resolution of a tax matter during the earlier year. The recognition of the tax refund resulted in a lower effective tax rate for the prior fiscal year, while the effective tax rate for the 2012 fiscal year returned to near normal. Effective income tax rates for the years ended June 30, 2012 and 2011, were 32.9% and 5.6%, respectively.

Liquidity and Capital Resources

Liquidity is the ability to meet current and future short-term financial obligations. Our primary sources of funds consist of cash and deposits at other banks, deposit inflows, loan repayments and maturities, calls and sales of investment and mortgage-backed securities and advances from the FHLB. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.

We periodically assess our available liquidity and projected upcoming liquidity demands. We regularly adjust our investments in liquid assets based upon our assessment of (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities, and (4) the objectives of our asset/liability management program. Excess liquid assets are invested generally in interest-earning deposits, federal funds and short- and intermediate-term U.S. Government agency obligations.

Our most liquid assets are cash, federal funds sold and interest-bearing deposits. The levels of these assets depend on our operating, financing, lending and investing activities during any given period. At June 30, 2012 and June 30, 2011, cash and cash equivalents totaled $5.7 million and $5.0 million, respectively. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $189,000 and $203,000 at June 30, 2012 and 2011, respectively. At June 30, 2012, we had the ability to borrow a total $65.9 million from the FHLB, of which $27.1 million was outstanding. In addition, we have the ability to borrow from the Federal Reserve Bank Discount Window. At June 30, 2012, we had pledged collateral which would enable us to borrow up to $4.3 million.

We are not aware of any trends and/or demands, commitments, events or uncertainties that could result in a material protracted decrease in liquidity. We expect that all of our liquidity needs, including the contractual commitments set forth in the table below can be met by our currently available liquid assets and cash flows. In the event any unforeseen demand or commitments were to occur, we would access our borrowing capacity with the FHLB. We expect that our currently available liquid assets and our ability to borrow from the FHLB would be sufficient to satisfy our liquidity needs without any material adverse effect on our liquidity.

23

Our primary investing activities are the origination of loans and the purchase of investment securities. In fiscal 2012 and 2011, we originated $33.9 million and $40.0 million of loans, respectively. During fiscal 2012, these activities were funded primarily by proceeds from principal repayments on loans of $34.0 million. During fiscal 2011, these activities were funded primarily by proceeds from the principal repayments on loans of $44.0 million and maturities of securities of $13.7 million.

Financing activities consist primarily of activity in deposit accounts and in FHLB advances. We experienced a net decrease in total deposits of $5.4 million and $5.0 million for the years ended June 30, 2012 and 2011, respectively. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us and our local competitors and other factors. We generally manage the pricing of our deposits to be competitive and to increase core deposit relationships. For the year ended June 30, 2012, our net increase in FHLB advances totaled $1.8 million, as we replaced some of the deposits lost with advances.

Commitments and Contractual Obligations

At June 30, 2012, we had $1.8 million in mortgage commitments. Certificates of deposit due within one year of June 30, 2011 totaled $67.5 million, or 48.2% of total deposits. If these deposits do not remain with us, we might be required to seek other sources of funds, including FHLB advances or other certificates of deposit. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before June 30, 2012. We believe, however, based on past experience, that a significant portion of our certificates of deposit will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

For the year ended June 30, 2012, other than loan commitments, we engaged in no off-balance-sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.

24

Dividend Policy

In fiscal 2012, the Company’s net income exceeded its aggregate dividend of $1.6 million by $111,000. In fiscal 2011, the Company’s net income exceeded its aggregate dividend $1.1 million by $644,000. Approximately 61% of the shares of Kentucky First Federal are held by First Federal MHC, a mutual holding company created in 2005. Since the Company’s inception, First Federal Mutual Holding Company applied to the Office of Thrift Supervision for, and was granted, permission to waive its right to dividends paid by Kentucky First Federal. While the Office of Thrift Supervision was eliminated on July 21, 2011 by the Dodd Frank Wall Street Reform and Consumer Protection Act, a provision in the act allows mutual holding companies, who have waived their dividends prior to December 1, 2009, to continue to waive these dividends without objection by the Federal Reserve. This waiver action is conditioned on providing appropriate notice and absent the Federal Reserve’s determination that the waiver would be detrimental to the safe and sound operations of the banks. An interim final rule issued by the Federal Reserve raises some question whether we will continue to be allowed to waive these dividends without detriment to the Company as a whole. The Federal Reserve did not object to dividend waivers in August 2011, November 2011 or February 2012. However, they refused to allow the waiver for the May 2012 dividend. As a result, the dividend was paid to the MHC as well as to public shareholders. In an effort to comply with Regulation MM and to be able to continue to waive the dividend, First Federal MHC put the issue to a vote of the members and on August 23, 2012, members of First Federal MHC voted in favor of the dividend waiver. Management believes that the Company has sufficient capital to continue the current dividend policy without affecting the well-capitalized status of either subsidiary bank. Indeed, the banks still far exceed all regulatory required capital levels. Therefore, we are seeking approval from the Federal Reserve to allow First Federal MHC to waive its right to dividends for the subsequent twelve months. If management should anticipate a long-term trend in which dividends consistently exceed net income (either due to regulatory mandate or a drop in income levels), the dividend policy would be reconsidered. Management cautions that comparison between the Company’s published earnings per share and the Company’s published dividends per share does not lead to an accurate portrayal of the relationship between net income and dividends paid.

Impact of Inflation and Changing Prices

Our consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all of our assets and liabilities are monetary in nature. As a result, interest rates generally have a more significant impact on our performance than do general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

25

Report of Independent Registered Public Accounting Firm

Kentucky First Federal Bancorp

Frankfort, Kentucky

We have audited the accompanying consolidated balance sheets of Kentucky First Federal Bancorp as of June 30, 2012 and 2011, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the two years in the period ended June 30, 2012. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2012 and 2011, and the results of its operations and its cash flows for each of the years in the period ended June 30, 2012, in conformity with U.S. generally accepted accounting principles.

                                                                                 Crowe Horwath LLP

Louisville, Kentucky

September 28, 2012

26

KENTUCKY FIRST FEDERAL BANCORP

CONSOLIDATED BALANCE SHEETS

June 30, 2012 and 2011

(Dollar amounts in thousands, except per share data)

	2012			2011
ASSETS
Cash and due from financial institutions	$	1,244		$	1,002
Interest-bearing demand deposits		4,491			4,047
Cash and cash equivalents		5,735			5,049
Interest-bearing deposits in other financial institutions		100			100
Securities available for sale		189			203
Securities held-to-maturity, at amortized cost- approximate fair value of $5,144 and $7,257 at June 30, 2012 and 2011, respectively		4,756			6,810
Loans held for sale		481			—
Loans, net of allowance of $875 and $764 at June 30, 2012 and 2011, respectively		182,473			182,796
Real estate owned, net		2,445			4,304
Premises and equipment, net		2,644			2,667
Federal Home Loan Bank stock, at cost		5,641			5,641
Accrued interest receivable		497			538
Bank-owned life insurance		2,697			2,607
Goodwill		14,507			14,507
Other intangible assets		—			87
Prepaid FDIC assessments		246			361
Prepaid federal income taxes		30			22
Prepaid expenses and other assets		508			443
Total assets	$	222,949		$	226,135
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits	$	134,552		$	139,940
Federal Home Loan Bank advances		27,065			25,261
Advances by borrowers for taxes and insurance		487			471
Accrued interest payable		64			91
Deferred federal income taxes		774			1,021
Deferred revenue		648			—
Other liabilities		506			654
Total liabilities		164,096			167,438
Commitments and contingencies		-			-
Shareholders’ equity Preferred stock, 500,000 shares authorized, $.01 par value; no shares issued and outstanding		-			-
Common stock, 20,000,000 shares authorized, $.01 par value; 8,596,064 shares issued		86			86
Additional paid-in capital		36,870			36,907
Retained earnings		31,971			31,860
Unearned employee stock ownership plan (ESOP)		(1,772	)		(1,989	)
Treasury shares at cost, 826,375 and 811,375 common shares at June 30, 2012 and 2011, respectively		(8,305	)		(8,170	)
Accumulated other comprehensive income		3			3
Total shareholders’ equity		58,853			58,697
Total liabilities and shareholders’ equity	$	222,949		$	226,135

The accompanying notes are an integral part of these statements.

27

KENTUCKY FIRST FEDERAL BANCORP

CONSOLIDATED STATEMENTS OF INCOME

For the years ended June 30, 2012 and 2011

(Dollar amounts in thousands, except per share data)

	2012			2011
Interest income
Loans	$	9,664		$	10,146
Mortgage-backed securities		256			355
Other securities		1			2
Interest-bearing deposits and other		235			246
Total interest income		10,156			10,749
Interest expense
Deposits		1,567			2,486
Borrowings		612			695
Total interest expense		2,179			3,181
Net interest income		7,977			7,568
Provision for loan losses		139			668
Net interest income after provision for loan losses		7,838			6,900
Non-interest income
Gains on sales of loans		23			155
Earnings on bank-owned life insurance		90			90
Net gains (losses) on sales of real estate owned		1			(36	)
Unrealized loss-other real estate		(67	)		(71	)
Other		93			104
Total non-interest income		140			242
Non-interest expense
Salaries and employee benefits		3,238			3,057
Occupancy and equipment		355			355
Legal fees		365			135
Outside service fees		267			100
Data processing		241			246
Audit and accounting		84			205
Federal deposit insurance		144			197
Franchise and other taxes		182			191
Amortization of intangible assets		87			131
Real estate owned expense, net		(14	)		159
Other operating		474			506
Total non-interest expense		5,423			5,282
Income before income taxes		2,555			1,860
Federal income taxes
Current		1,087			(43	)
Deferred		(247	)		147
Total federal income taxes		840			104
NET INCOME	$	1,715		$	1,756
EARNINGS PER SHARE
Basic and diluted	$	0.23		$	0.23

The accompanying notes are an integral part of these statements.

28

KENTUCKY FIRST FEDERAL BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended June 30, 2012 and 2011

(Dollar amounts in thousands)

	2012		2011
Net income	$	1,715	$	1,756
Other comprehensive income (loss), net of tax-related effects:
Unrealized holding gains (losses) on securities available for sale during the year, net of tax (benefit) of $0 and $0 in 2012 and 2011, respectively		—		(1	)
Comprehensive income	$	1,715	$	1,755

The accompanying notes are an integral part of these statements.

29

KENTUCKY FIRST FEDERAL BANCORP

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the years ended June 30, 2012 and 2011

(Dollar amounts in thousands, except per share data)

									Unearned
									employee
									stock						Accumulated
			Additional						ownership						other
	Common		paid-in			Retained			plan			Treasury			comprehensive
	stock		capital			earnings			(ESOP)			shares			income			Total
Balance at July 1, 2010	$	86	$	36,623		$	31,216		$	(2,169	)	$	(7,952	)	$	4		$	57,808
Net income		-		-			1,756			-			-			-			1,756
Allocation of ESOP shares		-		(15	)		-			180			-			-			165
Amortization expense of stock benefit plans		-		242			-			-			-			-			242
Compensation expense related to vesting stock options		-		57			-			-			-			-			57
Acquisition of shares for Treasury		-		-			-			-			(218	)		-			(218	)
Unrealized gains on securities designated as
available for sale, net of related tax effects		-		-			-			-			-			(1	)		(1	)
Cash dividends of $0.40 per common share		-		-			(1,112	)		-			-			-			(1,112	)
Balance at June 30, 2011		86		36,907			31,860			(1,989	)		(8,170	)		3			58,697
Net income		-		-			1,715			-			-			-			1,715
Allocation of ESOP shares		-		(37	)		-			217			-			-			180
Acquisition of shares for Treasury		-		-			-			-			(135	)		-			(135	)
Cash dividends of $0.40 per common share		-		-			(1,604	)		-			-			-			(1,604	)
Balance at June 30, 2012	$	86	$	36,870		$	31,971		$	(1,772	)	$	(8,305	)	$	3		$	58,853

The accompanying notes are an integral part of these statements.

30

KENTUCKY FIRST FEDERAL BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended June 30, 2012 and 2011

(Dollar amounts in thousands)

	2012			2011
Cash flows from operating activities:
Net income	$	1,715		$	1,756
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		189			185
Amortization of deferred loan origination (fees) costs		8			(8	)
Amortization of premiums on FHLB advances		(12	)		(108	)
Amortization of core deposit intangibles		87			131
Net gain on sale of loans		(23	)		(155	)
Net loss on real estate owned		67			107
Net gain on sale of equipment		(3	)		—
Deferred gain on sale of real estate acquired through foreclosure		(17	)		—
ESOP compensation expense		180			180
Amortization of stock benefit plans and stock options expense		—			284
Earnings on bank-owned life insurance		(90	)		(90	)
Provision for loan losses		139			668
Origination of loans held for sale		(875	)		(3,881	)
Proceeds from loans held for sale		417			4,406
Increase (decrease) in cash, due to changes in:
Accrued interest receivable		41			(20	)
Prepaid expenses and other assets		50			123
Accrued interest payable		(27	)		(54	)
Accounts payable and other liabilities		(148	)		(22	)
Federal income taxes
Current		(8	)		(143	)
Deferred		(247	)		147
Net cash provided by operating activities		1,443			3,506
Cash flows from investing activities:
Purchase of available-for-sale securities		(12,500	)		(11,000	)
Investment securities maturities, prepayments and calls:
Held to maturity		2,054			13,625
Available for sale		12,514			41
Loans originated for investment, net of principal collected		2,456			3,205
Proceeds from sale of real estate owned		177			294
Additions to premises and equipment, net		(163	)		(121	)
Net cash provided by investing activities		4,538			6,044
Cash flows from financing activities:
Net change in deposits		(5,388	)		(5,029	)
Payments by borrowers for taxes and insurance, net		16			136
Proceeds from Federal Home Loan Bank advances		29,000			16,000
Repayments on Federal Home Loan Bank advances		(27,184	)		(22,640	)
Treasury stock repurchases		(135	)		(218	)
Dividends paid on common stock		(1,604	)		(1,112	)
Net cash used in financing activities		(5,295	)		(12,863	)
Net increase (decrease) in cash and cash equivalents		686			(3,313	)
Beginning cash and cash equivalents		5,049			8,362
Ending cash and cash equivalents	$	5,735		$	5,049

The accompanying notes are an integral part of these statements.

31

KENTUCKY FIRST FEDERAL BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For the years ended June 30, 2012 and 2011

(Dollar amounts in thousands)

	2012		2011
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Federal income taxes	$	1,090	$	97
Interest on deposits and borrowings	$	2,218	$	3,343
Supplemental disclosure of noncash investing activities:
Transfers from loans to real estate acquired through foreclosure	$	96	$	4,643
Loans disbursed upon sales of real estate acquired through foreclosure	$	2,375	$	686

The accompanying notes are an integral part of these statements.

32

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2012 and 2011

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Kentucky First Federal Bancorp (the “Company”) is a savings and loan holding company whose activities are primarily limited to holding the stock and managing the operations of First Federal Savings and Loan Association of Hazard, Kentucky (“First Federal of Hazard”) and Frankfort First Bancorp, Inc., (“Frankfort First”) the holding company for First Federal Savings Bank of Frankfort (“First Federal of Frankfort”). First Federal of Hazard and First Federal of Frankfort are collectively referred to herein as “the Banks.” First Federal of Hazard is a community-oriented savings and loan association dedicated to serving consumers in Perry and surrounding counties in eastern Kentucky, while First Federal of Frankfort operates through three banking offices located in Frankfort, Kentucky. Both institutions engage primarily in the business of attracting deposits from the general public and applying those funds to the origination of loans for residential and consumer purposes. First Federal of Frankfort also originates, to a lesser extent, church loans, home equity and other loans. Other than a predominance of one- to four-family residential property, which is common in most thrifts, there are no significant concentrations of loans to any one industry or customer. However, the customers’ ability to repay their loans is dependent on the real estate and general economic conditions in the Banks’ specific operating areas. The Banks’ profitability is significantly dependent on net interest income, which is the difference between interest income generated from interest-earning assets (i.e. loans and investments) and the interest expense paid on interest-bearing liabilities (i.e. customer deposits and borrowed funds). Net interest income is affected by the relative amount of interest-earning assets and interest-bearing liabilities and the interest received or paid on these balances. The level of interest rates paid or received by the Banks can be significantly influenced by a number of environmental factors, such as governmental monetary policy, that are outside of management’s control.

The consolidated financial information presented herein has been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). In preparing consolidated financial statements in accordance with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from such estimates.

The following is a summary of the Company’s significant accounting policies which have been consistently applied in the preparation of the accompanying consolidated financial statements.

1.     Principles of Consolidation: The consolidated financial statements include the accounts of the Company, First Federal of Hazard, Frankfort First and First Federal of Frankfort. All significant intercompany accounts and transactions have been eliminated in consolidation.

2.     Use of Estimates: To prepare financial statements in conformity with U.S. GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. The allowance for loan losses, goodwill, loan servicing rights, deferred tax assets and fair values of financial instruments are particularly subject to change.

33

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3. Securities: Debt securities are classified as held to maturity or available for sale. Securities classified as held to maturity are to be carried at cost only if the Company has the positive intent and ability to hold these securities to maturity. Securities designated as available for sale are carried at fair value with resulting unrealized gains or losses recorded to shareholders’ equity, net of tax. Realized gains and losses on sales of securities are recognized using the specific identification method.

Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis.

4. Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal amount outstanding, adjusted for deferred loan origination fees and the allowance for loan losses. Interest income is accrued on the unpaid principal balance unless the collectibility of the loan is in doubt. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments. Interest income on loans is generally discontinued at the time a loan is 90 days delinquent unless the loan is well-secured and in process of collection. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. A loan is moved to non-accrual status in accordance with the Company’s policy, typically 90 days after the loan becomes delinquent.

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

5. Loans held for sale: Loans held for sale are carried at the lower of cost (less principal payments received) or fair value, calculated on an aggregate basis. At June 30, 2012 the Company had $481,000 in loans held for sale, while at June 30, 2011, no loans were held for sale.

34

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

5. Loans held for sale: (continued)

In selling loans, the Company utilizes a program with the Federal Home Loan Bank, retaining servicing on loans sold. Mortgage servicing rights on originated loans that have been sold are initially recorded at fair value. Capitalized servicing rights are amortized in proportion to and over the period of estimated servicing revenues. The Company recorded amortization related to mortgage servicing rights totaling $22,000 and $13,000 during the years ended June 30, 2012 and 2011, respectively. The carrying value of the Company’s mortgage servicing rights, which approximated fair value, totaled approximately $101,000 and $120,000 at June 30, 2012 and 2011, respectively.

The Company was servicing mortgage loans of approximately $12.6 million and $15.0 million that had been sold to the Federal Home Loan Bank at June 30, 2012 and 2011, respectively. During the fiscal year ended June 30, 2012, we sold $394,000 in loans under the FHLB program and the average balance of loans serviced was $13.9 million.

Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income. Changes in valuation allowances are reported with other non-interest income on the income statement. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses.

Servicing fee income which is reported on the income statement as other non-interest income is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal and are recorded as income when earned. The amortization of mortgage servicing rights is netted against loan servicing fee income. Servicing fees totaled $34,000 and $36,000 for the years ended June 30, 2012 and 2011, respectively. Late fees and ancillary fees related to loan servicing are not material.

6. Allowance for Loan Losses: The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loss experience, the nature and volume of the portfolio, trends in the level of delinquent and problem loans, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral and current and anticipated economic conditions in the primary lending area. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired or loans otherwise classified as substandard or doubtful. The general component covers non-classified loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the most recent eight quarters. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment.

35

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

6. Allowance for loan losses: (continued)

These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; changes in lending policies, procedures and practices; experience, ability and depth of lending management and other relevant staff; economic trends and conditions; industry conditions; and effects of changes in credit concentrations. Our portfolio segments include residential real estate, nonresidential real estate and land, loans on deposits and consumer and other loans. Risk factors associated with our portfolio segments are as follows:

Residential Real Estate

Our primary lending activity is the origination of mortgage loans, which enable a borrower to purchase or refinance existing homes in the Banks’ respective market areas. We further classify our residential real estate loans as one- to four-family, multi-family or construction. We believe that our first mortgage position on loans secured by residential real estate presents lower risk than our other loans, with the exception of loans on deposits.

We offer a mix of adjustable-rate and fixed-rate mortgage loans with terms up to 40 years for owner-occupied properties. For these properties a borrower may be able to borrow up to 95% of the value with private mortgage insurance. Alternatively, the borrower may be able to borrow up to 90% of the value with a traditional first mortgage and a second mortgage (bearing a higher rate of interest) on the additional 10% of the value. After initial fixed-rate periods of one, three, five or seven years, the interest rates on the adjustable-rate loans adjust once a year with annual limitation of one percentage point per adjustment period and a lifetime cap of five percentage points.

We also originate loans to individuals to finance the construction of residential dwellings for personal use or for use as rental property. We do not generally lend to builders for construction of speculative or custom residential properties for resale. Construction loans are generally less than one year in length, do not exceed 80% of the appraised value, and provide for the payment of interest only during the construction phase. Funds are disbursed as progress is made toward completion of the construction based on site inspections by qualified bank staff.

Multi-family and Nonresidential Loans

We offer mortgage loans secured by residential non-owner-occupied one- to four-family, residential multi-family (five or more units), and nonresidential real estate. Nonresidential real estate loans are comprised generally of commercial office buildings, churches, condominiums and properties used for other purposes. Generally, these loans are originated for 25 years or less and do not exceed 75% of the appraised value. Loans secured by multi-family and commercial real estate generally have larger balances and involve a greater degree of risk than one- to four-family residential mortgage loans. These loans depend on the borrower’s creditworthiness and the feasibility and cash flow potential of the project. Payments on loans secured by income properties often depend on successful operation and management of the properties. As a result, repayment on such loans may be subject to a greater extent to adverse conditions in the real estate market or economy than owner-occupied residential loans.

36

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

6. Allowance for loan losses: (continued)

Consumer lending

Our consumer loans include home equity lines of credit and loans secured by savings deposits. Home equity loans are generally second mortgage loans subordinate only to first mortgages also held by the bank and do not exceed 80% of the estimated value of the property. We do offer home equity loans up to 90% of the estimated value to qualified borrowers and these loans carry a premium rate. Loans secured by savings are originated up to 90% of the depositor’s savings account balance and normally bear interest at two percentage points above the rate paid on the deposit account. Because the deposit account must be pledged as collateral to secure the loan, the inherent risk of this type of loan is minimal.

In years prior to the year ended June 30, 2011, the loss history of the most recent 12 quarterly periods was used in the calculation of the Company’s general component of allowance for losses on loans. A three year period is the amount of time we determined was appropriate and provided a representative time frame from which we might estimate losses within our portfolio. Although prior to the 2011 fiscal year the Company had not incurred substantial losses, we did incur losses which have been discussed in previous financial statements and regulatory filings. When a loss event occurs it is prudent to shorten the period of time that is deemed representative of the loss period. This shortening process focuses much more attention on recent events than the normal period would focus, and, in our case, increased the amount that we determined was proper for our allowance for losses on loans. After a loss event occurs it is also prudent to re-extend the period of time used to represent the Company’s loss history. Failure to lengthen the time period would have the undesirable effect of focusing too closely on recent loss history and could result in losing sight of the loss event that prompted the change in the first place. Therefore, in consultation with the regulators during the 2011 year our loss history lookback period was shortened to the most recent four quarters, while during the 2012 year we began to lengthen the lookback period and used the most recent eight quarterly periods. We believe that the change to our lookback period was proper in determining an adequate amount loan loss allowance.

The Banks account for impaired loans by determining the present value of expected future cash flows discounted at the loan’s effective interest rate or, as an alternative, at the loan’s observable market price or fair value of the collateral, reduced by estimated selling costs.

A loan is considered impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. Although all of our loans are secured by collateral, we rely heavily on the capacity of our borrowers to generate sufficient cash flow to service their debt. As a result, our loans do not become collateral-dependent until there is deterioration in the borrower’s cash flow and financial condition, which makes it necessary for us to look to the collateral for our sole source of repayment. Collateral-dependent loans which are more than ninety days delinquent are considered to constitute more than a minimum delay in repayment and are evaluated for impairment under the policy at that time.

In the calculation of our general valuation allowance we consider the potential for outdated appraisal values to be of minimal risk and, therefore, do not attribute a specific factor to it.

With respect to the Banks’ investment in troubled debt restructurings, multi-family and nonresidential loans, and the evaluation of impairment thereof, such loans are nonhomogenous and, as such, may be deemed to be collateral-dependent when they become more than ninety days delinquent. We obtain updated independent appraisals in these situations or when we suspect that the previous appraisal may no longer be reflective of the property’s current fair value. This process varies from loan to loan, borrower to borrower, and also varies based on the nature of the collateral.

37

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

6. Allowance for loan losses: (continued)

We utilize updated independent appraisals to determine fair value for collateral-dependent loans, adjusted for estimated selling costs, in determining our specific reserve. In some situations management does not secure an updated independent appraisal. These situations may involve small loan amounts or loans that, in management’s opinion, have an abnormally low loan-to-value ratio.

7. Federal Home Loan Bank Stock: The banks are members of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

8. Real Estate Owned: Real estate acquired through or instead of foreclosure is initially recorded at fair value less estimated selling expenses at the date of acquisition, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If fair value declines subsequently, the carrying value is adjusted through a valuation allowance and the amount is recorded through expense. Costs relating to holding real estate owned, net of rental income, are charged against earnings as incurred.

9. Premises and Equipment: Land is carried at cost. Premises and equipment are carried at cost less accumulated depreciation. The cost of premises and equipment includes expenditures which extend the useful lives of existing assets. Maintenance, repairs and minor renewals are expensed as incurred. For financial reporting, depreciation is provided on the straight-line method over the useful lives of the assets, estimated to be forty years for buildings, ten to forty years for building improvements, and five to ten years for furniture and equipment.

10. Income Taxes: Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. Deferred tax assets are recorded only to the extent that the amount of net deductible temporary differences or carryforward attributes may be utilized against current period earnings, carried back against prior years earnings, offset against taxable temporary differences reversing in future periods, or utilized to the extent of management’s estimate of future taxable income. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. Deferred tax liabilities are provided on the total amount of net temporary differences taxable in the future.

A tax provision is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest and/or penalties related to income tax matters as income tax expense.

Kentucky First Federal Bancorp and Frankfort First Bancorp, Inc., each are subject to state income taxes in the Commonwealth of Kentucky. Neither of the Banks are subject to state income tax in the Commonwealth. With few exceptions, the Company is no longer subject to U.S. federal, state and local tax examinations by tax authorities for years before 2009.

38

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

11. Retirement and Employee Benefit Plans: The Banks each participate in the Pentegra Defined Benefit Plan for Financial Institutions (“The Pentegra DB Plan”), which is a tax-qualified, multi-employer defined benefit pension fund covering all employees who qualify as to length of service. The Pentegra DB Plan’s Employer Identification Number is 13-5645888 and the Plan Number is 333. The Pentegra DB Plan operates as a multi-employer plan for accounting purposes and as a multiple-employer plan under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code. The Pentegra DB Plan is a single plan under Internal Revenue Code Section 413(c) and, as a result, all of the assets stand behind all of the liabilities. Accordingly, under the Pentegra DB Plan contributions made by a participating employer may be used to provide benefits to participants of other participating employers. Total contributions made to the Pentegra DB Plan, as reported on Form 5500, equal $299.7 million and $203.6 million for the plan years ended June 30, 2011 and 2010, respectively. Our contributions for fiscal 2012 and 2011 was not more than 5% of the total contributions made to the Pentegra DB Plan. Pension expense is the net contributions, which are based upon covered employees’ ages and salaries and are dependent upon the ultimate prescribed benefits of the participants and the funded status of the plan. The Company recognized expense related to the plans totaling approximately $742,000 and $564,000 for the fiscal years ended June 30, 2012 and 2011. There are no collective bargaining agreements in place that require contributions to the Pentegra DB Plan. As of July 1, 2011, the most recent period for which information is available, First Federal of Hazard had a funded status of 83.79%, while First Federal of Frankfort had a funded status of 85.95%. There are no funding improvement plans or surcharges to participants.

The Company also maintains a nonqualified deferred compensation plan for the benefit of certain directors, which is closed to any future deferrals. Under the plan, the Company pays each participant, or their beneficiary, the amount of fees deferred plus interest under terms selected by the individual participants prior to compensation deferral. Payments are made to participants either in a lump sum or in monthly installments not to exceed 10 years. Payments may commence upon the director’s attainment of a certain age or upon the individual’s termination of service. The expense incurred for the deferred compensation was $17,000 and $7,000 for the fiscal years ended June 30, 2012 and 2011, respectively.

First Federal of Hazard has an Employee Stock Ownership Plan (“ESOP”) which provides retirement benefits for substantially all full-time employees who have completed one year of service and have attained the age of 21. Annual contributions are made to the ESOP equal to the ESOP’s debt service less dividends received by the ESOP on unallocated shares. Shares in the ESOP were acquired using funds provided by a loan from the Company and, accordingly, the cost of those shares is shown as a reduction of stockholders’ equity. Shares are released to participants proportionately as the loan is repaid. Dividends on allocated shares are recorded as dividends and charged to retained earnings. Dividends on unallocated shares are used to repay loan principal and accrued interest. Compensation expense is recorded equal to the fair value of shares committed to be released during a given fiscal year. Allocation of shares to the ESOP participants is contingent upon the repayment of a loan to Kentucky First Federal Bancorp totaling $2.1 million and $2.3 million at June 30, 2012 and 2011, respectively. The Company recorded expense for the ESOP of approximately $180,000 and $171,000 for each of the years ended June 30, 2012 and 2011, respectively. Shares may be surrendered from the plan as employees leave employment. Total shares surrendered from the plan were 27,047 and 26,682 at June 30, 2012 and 2011, respectively. The amount contributed to the ESOP during the year just ended was $324,000.

39

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

11.  Retirement and Employee Benefit Plans: (continued)

	For the fiscal year ended
	June 30,
	2012		2011
Allocated shares		122,249		100,961
Shares committed to be released		9,338		10,445
Unearned shares		178,339		198,885
Total ESOP shares		309,926		310,291
Fair value of unearned shares at end of period (dollars in thousands)	$	1,514	$	1,790

First Federal of Frankfort maintains a 401(k) plan for the benefit of all full-time employees. No employer contributions have been made to the 401(k) plan.

12. Share-Based Compensation Plans: Compensation cost is recognized for stock options and restricted stock awards issued to employees, based on the fair value of these awards at the date of the grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of the grant is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. In fiscal 2006, the Company initiated the 2005 Equity Incentive Plan (“EIP” or the “Plan”) which provides for two share-based compensation plans, which are described below.

No compensation cost was charged against income for those share-based plans for the fiscal year ended June 30, 2012, while $160,000 was charged against income for the fiscal year ended June 30, 2011. The total income tax benefit recognized in the statement of income for share-based compensation arrangements was $54,000 for the fiscal year ended June 30, 2011, while there was no income tax benefit recognized for the recent fiscal year ended.

The EIP provides for grants of up to 421,216 stock options. It also provides that one-fifth of the options granted become vested and exercisable on the first five anniversaries of the date of grant. The contractual term of the options is ten years. All option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant.

At June 30, 2012, the only options outstanding are related to those granted in the fiscal year 2006.

40

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

12. Share-Based Compensation Plans: (continued)

A summary of the status of the Company’s stock option plan as of June 30, 2012, and changes during the year then ended is presented below:

			Weighted-		Aggregate
			average		Intrinsic
			exercise		Value
	Shares		price		($000)
Outstanding at beginning of year		325,800	$	10.10
Granted		-		-
Exercised		-		-
Forfeited		-		-
Outstanding at end of year		325,800	$	10.10	$	-
Options exercisable at end of year		325,800	$	10.10	$	-
Weighted average fair value of options granted					$	1.75
Weighted average remaining contractual term of options outstanding and exercisable						3.5 years

Information related to the stock option plan during each year ended June 30, follows:

(in thousands)	2012		2011
Intrinsic value of options exercised	$	-	$	-
Cash received from option exercises		-		-
Tax benefit realized from option exercises		-		-

As of June 30, 2012, there was no unrecognized compensation cost related to nonvested stock options granted under the Plan.

The EIP also provides for the purchase of 168,486 shares of common stock and the issuance of such shares in the form of restricted stock awards to members of the board of directors, management and certain employees. Common shares awarded under the restricted stock plan vest over a five year period, commencing with the date of the grant and are expensed based on their fair value at the grant date.

41

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

12. Share-Based Compensation Plans: (continued)

The following table summarizes the activity with regard to restricted stock awards during fiscal 2012:

			Weighted-average
			grant date
	Shares		fair value
Nonvested at July 1, 2011		—	$	—
Vested		—		—
Forfeited		—		—
Nonvested at June 30, 2012		—	$	—

As of June 30, 2012, there was no unrecognized compensation cost related to the restricted stock awards. The total fair value of shares vested during the year ended June 30, 2011 was $237,000.

13. 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. There is no adjustment to net earnings for the calculation of diluted earnings per share. The factors used in the basic and diluted earnings per share computations for the fiscal years ended June 30 follow:

(in thousands)	2012		2011
Net income	$	1,715	$	1,756
Less earnings allocated to unvested shares		—		7
Net income allocated to common shareholders, basic and diluted	$	1,715	$	1,749

	2012		2011
Basic
Weighted-average common shares including unvested common shares outstanding		7,546,120		7,530,603
Less: Weighted-average unvested common shares		—		11,256
Weighted-average common shares outstanding		7,546,120		7,519,347
Diluted
Add: Dilutive effect of assumed exercise of stock options		—		—
Weighted-average common shares outstanding (diluted)		7,546,120		7,519,347

Basic earnings per share is computed based upon the weighted-average shares outstanding during the year less shares in the ESOP that are unallocated and not committed to be released and unearned restricted stock. For fiscal years 2012 and 2011 all options were antidilutive, as the exercise price was greater than the average market price of the common stock.

42

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

14. Fair Value of Assets and Liabilities: Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 - Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access as of the measurement date.

Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in 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 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Following is a description of the valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the accompanying statement of condition, 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 matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities bur rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The following table presents the fair value measurements of assets and liabilities measured at fair value on a recurring basis at June 30, 2012 and 2011. The securities represented are only those classified as available-for sale.

	Fair Value Measurements Using
			Quotes Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)
2012
Agency mortgage-backed: residential	$	189	$	-	$	189	$	-
2011
Agency mortgage-backed: residential	$	203		-		203		-

There were no transfers between levels 1 and 2.

43

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

14. Fair Value of Assets and Liabilities (continued)

Impaired Loans

The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent independent 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 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. Independent appraisals for collateral-dependent loans are updated periodically (usually every 9-12 months).

Other Real Estate

Nonrecurring adjustments to real estate properties classified as other real estate owned (“OREO”) are measured at fair value, less costs to sell. Fair values are based on recent real estate appraisals. These appraisals may use 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.

The following table presents the fair value measurements of assets and liabilities measured at fair value on a nonrecurring basis at June 30, 2012 and 2011.

	Fair Value Measurements Using
			Quotes Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)
2012
Impaired loans
One- to four-family	$	807	$	-	$	-	$	807
Multi-family		631		-		-		631
Other real estate owned, net
One- to four-family		648		-		-		648
Multi-family		233		-		-		233
2011
Impaired loans
One- to four-family	$	1,033	$	-	$	-	$	1,033
Other real estate owned, net
One- to four-family		126		-		-		126
Multi-family		186		-		-		186

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $1.5 million, with a valuation allowance of $97,000 at June 30, 2012. At June 30, 2011, impaired loans had a principal balance of $1.1 million, with a valuation allowance of $55,000. A provision for loss on impaired loans of $42,000 was made during fiscal 2012.

44

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

14. Fair Value of Assets and Liabilities (continued)

Other real estate owned measured at fair value less costs to sell, had a carrying amount of $881,000 and $312,000 at June 30, 2012 and 2011, respectively, after write-down of $58,000 and $71,000 for the years ended June 30, 2012 and 2011, respectively.

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 June 30, 2012:

					Range
	Fair Value		Valuation	Unobservable	(Weighted
	(in thousands)		Technique(s)	Input(s)	Average)
Impaired Loans:
Residential real estate 1-4 family	$	807	Sales comparison approach	Adjustments for differences between comparable sales		3.1% To 19.8% (4.3%)
Multi-family		631	Sales comparison approach	Adjustments for differences between comparable sales		5.9% To 15.0% (4.8%)
Repossessed assets:
1-4 family	$	648	Sales comparison approach	Adjustments for differences between comparable sales		0.5% To 18.6% (8.6%)
Multi-family		233	Sales comparison approach	Adjustments for differences between comparable sales		20.2% To 38.9% (20.8%)

The following disclosure of the fair value of financial instruments, both assets and liabilities, whether or not recognized in the consolidated statement of financial condition, for which it is practicable to estimate that value. For financial instruments where quoted market prices are not available, fair values are based on estimates using present value and other valuation methods.

The methods used are greatly affected by the assumptions applied, including the discount rate and estimates of future cash flows. Therefore, the fair values presented may not represent amounts that could be realized in an exchange for certain financial instruments.

The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying statements of financial condition at amounts other than fair value at June 30, 2012 and 2011:

Cash and cash equivalents: 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 methods for securities were previously described.

Loans held for sale: Loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value determined by FHLB pricing schedules.

45

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

14. Fair Value of Assets and Liabilities (continued)

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.

Federal Home Loan Bank stock: It was 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. The historical carrying amount of accrued interest payable on deposits is deemed to approximate fair value.

Advances from the Federal Home Loan Bank: 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 June 30, 2012 and 2011, was not material.

46

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

14. 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 June 30, 2012 and June 30, 2011 are as follows:

			Fair Value Measurements at
(in thousands)			June 30, 2012 Using
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	5,735	$	5,735					$	5,735
Interest-earning deposits		100		100						100
Available-for-sale securities		189			$	189				189
Held-to-maturity securities		4,756				5,144				5,144
Loans held for sale		481				500				500
Loans receivable - net		182,473					$	190,354		190,354
Federal Home Loan Bank stock		5,641								n/a
Accrued interest receivable		497						497		497
Financial liabilities
Deposits	$	134,552	$	51,069	$	83,906			$	134,975
Federal Home Loan Bank advances		27,065				29,429				29,429
Advances by borrowers for taxes and insurance		487					$	487		487
Accrued interest payable		64				64				64

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. This process is different from the process performed by the Office of Thrift Supervision, which was utilized by the Company until December 31, 2011, when the service was discontinued.

The carrying amounts and estimated fair values of financial instruments at June 30, 2011, are as follows:

	Carrying		Fair
(in thousands)	value		value
Financial assets
Cash and cash equivalents	$	5,049	$	5,049
Interest-earning deposits		100		100
Available-for-sale securities		203		203
Held-to-maturity securities		6,810		7,257
Loans held for sale		—		—
Loans receivable - net		182,796		190,183
Federal Home Loan Bank stock		5,641		n/a
Accrued interest receivable		538		538
Financial liabilities
Deposits	$	139,940	$	141,408
Federal Home Loan Bank advances		25,261		23,797
Advances by borrowers for taxes and insurance		471		471
Accrued interest payable		91		91

47

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

15. Cash and Cash Equivalents: For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks and interest-bearing deposits in other financial institutions with original maturities of less than ninety days.

16. Goodwill and Other Intangible Assets: Goodwill resulting from business combinations prior to January 1, 2009 represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Goodwill resulting from business combinations after January 1, 2009, is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually. The Company has selected March 31 as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill is the only intangible asset with an indefinite life on our balance sheet.

The Company’s core deposit intangible is being amortized on a straight-line basis over an original period of seven years. The carrying basis and accumulated amortization of recognized intangible assets at June 30, 2012 and 2011 is as follows:

(in thousands)	2012		2011
Core deposits
Gross Carrying Amount	$	918	$	918
Accumulated Amortization		918		831
	$	—	$	87

Amortization expense for the years ended June 30, 2012 and 2011 was $87,000 and $131,000, respectively.

17. Cash Surrender Value of Life Insurance: First Federal of Frankfort has purchased life insurance policies on certain key executives. Bank-owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

18. Treasury Stock: Treasury stock is stated at cost. Cost is determined by the first-in, first-out method.

19. Related Party Transactions: Loans outstanding to executive officers, directors, significant shareholders and their affiliates (related parties) at June 30, 2012 and 2011 are summarized as follows:

(in thousands)	2012			2011
Outstanding principal, beginning of year	$	865		$	593
Changes in composition of related parties		—			157
Principal disbursed during the year		53			156
Principal repaid and refinanced during the year		(121	)		(41	)
Outstanding principal, end of year	$	797		$	865

Deposits from related parties held by the Company at June 30, 2012 and 2011 totaled $2.2 million and $1.1 million, respectively.

48

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

20. Comprehensive Income: Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available for sale which are also recognized as separate components of equity.

21. Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the financial statements.

22. Equity: Stock dividends in excess of 20% are reported by transferring the par value of the stock issued from retained earnings to common stock. Stock dividends for 20% or less are reported by transferring the fair value, as of the ex-dividend date, of the stock issued from retained earnings to common stock and additional paid-in capital. Fractional share amounts are paid in cash with a reduction in retained earnings.

23. Dividend Restriction: Banking regulations require maintaining certain capital levels and may limit the dividends paid by the bank to the holding company or by the holding company to shareholders.

24. Operating Segments: While the chief decision-makers monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Operating segments are aggregated into one as operating results for all segments are similar. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

25. Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation.

27. New Accounting Standards In July 2012, the FASB issued an update (ASU No. 2012-02).  The update will allow the Company to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test. Under the update, the Company would not be required to calculate the fair value of an indefinite-lived intangible asset unless the Company determines, based on a qualitative assessment, that it is not more likely than not, the indefinite-lived intangible asset is impaired. The update includes a number of events and circumstances for the Company to consider in conducting the qualitative assessment.  The update is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012.  Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if the Company’s financial statements for the most recent annual or interim period have not yet been issued.  The Company did not elect early adoption of this update and has not evaluated to date if any future adoption will have a material impact on the Company’s consolidated financial statements or results of operations.

49

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE B - SECURITIES

The following table summarizes the amortized cost and fair value of the available for sale securities and held to maturity investment securities portfolio at June 30, 2012 and 2011 and the corresponding amounts of gross unrealized or unrecognized gains and losses. Unrealized gains or losses apply to available-for-sale securities and are recognized in accumulated other comprehensive income, while unrealized gains or losses on held-to-maturity securities are not recognized in the financial statements. The gains and losses are as follows:

			2012
(in thousands)	Amortized cost		Gross unrealized/ unrecognized gains		Gross unrealized/ unrecognized losses		Estimated fair value
Available-for-sale Securities
Agency mortgage-backed:residential	$	185	$	4	$	-	$	189
Held-to-maturity Securities
Agency mortgage-backed:residential	$	4,756	$	388	$	-	$	5,144

			2011
(in thousands)	Amortized cost		Gross unrealized/ unrecognized gains		Gross unrealized/ unrecognized losses		Estimated fair value
Available-for-sale Securities
Agency mortgage-backed:residential	$	199	$	4	$	-	$	203
Held-to maturity Securities
Agency mortgage-backed:residential	$	6,810	$	447	$	-	$	7,257

The amortized cost and estimated fair value of securities as of June 30, 2012 and 2011, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities without a single maturity, primarily mortgage-backed, are shown separately.

	2012				2011
(in thousands)	Estimated fair value		Amortized cost		Estimated fair value		Amortized cost
Available-for-sale Securities
Agency mortgage-backed:residential	$	189	$	185	$	203	$	199
Held-to maturity Securities
Agency mortgage-backed:residential	$	5,144	$	4,756	$	7,257	$	6,810

50

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE B – SECURITIES (continued)

There were no sales of securities during the fiscal years ended June 30, 2012 or 2011. At June 30, 2012 and 2011, the Company had no securities with unrealized losses.

There are no pledged securities at June 30, 2012.

NOTE C - LOANS

The composition of the loan portfolio at June 30 was as follows:

(in thousands)	2012			2011
Residential real estate
One- to four-family	$	149,086		$	158,821
Multi-family		15,495			4,504
Construction		964			1,062
Nonresidential real estate and land		11,098			12,211
Loans on deposits		2,281			2,405
Consumer and other		4,865			4,824
		183,789			183,827
Less:
Undisbursed portion of loans in process		544			353
Deferred loan origination fees (cost)		(103	)		(86	)
Allowance for loan losses		875			764
	$	182,473		$	182,796

51

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE C - LOANS (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, 2012 and 2011. There were no loans acquired with deteriorated credit quality at June 30, 2012 and 2011.

June 30, 2012:
(in thousands)	Recorded investment in loans		Ending allowance attributed to loans		Unallocated allowance		Total allowance
Loans individually evaluated for impairment:
Residential real estate:
One- to four-family	$	2,757	$	97	$	—	$	97
Loans collectively evaluated for impairment:
Residential real estate:
One- to four-family	$	146,329	$	468	$	—	$	468
Multi-family		15,495		49		—		49
Construction		964		3		—		3
Nonresidential real estate and land		11,098		35		—		35
Loans on deposits		2,281		7		—		7
Consumer and other		4,865		16		—		16
Unallocated		—		—		200		200
		181,032		578		200		778
	$	183,789	$	675	$	200	$	875

June 30, 2011:
(in thousands)	Recorded investment in loans		Ending allowance attributed to loans		Unallocated allowance		Total allowance
Loans individually evaluated for impairment:
Residential real estate:
One- to four-family	$	2,224	$	55	$	—	$	55
Loans collectively evaluated for impairment:
Residential real estate:
One- to four-family	$	156,597	$	439	$	—	$	439
Multi-family		4,504		13		—		13
Construction		1,062		3		—		3
Nonresidential real estate and land		12,211		34		—		34
Loans on deposits		2,405		7		—		7
Consumer and other		4,824		13		—		13
Unallocated		—		—		200		200
		181,603		509		200		709
	$	183,827	$	564	$	200	$	764

52

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE C - LOANS (continued)

The following tables present impaired loans by class of loans as of and for the years ended June 30, 2012 and 2011:

June 30, 2012:     (in thousands)	Unpaid Principal Balance and Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized
With no related allowance recorded:
One- to four-family	$	1,222	$	—	$	889	$	45	$	45
With an allowance recorded:
One- to four-family		1,535		97		1,434		27		27
	$	2,757	$	97	$	2,323	$	72	$	72

June 30, 2011:     (in thousands)	Unpaid Principal Balance and Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized		Cash Received
With no related allowance recorded:
One- to four-family	$	1,136	$	—	$	1,296	$	44	$	47
With an allowance recorded:
One- to four-family		1,088		55		1,213		33		33
	$	2,224	$	55	$	2,509	$	77	$	77

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 June 30, 2012 and 2011:

	June 30, 2012				June 30, 2011
(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	$	1,593	$	201	$	876	$	-

53

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE C - LOANS (continued)

Troubled Debt Restructurings:

During the year ended June 30, 2012, the terms of four loans were modified as a troubled debt restructuring. The modification of the terms of two loans involved extending the maturity dates of the loans, which resulted in lower monthly payments for the borrowers. The interest rate on one loan was reduced from 5.5% to 5.47% and $9,000 in additional credit was extended.

In order to determine whether a borrower is experiencing financial difficulty, we consider the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

The following table presents loans by class modified as TDRs during the year ended June 30, 2012, and their performance, by modification type:

	Number  of Loans		Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		TDRs Performing to Modified Terms		TDRs Not Performing to Modified Terms
Residential Real Estate:
1-4 Family		4	$	179	$	188	$	187	$	-

The Company had allocated $2,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of June 30, 2012, and had $6,000 of specific reserves at June 30, 2011. The Company has no commitments to lend additional amounts as of June 30, 2012 and 2011, to customers with outstanding loans that are classified as troubled debt restructurings.

The following tables present the aging of the principal balance outstanding in past due loans as of June 30, 2012 and 2011, by class of loans:

June 30, 2012:

(in thousands)	30-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate:
One-to four-family	$	4,332	$	1,794	$	6,126	$	142,960	$	149,086
Multi-family		—		—		—		15,495		15,495
Construction		—		—		—		964		964
Nonresidential real estate and land		—		—		—		11,098		11,098
Loans on deposits		—		—		—		2,281		2,281
Consumer and other		—		—		—		4,865		4,865
Total	$	4,332	$	1,794	$	6,126	$	177,663	$	183,789

54

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE C - LOANS (continued)

June 30, 2011:
(in thousands)	30-89 Days Past Due		Greater than 90 Days  Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate:
One-to four-family	$	3,181	$	876	$	4,057	$	154,764	$	158,821
Multi-family		—		—		—		4,504		4,504
Construction		—		—		—		1,062		1,062
Nonresidential real estate and land		—		—		—		12,211		12,211
Loans on deposits		—		—		—		2,405		2,405
Consumer and other		—		—		—		4,824		4,824
Total	$	3,181	$	876	$	4,057	$	179,770	$	183,827

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 June 30, 2012, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

55

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE C - LOANS (continued)

June 30, 2012:
(in thousands)	Pass		Special Mention		Substandard		Doubtful		Not  rated
Residential real estate:
One- to four-family	$	—	$	64	$	3,057	$	—	$	145,965
Multi-family		12,692		—		2,803		—		—
Construction		964		—		—		—		—
Nonresidential real estate and land		10,831		267		—		—		—
Loans on deposits		—		—		—		—		2,281
Consumer and other		—		—		—		—		4,865

June 30, 2011:

(in thousands)	Pass		Special Mention		Substandard		Doubtful		Not rated
Residential real estate:
One- to four-family	$	—	$	67	$	2,180	$	—	$	156,574
Multi-family		4,504		—		—		—		—
Construction		1,062		—		—		—		—
Nonresidential real estate and land		11,943		268		—		—		—
Loans on deposits		—		—		—		—		2,405
Consumer and other		—		—		—		—		4,824

The activity in the allowance for loan losses is summarized as follows for the years ended June 30:

(in thousands)	2012			2011
Balance at beginning of year	$	764		$	1,535
Provision for losses on loans		139			668
Charge-offs		(28	)		(1,439	)
Balance at end of year	$	875		$	764

56

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE C - LOANS (continued)

The following tables present the activity in the allowance for loan losses by portfolio segment for the years ended June 30, 2012 and 2011:

June 30, 2012:

(in thousands)	Beginning balance		Provision for loan losses			Loans charged off			Recoveries		Ending balance
Residential real estate:
One- to four-family	$	490	$	79		$	(4	)	$	—	$	565
Multi-family		11		38			—			—		49
Construction		5		(2	)		—			—		3
Nonresidential real estate and land		36		(1	)		—			—		35
Loans on deposits		8		(1	)		—			—		7
Consumer and other		14		26			(24	)		—		16
Unallocated		200		—			—			—		200
Totals	$	764	$	139		$	(28	)	$	—	$	875

June 30, 2011:

(in thousands)	Beginning balance		Provision for loan losses		Loans charged off			Recoveries		Ending balance
Residential real estate:
One- to four-family	$	1,261	$	668	$	(1,439	)	$	—	$	490
Multi-family		11		—		—			—		11
Construction		5		—		—			—		5
Nonresidential real estate and land		36		—		—			—		36
Loans on deposits		8		—		—			—		8
Consumer and other		14		—		—			—		14
Unallocated		200		—		—			—		200
Totals	$	1,535	$	668	$	(1,439	)	$	—	$	764

NOTE D – REAL ESTATE OWNED

Activity in real estate owned for the years ended June 30 was as follows:

(in thousands)	2012			2011
Balance at beginning of year	$	4,304		$	748
Additions		96			4,643
Impairment charges		(67	)		(71	)
Disposals		(1,888	)		(1,016	)
Balance at end of year	$	2,445		$	4,304

57

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE E - PREMISES AND EQUIPMENT

Premises and equipment at June 30 are comprised of the following:

(in thousands)	2012		2011
Land	$	860	$	860
Buildings and improvements		3,842		3,747
Furniture and equipment		1,097		1,126
Automobiles		29		29
		5,828		5,762
Less: accumulated depreciation		3,184		3,095
Balance at end of year	$	2,644	$	2,667

NOTE F - DEPOSITS

Deposits consist of the following major classifications at June 30:

(in thousands)	2012		2011
Non-interest bearing checking accounts	$	1,704	$	996
Checking accounts		7,615		6,965
Savings accounts		36,913		34,147
Money market demand deposits		4,837		4,796
Total demand, transaction and passbook deposits		51,069		46,904
Certificates of deposit:
Original maturities of:
Less than 12 months		3,940		5,019
12 months to 36 months		72,405		81,075
More than 36 months		7,138		6,942
Total certificates of deposit		83,483		93,036
Total deposits	$	134,552	$	139,940

At June 30, 2012 and 2011, the Banks had certificate of deposit accounts with balances equal to or in excess of $100,000 totaling approximately $28.7 million and $32.0 million, respectively.

Maturities of outstanding certificates of deposit at June 30 are summarized as follows:

(in thousands)	2012
2013	$	56,068
2014		15,050
2015		9,649
2016		1,675
2017 and thereafter		1,041
	$	83,483

58

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE G - ADVANCES FROM THE FEDERAL HOME LOAN BANK

Advances from the Federal Home Loan Bank, collateralized at June 30, 2012 and 2011 by pledges of certain residential mortgage loans totaling $38.2 million and $37.6 million, respectively, and the Banks’ investment in Federal Home Loan Bank stock, are summarized as follows:

Maturing year ended June 30, 2012
(in thousands)
2013	$	9,810
2014		7,555
2015		2,366
2016		623
2017		431
2018		2,328
2019		3,249
2020-2030		703
	$	27,065
Premium assigned to borrowings in Frankfort First acquisition, net of amortization		—
	$	27,065

At June 30, 2012 interest rates for advances were fixed ranging from 1.11% to 6.95%, with a weighted-average interest rate of 2.27%.

Maturing year ended June 30, 2011
(in thousands)
2012	$	3,184
2013		7,810
2014		7,555
2015		2,366
2016		623
2017		431
2018		2,328
2019-2030		952
	$	25,249
Premium assigned to borrowings in Frankfort First acquisition, net of amortization		12
	$	25,261

At June 30, 2011 interest rates for advances were fixed ranging from 1.11% to 6.95%, with a weighted-average interest rate of 2.50%.

Each advance is payable at its maturity date, with a prepayment penalty for fixed rate advances. Based on collateral composed of first mortgage loans and the Company’s holdings of FHLB stock, the Company was eligible to borrow up to $65.9 million as of June 30, 2012.

59

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE H - FEDERAL INCOME TAXES

Federal income taxes on earnings differs from that computed at the statutory corporate tax rate for the years ended June 30, 2012 and 2011, as follows:

(in thousands)	2012			2011
Federal income taxes at the statutory rate	$	869		$	632
Increase (decrease) resulting primarily from:
Cash surrender value of life insurance		(30	)		(30	)
Compensation expense		-			4
Other		1			-
Allowed deduction claimed on amended return for $1.3 million paid to option holders in acquisition of Frankfort First Bancorp, Inc. and other IRS audit adjustments		-			(502	)
	$	840		$	104

The composition of the Company’s net deferred tax liability at June 30 is as follows:

(in thousands)	2012			2011
Taxes (payable) refundable on temporary differences at estimated corporate tax rate:
Deferred tax assets:
General loan loss allowance	$	297		$	260
Deferred compensation and benefits		257			258
Charitable contributions		3			3
Purchase accounting adjustments		—			4
Nonaccrued interest on loans		21			8
Other real estate owned adjustments		259			80
Total deferred tax assets		837			613
Deferred tax liabilities:
Federal Home Loan Bank stock dividends		(1,074	)		(1,074	)
Deferred loan origination costs		(32	)		(39	)
Loan servicing rights		(12	)		(11	)
Other		(—)			(2	)
Purchase accounting adjustments		(463	)		(248	)
Depreciation		(30	)		(260	)
Total deferred tax liabilities		(1,611	)		(1,634	)
Net deferred tax liability	$	(774	)	$	(1,021	)

The 2011 provision for federal income taxes included a credit of $502,000, which related to a refund provided by the Internal Revenue Service and a reversal of an uncertain tax position. This credit is not expected to reoccur.

60

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE H – FEDERAL INCOME TAXES (continued)

Prior to 1997, the Banks were allowed a special bad debt deduction, generally limited to 8% of otherwise taxable income, and subject to certain limitations based on aggregate loans and deposit account balances at the end of the year. If the amounts that qualified as deductions for federal income taxes are later used for purposes other than bad debt losses, including distributions in excess of accumulated earnings and profits, such distributions will be subject to federal income taxes at the then current corporate income tax rate. Retained earnings at June 30, 2012, include approximately $5.2 million for which federal income taxes have not been provided. The amount of unrecognized deferred tax liability relating to the cumulative bad debt deduction was approximately $1.8 million at June 30, 2012.

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(in thousands)	2012			2011
Balance at beginning of year	$	80		$	253
Additions/(reductions) based on tax positions for the current year		(80	)		(173	)
Balance at end of year	$	—		$	80

Cash settlements occurred during the period July 1, 2011 through June 30, 2012. Because of uncertainty regarding the proper inclusion or exclusion of income from Bank-owned life insurance (‘BOLI”) in the earnings and profits calculation, the Company amended its June 30, 2009 federal return to report additional tax liability of $80,000 and reversed the corresponding reserve. The Company expects its unrecognized benefits will change in the next twelve months. The Company has amended its 2009 tax return claiming that its BOLI income is includible in the earnings and profits calculation and that it is entitled to a refund of the $80,000.

NOTE I - LOAN COMMITMENTS

The Banks are a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of their customers, including commitments to extend credit. Such commitments involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the consolidated statements of financial condition. The contract or notional amounts of the commitments reflect the extent of the Banks’ involvement in such financial instruments.

The Banks’ exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. The Banks use the same credit policies in making commitments and conditional obligations as those utilized for on-balance-sheet instruments.

At June 30, 2012 and 2011, the Banks had outstanding commitments of approximately $1.8 million and $1.7 million, respectively, to originate mortgage loans. Additionally, First Federal of Frankfort was obligated under unused lines of credit for one-to four-family equity loans totaling $8.3 million and $8.9 million at the end of fiscal years 2012 and 2011, respectively. Commitments to make loans are generally made for periods of 60 days or less. The fixed rate loan commitments at June 30, 2012 totaled $592,000 and had interest rates ranging from 4.53% to 7.25% and maturities ranging from 10 years to 30 years, while the fixed rate loan commitments at June 30, 2011 totaled $614,000 and had interest rates ranging from 4.63% to 8.0% with maturities ranging from 15 years to 30 years.

61

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE J - REGULATORY CAPITAL

The Banks are subject to minimum regulatory capital standards promulgated by the Office of the Controller of the Currency (the “OCC”), the successor to the Office of Thrift Supervision (the “OTS”). Failure to meet minimum capital requirements can initiate certain mandatory — and possibly additional discretionary — actions by regulators that, if undertaken, could have a direct material effect on the consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Banks must meet specific capital guidelines that involve quantitative measures of the Banks’ assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Banks’ capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

The minimum capital standards of the OCC generally require the maintenance of regulatory capital sufficient to meet each of three tests, hereinafter described as the tangible capital requirement, the core capital requirement and the risk-based capital requirement. The core capital requirement provides for minimum core capital (tangible capital plus certain forms of supervisory goodwill and other qualifying intangible assets) generally equal to 4.0% of adjusted total assets, except for those associations with the highest examination rating and acceptable levels of risk. The risk-based capital requirement provides for the maintenance of core capital plus general loss allowances equal to 8.0% of risk-weighted assets. In computing risk-weighted assets, the Banks multiply the value of each asset on their respective statements of financial condition by a defined risk-weighting factor, e.g., one- to four-family residential loans carry a risk-weighted factor of 50%.

During fiscal 2011, the Banks were notified by the OTS that each was categorized as “well-capitalized” under the regulatory framework for prompt corrective action. Although the OCC has not notified the Company of the classification of its capital status since it succeeded the OTS, there are no conditions or events since the OTS notification that management believes has changed the Banks’ categories. The transfer to the OCC resulted is somewhat different capital ratios than reported by the OTS. To be categorized as “well-capitalized” the Banks must maintain minimum capital ratios as set forth in the following tables:

62

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE J - REGULATORY CAPITAL (continued)

	As of June 30, 2012
											To be “well-
											capitalized” under
						For capital					prompt corrective
	Actual					adequacy purposes					action provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
Tier 1 core capital
First Federal of Hazard	$	20,764		21.2	%		³$3,926		³4.0	%		³$4,908		³ 5.0	%
First Federal of Frankfort	$	19,543		15.9	%		³$5,511		³4.0	%		³$6,889		³ 5.0	%
Consolidated	$	44,333		21.3	%		³$8,918		³4.0	%		N/A		N/A
Total risk-based capital
First Federal of Hazard	$	21,185		42.2	%		³$4,013		³8.0	%		³$5,016		³10.0	%
First Federal of Frankfort	$	19,997		28.7	%		³$5,566		³8.0	%		³$6,958		³10.0	%
Consolidated	$	45,208		38.6	%		³$9,377		³8.0	%		N/A		N/A
Tier 1 risk-based capital
First Federal of Hazard	$	20,764		41.4	%		N/A		N/A			³$3,010		³ 6.0	%
First Federal of Frankfort	$	19,543		28.1	%		N/A		N/A			³$4,175		³ 6.0	%
Consolidated	$	44,333		37.8	%		N/A		N/A			N/A		N/A

	As of June 30, 2011
											To be “well-
											capitalized” under
						For capital					prompt corrective
	Actual					adequacy purposes					action provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
Tangible capital
First Federal of Hazard	$	19,629		19.3	%		³$1,525		³1.5	%		N/A		N/A
First Federal of Frankfort	$	18,151		14.6	%		³$1,868		³1.5	%		N/A		N/A
Consolidated	$	44,100		20.8	%		³$3,175		³1.5	%		N/A		N/A
Tier 1 core capital
First Federal of Hazard	$	19,629		19.3	%		³$4,067		³4.0	%		³$5,084		³ 5.0	%
First Federal of Frankfort	$	18,151		14.6	%		³$4,980		³4.0	%		³$6,225		³ 5.0	%
Consolidated	$	44,100		20.8	%		³$9,048		³4.0	%		N/A		N/A
Total risk-based capital
First Federal of Hazard	$	19,939		40.5	%		³$3,941		³8.0	%		³$4,927		³10.0	%
First Federal of Frankfort	$	18,564		27.0	%		³$5,505		³8.0	%		³$6,881		³10.0	%
Consolidated	$	44,864		39.0	%		³$9,201		³8.0	%		N/A		N/A
Tier 1 risk-based capital
First Federal of Hazard	$	19,629		39.8	%		N/A		N/A			³$2,956		³ 6.0	%
First Federal of Frankfort	$	18,151		26.4	%		N/A		N/A			³$4,129		³ 6.0	%
Consolidated	$	44,100		38.3	%		N/A		N/A			N/A		N/A

63

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE J - REGULATORY CAPITAL (continued)

As of June 30, 2012 and 2011, management believes that First Federal of Hazard and First Federal of Frankfort met all capital adequacy requirements to which the Banks were subject.

The Banks’ management believes that, under the current regulatory capital regulations, both Banks will continue to meet their minimum capital requirements in the foreseeable future. However, events beyond the control of the Banks, such as increased interest rates or a downturn in the economy in the Banks’ market area, could adversely affect future earnings and, consequently, the ability to meet future minimum regulatory capital requirements.

Regulations of the OCC governing mutual holding companies require First Federal MHC to meet certain criteria before the company may waive the receipt by it of any common stock dividend declared by Kentucky First Federal Bancorp. During the fiscal year ended June 30, 2012, and pursuant to the provisions allowed by the OCC, First Federal MHC waived $1.4 million in dividends.

NOTE K - CONDENSED FINANCIAL STATEMENTS OF KENTUCKY FIRST FEDERAL BANCORP

The following condensed financial statements summarize the financial position of Kentucky First Federal Bancorp as of June 30, 2012 and 2011, and the results of its operations and its cash flows for the fiscal years ended June 30, 2012 and 2011.

KENTUCKY FIRST FEDERAL BANCORP

BALANCE SHEETS

June 30, 2012 and 2011

(In thousands)

ASSETS	2012			2011
Interest-bearing deposits in First Federal of Hazard	$	425		$	604
Interest-bearing deposits in First Federal of Frankfort		427			2,513
Other interest-bearing deposits		39			37
Investment in First Federal of Hazard		22,640			21,708
Investment in Frankfort First		34,977			33,671
Prepaid expenses and other assets		456			521
Total assets	$	58,964		$	59,054
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable and other liabilities	$	111		$	357
Total liabilities		111			357
Shareholders’ equity
Common stock		86			86
Additional paid-in capital		36,870			36,907
Retained earnings		31,971			31,860
Shares acquired by stock benefit plans		(1,772	)		(1,989	)
Shares acquired for treasury – at cost		(8,305	)		(8,170	)
Accumulated other comprehensive income		3			3
Total shareholders’ equity		58,853			58,697
Total liabilities and shareholders’ equity	$	58,964		$	59,054

64

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE K - CONDENSED FINANCIAL STATEMENTS OF KENTUCKY FIRST FEDERAL BANCORP (continued)

KENTUCKY FIRST FEDERAL BANCORP

STATEMENTS OF INCOME

Years ended June 30, 2012 and 2011

(Dollar amounts in thousands)

	2012			2011
Income
Interest income	$	121		$	164
Dividends from First Federal of Hazard		—			—
Equity in undistributed (excess distributed) earnings of First Federal of Hazard		886			644
Dividends from Frankfort First		—			378
Equity in undistributed earnings of Frankfort First		1,306			964
Total income		2,313			2,150
Non-interest expenses		838			547
Earnings before income taxes		1,475			1,603
Federal income tax expense (benefit)		(240	)		(153	)
NET INCOME	$	1,715		$	1,756

KENTUCKY FIRST FEDERAL BANCORP

STATEMENTS OF CASH FLOWS

For Years ended June 30, 2012 and 2011

(Dollar amounts in thousands)

	2012			2011
Cash flows from operating activities:
Net earnings for the year	$	1,715		$	1,756
Adjustments to reconcile net earnings to net cash provided by operating activities:
Excess (deficit) distributions over earnings (undistributed earnings) from consolidated subsidiaries		(2,192	)		(1,608	)
Noncash compensation expense		134			363
Increase (decrease) in cash due to changes in:
Prepaid expenses and other assets		65			(235	)
Other liabilities		(246	)		7
Net cash provided by operating activities		(524	)		283

65

KENTUCKY FIRST FEDERAL BANCORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

June 30, 2012 and 2011

NOTE K - CONDENSED FINANCIAL STATEMENTS OF KENTUCKY FIRST FEDERAL BANCORP (continued)

KENTUCKY FIRST FEDERAL BANCORP

STATEMENTS OF CASH FLOWS (continued)

For Years ended June 30, 2012 and 2011

(Dollar Amounts in thousands)

	2012			2011
Cash flows from financing activities:
Dividends paid on common stock		(1,604	)		(1,112	)
Repurchase of treasury shares		(135	)		(218	)
Net cash used in financing activities		(1,739	)		(1,330	)
Net increase (decrease) in cash and cash equivalents		(2,263	)		(1,047	)
Cash and cash equivalents at beginning of year		3,154			4,201
Cash and cash equivalents at end of year	$	891		$	3,154

Prior to July 21, 2011, the Banks were subject to regulations imposed by the OTS regarding the amount of capital distributions payable to the Company. Generally, the Banks’ payments of dividends were limited, without prior OTS approval, to net earnings for the current calendar year plus the two preceding calendar years, less capital distributions paid over the comparable time period.

NOTE L – PENDING MERGER (unaudited)

On November 3, 2011, the Company entered into an agreement of merger with CFK Bancorp, Inc. (“CKP”) and Central Kentucky Federal Savings Bank, whereby CKF will merger with and into the Company with the Company being the surviving corporation. In connection with the merger, Central Kentucky Federal Savings Bank will merge into First Federal of Frankfort and will operate under the name “Central Kentucky Federal Savings Bank” as a division of First Federal of Frankfort. The CFK Bancorp, Inc. stockholders, who can elect to receive cash, the Company’s stock, or a combination of cash and the Company’s stock, approved the merger on July 3, 2012. The merger is also subject to regulatory approval and Kentucky First has filed the appropriate applications with its primary regulator, the Board of Governors of the Federal Reserve System. As of June 30, 2012, CFK Bancorp, Inc., maintained $125.3 million in assets, $101.8 million in net loans, $103.1 million in deposits and $12.8 million in tangible equity capital. The merger consideration is expected to be valued at $11.6 million and the combination is expected to be completed during the fourth quarter of 2012. Please refer to Form 424B3 – Prospectus [Rule 242(b)(3)] filed with the Securities and Exchange Commission on May 23, 2012, for additional information about the proposed merger.

66

The Board of Kentucky First Federal Bancorp would like to recognize our employees who are working hard every day to maximize the value of your investment:

First Federal Savings & Loan of Hazard	First Federal Savings Bank of Frankfort
Deborah C. Bersaglia, Vice President/	Wick Asbury, Vice President/Lending
Secretary	Brenda Baldwin, Accounting
Holly Caudill, Customer Service	Stan Betsworth, Vice President/Lending
Jaime S. Coffey, Assistant Vice President/	Phyllis Bowman, Loan Servicing
Loan Officer	Lisa Brinley, Branch Manager
Sandra C. Craft, Vice President/Loan Officer	Andrea Cline, Asst. Executive Office Coordinator
Lou Ella R. Farler, Executive Vice President	Carolyn Eades, Receptionist/Customer Service
Deloris S. Justice, Assistant Vice President	Diana Eads, Customer Service
Kaye Craft, Vice President/Treasurer	Stacey Greenawalt, Vice President/Lending
Brenda W. Lovelace, Assistant Vice President	Tiffany Heinsohn, Customer Service
Margaret P. Pelley, Customer Service	Barry Holder, Branch Manager
Peggy H. Steele, Assistant Vice President/IT	R. Clay Hulette, President/Treasurer
Susie W. Steele, IT	Don D. Jennings, Chief Executive Officer
Molly Ann E. Toler, Vice President	Teresa K. Hulette, Executive Vice President/
Tony Whitaker, President/CEO	Operations/Human Resources
	Janet Lewis, Customer Service
	Stephanie Lewis, Customer Service
	Patty Luttrell, Loan Processing/Compliance
	Tracey McCoun, Customer Service
	Kim Moore, Customer Service Manager
	Carolyn Mulcahy, Accounting
	Jeanie Murphy, Customer Service
	Kathy Padgett, Customer Service
	David Semones, Loan Processing
	Lee Ann Hockensmith, Executive Office Coordinator
	Yvonne Thornberry, Loan Processing/Servicing
	Nancy Watts, Loan Servicing/ Insurance Processing
	Laurel Weeks, Customer Service

67

Kentucky First Federal Bancorp	First Federal Savings and Loan Association of Hazard	First Federal Savings Bank of Frankfort
Board of Directors	Board of Directors	Board of Directors
Stephen G. Barker, Attorney and Executive Vice President and General Counsel to Kentucky River Properties, LLC Walter G. Ecton, Jr., Attorney and principal of Ecton, Murphy and Shannon, PLLC David R. Harrod C.P.A. and principal of Harrod and Associates, P.S.C. Don D. Jennings, President, Kentucky First Federal Bancorp Herman D. Regan, Jr., Retired President of Kenvirons, Inc. Tony Whitaker, Chairman of Kentucky First Federal Bancorp	Stephen G. Barker Walter G. Ecton, Jr. William D. Gorman, Jr. Tony Whitaker	C. Michael Davenport Danny A. Garland David R. Harrod R. Clay Hulette Don D. Jennings William C. Jennings, Chairman William M. Johnson Herman D. Regan, Jr. Charles A. Cotton, III, Director Emeritus Frank McGrath, Director Emeritus
	Office Locations
		First Federal of Frankfort
		East Branch
First Federal of Hazard	First Federal of Frankfort	1980 Versailles Road
Main Office	Main Office	Frankfort, KY 40601
479 Main Street	216 West Main Street
P.O. Box 1069	P.O. Box 535	First Federal of Frankfort
Hazard, KY 41702-1069	Frankfort, KY 40602-0535	West Branch
		1220 US 127 South
		Frankfort, KY 40601
Chairman and CEO	Special Counsel	Shareholder Inquiries and
Tony Whitaker (606) 436-3860	Kilpatrick Townsend & Stockton LLP, Suite 900	Availability of 10-K Report: A COPY OF THE COMPANY’S
firstfederal@windstream.net	607 14th Street, NW Washington, DC 20005-2018	ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
		JUNE 30, 2012, AS FILED
Investor Relations	Transfer Agent and Registrar	WITH THE SECURITIES AND
Don Jennings	IST Shareholder Services	EXCHANGE COMMISSION
djennings@ffsbfrankfort.com	433 S Carlton Ave	WILL BE FURNISHED
	Wheaton, IL 60187-9904	WITHOUT CHARGE TO
Clay Hulette	(630) 480-0393	SHAREHOLDERS AS OF THE
chulette@ffsbfrankfort.com		RECORD DATE FOR THE
	Annual Meeting	NOVEMBER 15, 2012
(502) 223-1638	The Annual Meeting of Share-	ANNUAL MEETING UPON
P.O. Box 535	holders will be held on	WRITTEN REQUEST TO:
Frankfort, KY 40602	November 15, 2012 at
	3:30 p.m., Eastern Time, at	INVESTOR RELATIONS
	the First Federal Center on the	KENTUCKY FIRST
Independent Auditors	campus of Hazard Community	FEDERAL BANCORP
Crowe Horwath, LLP	and Technical College, One	P.O. BOX 535
9600 Brownsboro Rd., Ste 400	Community College Blvd,	FRANKFORT, KY 40602
Louisville, KY 40252	Hazard, KY

68

EX-21

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

	State or Other
	Jurisdiction of		Percentage
	Incorporation		Ownership
Parent
Kentucky First Federal Bancorp		United States		N/A
Subsidiaries (1)
First Federal Savings and Loan Association of Hazard		United States		100	%
Frankfort First Bancorp, Inc.		Delaware		100	%
First Federal Savings Bank of Frankfort (2)		United States		100	%

(1) The assets, liabilities and operations of the subsidiaries are included in the consolidated financial statements contained in the Annual Report to Stockholders attached hereto as Exhibit 13.

(2) Wholly owned subsidiary of Frankfort First Bancorp, Inc., which is a wholly-owned subsidiary of Parent.

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-130243 on Form S-8 of Kentucky First Federal Bancorp of our report dated September 28, 2012 appearing in this 2012 Annual Report on Form 10-K of Kentucky First Federal Bancorp .

/s/ Crowe Horwath LLP

Louisville, Kentucky

September 28, 2012

EX-31.1

EXHIBIT 31.1

Certification

I, Tony D. Whitaker, certify that:

1.          I have reviewed this Annual Report on Form 10-K of Kentucky First Federal Bancorp;

2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.          The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-(15)(f) and 15d-15(f)) for the registrant and have:

(a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)          Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)          Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.          The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)          All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)          Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: September 28, 2012

/s/ Tony D. Whitaker

Tony D. Whitaker

Chief Executive Officer and Chairman

EX-31.2

EXHIBIT 31.2

Certification

I, R. Clay Hulette, certify that:

1.          I have reviewed this Annual Report on Form 10-K of Kentucky First Federal Bancorp;

2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.          Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.          The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-(15)(f) and 15d-15(f)) for the registrant and have:

(a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)          Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)          Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.          The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)          All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)          Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: September 28, 2012

/s/ R. Clay Hulette

R. Clay Hulette

Vice President, Chief Financial Officer and Treasurer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

The undersigned executive officers of Kentucky First Federal Bancorp (the “Registrant”) hereby certify that this Annual Report on Form 10-K for the year ended June 30, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

By:	/s/ Tony D. Whitaker
	Name:	Tony D. Whitaker
	Title:	Chief Executive Officer and Chairman
By:	/s/ R. Clay Hulette
	Name:	R. Clay Hulette
	Title:	Vice President, Chief Financial Officer and
		Treasurer

Date: September 28, 2012

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 6) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Available-for-sale securities, Fair Value	$ 189	$ 203
Impaired Loans [Member] | Residential Real Estate One To Four Family [Member]
Available-for-sale securities, Fair Value	807	1,033
Impaired Loans [Member] | Residential Real Estate Multi Family [Member]
Available-for-sale securities, Fair Value	631
Other Real Estate Owned [Member] | Residential Real Estate One To Four Family [Member]
Available-for-sale securities, Fair Value	648	126
Other Real Estate Owned [Member] | Residential Real Estate Multi Family [Member]
Available-for-sale securities, Fair Value	233	186
Fair Value, Inputs, Level 1 [Member] | Impaired Loans [Member] | Residential Real Estate One To Four Family [Member]
Available-for-sale securities, Fair Value	0	0
Fair Value, Inputs, Level 1 [Member] | Impaired Loans [Member] | Residential Real Estate Multi Family [Member]
Available-for-sale securities, Fair Value	0
Fair Value, Inputs, Level 1 [Member] | Other Real Estate Owned [Member] | Residential Real Estate One To Four Family [Member]
Available-for-sale securities, Fair Value	0	0
Fair Value, Inputs, Level 1 [Member] | Other Real Estate Owned [Member] | Residential Real Estate Multi Family [Member]
Available-for-sale securities, Fair Value	0	0
Fair Value, Inputs, Level 2 [Member]
Available-for-sale securities, Fair Value	189
Fair Value, Inputs, Level 2 [Member] | Impaired Loans [Member] | Residential Real Estate One To Four Family [Member]
Available-for-sale securities, Fair Value	0	0
Fair Value, Inputs, Level 2 [Member] | Impaired Loans [Member] | Residential Real Estate Multi Family [Member]
Available-for-sale securities, Fair Value	0
Fair Value, Inputs, Level 2 [Member] | Other Real Estate Owned [Member] | Residential Real Estate One To Four Family [Member]
Available-for-sale securities, Fair Value	0	0
Fair Value, Inputs, Level 2 [Member] | Other Real Estate Owned [Member] | Residential Real Estate Multi Family [Member]
Available-for-sale securities, Fair Value	0	0
Fair Value, Inputs, Level 3 [Member] | Impaired Loans [Member] | Residential Real Estate One To Four Family [Member]
Available-for-sale securities, Fair Value	807	1,033
Fair Value, Inputs, Level 3 [Member] | Impaired Loans [Member] | Residential Real Estate Multi Family [Member]
Available-for-sale securities, Fair Value	631
Fair Value, Inputs, Level 3 [Member] | Other Real Estate Owned [Member] | Residential Real Estate One To Four Family [Member]
Available-for-sale securities, Fair Value	648	126
Fair Value, Inputs, Level 3 [Member] | Other Real Estate Owned [Member] | Residential Real Estate Multi Family [Member]
Available-for-sale securities, Fair Value	$ 233	$ 186

XML

LOANS (Details 7) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Allowance for Loan and Lease Losses, Beginning balance	$ 764	$ 1,535
Allowance for Loan and Lease Losses, Provision for loan losses	139	668
Allowance for Loan and Lease Losses, Loans charged off	(28)	(1,439)
Allowance for Loan and Lease Losses, Recoveries	0	0
Allowance for Loan and Lease Losses, Ending balance	875	764
Commercial Real Estate [Member]
Allowance for Loan and Lease Losses, Beginning balance	36	36
Allowance for Loan and Lease Losses, Provision for loan losses	(1)	0
Allowance for Loan and Lease Losses, Loans charged off	0	0
Allowance for Loan and Lease Losses, Recoveries	0	0
Allowance for Loan and Lease Losses, Ending balance	35	36
Loans On Deposits [Member]
Allowance for Loan and Lease Losses, Beginning balance	8	8
Allowance for Loan and Lease Losses, Provision for loan losses	(1)	0
Allowance for Loan and Lease Losses, Loans charged off	0	0
Allowance for Loan and Lease Losses, Recoveries	0	0
Allowance for Loan and Lease Losses, Ending balance	7	8
Consumer and Other Loan [Member]
Allowance for Loan and Lease Losses, Beginning balance	14	14
Allowance for Loan and Lease Losses, Provision for loan losses	26	0
Allowance for Loan and Lease Losses, Loans charged off	(24)	0
Allowance for Loan and Lease Losses, Recoveries	0	0
Allowance for Loan and Lease Losses, Ending balance	16	14
Unallocated Loans [Member]
Allowance for Loan and Lease Losses, Beginning balance	200	200
Allowance for Loan and Lease Losses, Provision for loan losses	0	0
Allowance for Loan and Lease Losses, Loans charged off	0	0
Allowance for Loan and Lease Losses, Recoveries	0	0
Allowance for Loan and Lease Losses, Ending balance	200	200
Residential Real Estate One To Four Family [Member]
Allowance for Loan and Lease Losses, Beginning balance	490	1,261
Allowance for Loan and Lease Losses, Provision for loan losses	79	668
Allowance for Loan and Lease Losses, Loans charged off	(4)	(1,439)
Allowance for Loan and Lease Losses, Recoveries	0	0
Allowance for Loan and Lease Losses, Ending balance	565	490
Residential Real Estate Multi Family [Member]
Allowance for Loan and Lease Losses, Beginning balance	11	11
Allowance for Loan and Lease Losses, Provision for loan losses	38	0
Allowance for Loan and Lease Losses, Loans charged off	0	0
Allowance for Loan and Lease Losses, Recoveries	0	0
Allowance for Loan and Lease Losses, Ending balance	49	11
Residential Real Estate Construction [Member]
Allowance for Loan and Lease Losses, Beginning balance	5	5
Allowance for Loan and Lease Losses, Provision for loan losses	(2)	0
Allowance for Loan and Lease Losses, Loans charged off	0	0
Allowance for Loan and Lease Losses, Recoveries	0	0
Allowance for Loan and Lease Losses, Ending balance	$ 3	$ 5

XML

LOANS (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Loans collectively evaluated for impairment, Recorded investment in loans	$ 181,032	$ 181,603
Loans collectively evaluated for impairment, Ending allowance attributed to loans	578	509
Loans collectively evaluated for impairment, Unallocated allowance	200	200
Loans collectively evaluated for impairment, Total allowance	778	709
Loans Receivable, Recorded Investment	183,789	183,827
Total Ending allowance attributed to loans	675	564
Total Unallocated Allowance	200	200
Total allowance	875	764	1,535
Commercial Real Estate [Member]
Loans collectively evaluated for impairment, Recorded investment in loans	11,098	12,211
Loans collectively evaluated for impairment, Ending allowance attributed to loans	35	34
Loans collectively evaluated for impairment, Unallocated allowance	0	0
Loans collectively evaluated for impairment, Total allowance	35	34
Loans Receivable, Recorded Investment	11,098	12,211
Total allowance	35	36	36
Loans On Deposits [Member]
Loans collectively evaluated for impairment, Recorded investment in loans	2,281	2,405
Loans collectively evaluated for impairment, Ending allowance attributed to loans	7	7
Loans collectively evaluated for impairment, Unallocated allowance	0	0
Loans collectively evaluated for impairment, Total allowance	7	7
Loans Receivable, Recorded Investment	2,281	2,405
Total allowance	7	8	8
Consumer and Other Loan [Member]
Loans collectively evaluated for impairment, Recorded investment in loans	4,865	4,824
Loans collectively evaluated for impairment, Ending allowance attributed to loans	16	13
Loans collectively evaluated for impairment, Unallocated allowance	0	0
Loans collectively evaluated for impairment, Total allowance	16	13
Loans Receivable, Recorded Investment	4,865	4,824
Total allowance	16	14	14
Unallocated Loans [Member]
Loans collectively evaluated for impairment, Recorded investment in loans	0	0
Loans collectively evaluated for impairment, Ending allowance attributed to loans	0	0
Loans collectively evaluated for impairment, Unallocated allowance	200	200
Loans collectively evaluated for impairment, Total allowance	200	200
Total allowance	200	200	200
Residential Real Estate One To Four Family [Member]
Loans individually evaluated for impairment, Recorded investment in loans	2,757	2,224
Loans individually evaluated for impairment, Ending allowance attributed to loans	97	55
Loans individually evaluated for impairment, Unallocated allowance	0	0
Loans individually evaluated for impairment, Total allowance	97	55
Loans collectively evaluated for impairment, Recorded investment in loans	146,329	156,597
Loans collectively evaluated for impairment, Ending allowance attributed to loans	468	439
Loans collectively evaluated for impairment, Unallocated allowance	0	0
Loans collectively evaluated for impairment, Total allowance	468	439
Loans Receivable, Recorded Investment	149,086	158,821
Total allowance	565	490	1,261
Residential Real Estate Multi Family [Member]
Loans collectively evaluated for impairment, Recorded investment in loans	15,495	4,504
Loans collectively evaluated for impairment, Ending allowance attributed to loans	49	13
Loans collectively evaluated for impairment, Unallocated allowance	0	0
Loans collectively evaluated for impairment, Total allowance	49	13
Loans Receivable, Recorded Investment	15,495	4,504
Total allowance	49	11	11
Residential Real Estate Construction [Member]
Loans collectively evaluated for impairment, Recorded investment in loans	964	1,062
Loans collectively evaluated for impairment, Ending allowance attributed to loans	3	3
Loans collectively evaluated for impairment, Unallocated allowance	0	0
Loans collectively evaluated for impairment, Total allowance	3	3
Loans Receivable, Recorded Investment	964	1,062
Total allowance	$ 3	$ 5	$ 5

XML

CONDENSED FINANCIAL STATEMENTS OF KENTUCKY FIRST FEDERAL BANCORP (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
ASSETS
Other interest-bearing deposits	$ 100	$ 100
Prepaid expenses and other assets	508	443
Total assets	222,949	226,135
LIABILITIES AND SHAREHOLDERS' EQUITY
Total liabilities	164,096	167,438
Shareholders' equity
Common stock	86	86
Additional paid-in capital	36,870	36,907
Retained earnings	31,971	31,860
Shares acquired by stock benefit plans	1,772	1,989
Shares acquired for treasury - at cost	8,305	8,170
Accumulated other comprehensive income	3	3
Total shareholders' equity	58,853	58,697	57,808
Total liabilities and shareholders' equity	222,949	226,135
Parent Company [Member]
ASSETS
Interest-bearing deposits in First Federal of Hazard	425	604
Interest-bearing deposits in First Federal of Frankfort	427	2,513
Other interest-bearing deposits	39	37
Investment in First Federal of Hazard	22,640	21,708
Investment in Frankfort First	34,977	33,671
Prepaid expenses and other assets	456	521
Total assets	58,964	59,054
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and other liabilities	111	357
Total liabilities	111	357
Shareholders' equity
Common stock	86	86
Additional paid-in capital	36,870	36,907
Retained earnings	31,971	31,860
Shares acquired by stock benefit plans	(1,772)	(1,989)
Shares acquired for treasury - at cost	(8,305)	(8,170)
Accumulated other comprehensive income	3	3
Total shareholders' equity	58,853	58,697
Total liabilities and shareholders' equity	$ 58,964	$ 59,054

XML

LOANS (Details Textual) (USD $)	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Mortgage Loans on Real Estate, Interest Rate	5.47%	5.50%
Mortgage Loans On Real Estate Additional Credit Extended	$ 9,000
Troubled Debt [Member]
Restructuring Reserve	$ 2,000	6,000

XML

SECURITIES (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Held-to-maturity Securities, Estimated fair value	$ 5,144	$ 7,257
Residential Mortgage Backed Securities [Member]
Held-to-maturity Securities, Amortized cost	4,756	6,810
Held-to-maturity Securities, Gross unrealized/ unrecognized gains	388	447
Held-to-maturity Securities, Gross unrealized/ unrecognized losses	0	0
Held-to-maturity Securities, Estimated fair value	$ 5,144	$ 7,257

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Allocated shares	122,249	100,961
Shares committed to be released	9,338	10,445
Unearned shares	178,339	198,885
Total ESOP shares	309,926	310,291
Fair value of unearned shares at end of period	$ 1,514	$ 1,790

XML

PENDING MERGER (unaudited) (Details Textual) (USD $)	Jun. 30, 2012	Jun. 30, 2011
Loans And Leases Receivable Net Reported Amount	$ 182,473,000	$ 182,796,000
Deposits	134,552,000	139,940,000
CFK Bancorp Inc [Member] | Pending Merger [Member]
Assets Current	125,300,000
Loans And Leases Receivable Net Reported Amount	101,800,000
Deposits	103,100,000
Tangible Equity Capital	12,800,000
Expectationof Merger Consideration	$ 11,600,000

XML

PREMISES AND EQUIPMENT (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Land	$ 860	$ 860
Buildings and improvements	3,842	3,747
Furniture and equipment	1,097	1,126
Automobiles	29	29
Premises and Equipment, Gross	5,828	5,762
Less: accumulated depreciation	3,184	3,095
Balance at end of year	$ 2,644	$ 2,667

XML

CONDENSED FINANCIAL STATEMENTS OF KENTUCKY FIRST FEDERAL BANCORP (Details 1) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Income
Interest income	$ 10,156	$ 10,749
Non-interest expenses	5,423	5,282
Earnings before income taxes	2,555	1,860
Federal income tax expense (benefit)	840	104
NET INCOME	1,715	1,756
Parent Company [Member]
Income
Interest income	121	164
Dividends from First Federal of Hazard	0	0
Equity in undistributed (excess distributed) earnings of First Federal of Hazard	886	644
Dividends from Frankfort First	0	378
Equity in undistributed earnings of Frankfort First	1,306	964
Total income	2,313	2,150
Non-interest expenses	838	547
Earnings before income taxes	1,475	1,603
Federal income tax expense (benefit)	(240)	(153)
NET INCOME	$ 1,715	$ 1,756

XML

LOANS (Tables)

12 Months Ended

Jun. 30, 2012

Receivables [Abstract]

Schedule Of Classification Of Loans Receivable [Table Text Block]

The composition of the loan portfolio at June 30 was as follows:

(in thousands)	2012			2011
Residential real estate
One- to four-family	$	149,086		$	158,821
Multi-family		15,495			4,504
Construction		964			1,062
Nonresidential real estate and land		11,098			12,211
Loans on deposits		2,281			2,405
Consumer and other		4,865			4,824
		183,789			183,827
Less:
Undisbursed portion of loans in process		544			353
Deferred loan origination fees (cost)		(103	)		(86	)
Allowance for loan losses		875			764
	$	182,473		$	182,796

Schedule Of Impaired Loans Receivable Additional Information [Table Text Block]

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, 2012 and 2011. There were no loans acquired with deteriorated credit quality at June 30, 2012 and 2011.

June 30, 2012:
(in thousands)	Recorded investment in loans		Ending allowance attributed to loans		Unallocated allowance		Total allowance
Loans individually evaluated for impairment:
Residential real estate:
One- to four-family	$	2,757	$	97	$	—	$	97
Loans collectively evaluated for impairment:
Residential real estate:
One- to four-family	$	146,329	$	468	$	—	$	468
Multi-family		15,495		49		—		49
Construction		964		3		—		3
Nonresidential real estate and land		11,098		35		—		35
Loans on deposits		2,281		7		—		7
Consumer and other		4,865		16		—		16
Unallocated		—		—		200		200
		181,032		578		200		778
	$	183,789	$	675	$	200	$	875

June 30, 2011:
(in thousands)	Recorded investment in loans		Ending allowance attributed to loans		Unallocated allowance		Total allowance
Loans individually evaluated for impairment:
Residential real estate:
One- to four-family	$	2,224	$	55	$	—	$	55
Loans collectively evaluated for impairment:
Residential real estate:
One- to four-family	$	156,597	$	439	$	—	$	439
Multi-family		4,504		13		—		13
Construction		1,062		3		—		3
Nonresidential real estate and land		12,211		34		—		34
Loans on deposits		2,405		7		—		7
Consumer and other		4,824		13		—		13
Unallocated		—		—		200		200
		181,603		509		200		709
	$	183,827	$	564	$	200	$	764

Impaired Financing Receivables [Table Text Block]

The following tables present impaired loans by class of loans as of and for the years ended June 30, 2012 and 2011:

June 30, 2012:     (in thousands)	Unpaid Principal Balance and Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized
With no related allowance recorded:
One- to four-family	$	1,222	$	—	$	889	$	45	$	45
With an allowance recorded:
One- to four-family		1,535		97		1,434		27		27
	$	2,757	$	97	$	2,323	$	72	$	72

June 30, 2011:     (in thousands)	Unpaid Principal Balance and Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized		Cash Received
With no related allowance recorded:
One- to four-family	$	1,136	$	—	$	1,296	$	44	$	47
With an allowance recorded:
One- to four-family		1,088		55		1,213		33		33
	$	2,224	$	55	$	2,509	$	77	$	77

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

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 June 30, 2012 and 2011:

	June 30, 2012				June 30, 2011
(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	$	1,593	$	201	$	876	$	-

Schedule Of Types Troubled Debt Restructuring Loan Modifications [Table Text Block]

The following table presents loans by class modified as TDRs during the year ended June 30, 2012, and their performance, by modification type:

	Number  of Loans		Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		TDRs Performing to Modified Terms		TDRs Not Performing to Modified Terms
Residential Real Estate:
1-4 Family		4	$	179	$	188	$	187	$	-

Past Due Financing Receivables [Table Text Block]

The following tables present the aging of the principal balance outstanding in past due loans as of June 30, 2012 and 2011, by class of loans:

June 30, 2012:

(in thousands)	30-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate:
One-to four-family	$	4,332	$	1,794	$	6,126	$	142,960	$	149,086
Multi-family		—		—		—		15,495		15,495
Construction		—		—		—		964		964
Nonresidential real estate and land		—		—		—		11,098		11,098
Loans on deposits		—		—		—		2,281		2,281
Consumer and other		—		—		—		4,865		4,865
Total	$	4,332	$	1,794	$	6,126	$	177,663	$	183,789

June 30, 2011:
(in thousands)	30-89 Days Past Due		Greater than 90 Days  Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate:
One-to four-family	$	3,181	$	876	$	4,057	$	154,764	$	158,821
Multi-family		—		—		—		4,504		4,504
Construction		—		—		—		1,062		1,062
Nonresidential real estate and land		—		—		—		12,211		12,211
Loans on deposits		—		—		—		2,405		2,405
Consumer and other		—		—		—		4,824		4,824
Total	$	3,181	$	876	$	4,057	$	179,770	$	183,827

Financing Receivable Credit Quality Indicators [Table Text Block]

As of June 30, 2012, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

June 30, 2012:
(in thousands)	Pass		Special Mention		Substandard		Doubtful		Not  rated
Residential real estate:
One- to four-family	$	—	$	64	$	3,057	$	—	$	145,965
Multi-family		12,692		—		2,803		—		—
Construction		964		—		—		—		—
Nonresidential real estate and land		10,831		267		—		—		—
Loans on deposits		—		—		—		—		2,281
Consumer and other		—		—		—		—		4,865

June 30, 2011:

(in thousands)	Pass		Special Mention		Substandard		Doubtful		Not rated
Residential real estate:
One- to four-family	$	—	$	67	$	2,180	$	—	$	156,574
Multi-family		4,504		—		—		—		—
Construction		1,062		—		—		—		—
Nonresidential real estate and land		11,943		268		—		—		—
Loans on deposits		—		—		—		—		2,405
Consumer and other		—		—		—		—		4,824

Allowance for Credit Losses on Financing Receivables [Table Text Block]

The activity in the allowance for loan losses is summarized as follows for the years ended June 30:

(in thousands)	2012			2011
Balance at beginning of year	$	764		$	1,535
Provision for losses on loans		139			668
Charge-offs		(28	)		(1,439	)
Balance at end of year	$	875		$	764

The following tables present the activity in the allowance for loan losses by portfolio segment for the years ended June 30, 2012 and 2011:

June 30, 2012:

(in thousands)	Beginning balance		Provision for loan losses			Loans charged off			Recoveries		Ending balance
Residential real estate:
One- to four-family	$	490	$	79		$	(4	)	$	—	$	565
Multi-family		11		38			—			—		49
Construction		5		(2	)		—			—		3
Nonresidential real estate and land		36		(1	)		—			—		35
Loans on deposits		8		(1	)		—			—		7
Consumer and other		14		26			(24	)		—		16
Unallocated		200		—			—			—		200
Totals	$	764	$	139		$	(28	)	$	—	$	875

June 30, 2011:

(in thousands)	Beginning balance		Provision for loan losses		Loans charged off			Recoveries		Ending balance
Residential real estate:
One- to four-family	$	1,261	$	668	$	(1,439	)	$	—	$	490
Multi-family		11		—		—			—		11
Construction		5		—		—			—		5
Nonresidential real estate and land		36		—		—			—		36
Loans on deposits		8		—		—			—		8
Consumer and other		14		—		—			—		14
Unallocated		200		—		—			—		200
Totals	$	1,535	$	668	$	(1,439	)	$	—	$	764

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LOANS (Details 3) (Residential Real Estate One To Four Family [Member], Troubled Debt Restructuring [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Residential Real Estate One To Four Family [Member] | Troubled Debt Restructuring [Member]
Loans Receivable, Recorded Investment, Nonaccrual	$ 1,593	$ 876
Loans Receivable, Recorded Investment, Loans Past Due Over 90Days Still Accruing	$ 201	$ 0

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 9) (Core Deposits [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Core Deposits [Member]
Gross Carrying Amount	$ 918	$ 918
Accumulated Amortization	918	831
Finite-Lived Intangible Assets, Net	$ 0	$ 87

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Net income (in dollars)	$ 1,715	$ 1,756
Less earnings allocated to unvested shares (in dollars)	0	7
Net income allocated to common shareholders, basic and diluted (in dollars)	$ 1,715	$ 1,749
Basic
Weighted-average common shares including unvested common shares outstanding	7,546,120	7,530,603
Less: Weighted-average unvested common shares	0	11,256
Weighted-average common shares outstanding	7,546,120	7,519,347
Diluted
Add: Dilutive effect of assumed exercise of stock options	0	0
Weighted-average common shares outstanding (diluted)	7,546,120	7,519,347

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LOANS (Details 5) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Loans Receivable, Recorded Investment, 30-89 Days Past Due	$ 4,332	$ 3,181
Loans Receivable, Recorded Investment, Greater than 90 Days Past Due	1,794	876
Loans Receivable, Recorded Investment, Total Past Due	6,126	4,057
Loans Receivable, Recorded Investment, Loans Not Past Due	177,663	179,770
Loans Receivable, Recorded Investment, Total	183,789	183,827
Commercial Real Estate [Member]
Loans Receivable, Recorded Investment, 30-89 Days Past Due	0	0
Loans Receivable, Recorded Investment, Greater than 90 Days Past Due	0	0
Loans Receivable, Recorded Investment, Total Past Due	0	0
Loans Receivable, Recorded Investment, Loans Not Past Due	11,098	12,211
Loans Receivable, Recorded Investment, Total	11,098	12,211
Loans On Deposits [Member]
Loans Receivable, Recorded Investment, 30-89 Days Past Due	0	0
Loans Receivable, Recorded Investment, Greater than 90 Days Past Due	0	0
Loans Receivable, Recorded Investment, Total Past Due	0	0
Loans Receivable, Recorded Investment, Loans Not Past Due	2,281	2,405
Loans Receivable, Recorded Investment, Total	2,281	2,405
Consumer and Other Loan [Member]
Loans Receivable, Recorded Investment, 30-89 Days Past Due	0	0
Loans Receivable, Recorded Investment, Greater than 90 Days Past Due	0	0
Loans Receivable, Recorded Investment, Total Past Due	0	0
Loans Receivable, Recorded Investment, Loans Not Past Due	4,865	4,824
Loans Receivable, Recorded Investment, Total	4,865	4,824
Residential Real Estate One To Four Family [Member]
Loans Receivable, Recorded Investment, 30-89 Days Past Due	4,332	3,181
Loans Receivable, Recorded Investment, Greater than 90 Days Past Due	1,794	876
Loans Receivable, Recorded Investment, Total Past Due	6,126	4,057
Loans Receivable, Recorded Investment, Loans Not Past Due	142,960	154,764
Loans Receivable, Recorded Investment, Total	149,086	158,821
Residential Real Estate Multi Family [Member]
Loans Receivable, Recorded Investment, 30-89 Days Past Due	0	0
Loans Receivable, Recorded Investment, Greater than 90 Days Past Due	0	0
Loans Receivable, Recorded Investment, Total Past Due	0	0
Loans Receivable, Recorded Investment, Loans Not Past Due	15,495	4,504
Loans Receivable, Recorded Investment, Total	15,495	4,504
Residential Real Estate Construction [Member]
Loans Receivable, Recorded Investment, 30-89 Days Past Due	0	0
Loans Receivable, Recorded Investment, Greater than 90 Days Past Due	0	0
Loans Receivable, Recorded Investment, Total Past Due	0	0
Loans Receivable, Recorded Investment, Loans Not Past Due	964	1,062
Loans Receivable, Recorded Investment, Total	$ 964	$ 1,062

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LOAN COMMITMENTS (Details Textual) (USD $)	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Line of Credit Facility, Commitment Fee Amount	$ 8,300,000	$ 8,900,000
Mortgage Loans on Real Estate, Face Amount of Mortgages	592,000	614,000
Mortgage Loans on Real Estate, Minimum Interest Rate in Range	4.53%	4.63%
Mortgage Loans on Real Estate, Maximum Interest Rate in Range	7.25%	8.00%
Mortgage Loans On Real Estate, Maturity Term, Minimum	10 years	15 years
Mortgage Loans On Real Estate, Maturity Term, Maximum	30 years	30 years
Mortgage Loans Over $1,000,000 [Member]
Mortgage Loans on Real Estate, Carrying Amount of Mortgages	$ 1,800,000	$ 1,700,000

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ADVANCES FROM THE FEDERAL HOME LOAN BANK (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
2013	$ 9,810	$ 3,184
2014	7,555	7,810
2015	2,366	7,555
2016	623	2,366
2017	431	623
2018	2,328	431
2019	3,249	2,328
2020-2030	703	952
Federal Home Loan Bank, Advances	27,065	25,249
Premium assigned to borrowings in Frankfort First acquisition, net of amortization	0	12
Long-term Federal Home Loan Bank Advances, Total	$ 27,065	$ 25,261

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LOANS (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Residential real estate, Construction	$ 964	$ 1,062
Nonresidential real estate and land	11,098	12,211
Loans on deposits	2,281	2,405
Consumer and other	4,865	4,824
Loans Receivable, Recorded Investment	183,789	183,827
Undisbursed portion of loans in process	544	353
Deferred loan origination fees (cost)	(103)	(86)
Allowance for loan losses (in dollars)	875	764	1,535
Loans receivable - net, Carrying Value	182,473	182,796
Residential Real Estate One To Four Family [Member]
Residential real estate, One- to four-family/Multi-family	149,086	158,821
Loans Receivable, Recorded Investment	149,086	158,821
Allowance for loan losses (in dollars)	565	490	1,261
Residential Real Estate Multi Family [Member]
Residential real estate, One- to four-family/Multi-family	15,495	4,504
Loans Receivable, Recorded Investment	15,495	4,504
Allowance for loan losses (in dollars)	$ 49	$ 11	$ 11

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash flows from operating activities:
Net income	$ 1,715	$ 1,756
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	189	185
Amortization of deferred loan origination (fees) costs	8	(8)
Amortization of premiums on FHLB advances	(12)	(108)
Amortization of core deposit intangibles	87	131
Net gain on sale of loans	(23)	(155)
Net loss on real estate owned	67	107
Net gain on sale of equipment	(3)	0
Deferred gain on sale of real estate acquired through foreclosure	(17)	0
ESOP compensation expense	180	180
Amortization of stock benefit plans and stock options expense	0	284
Earnings on bank-owned life insurance	(90)	(90)
Provision for loan losses	139	668
Origination of loans held for sale	(875)	(3,881)
Proceeds from loans held for sale	417	4,406
Increase (decrease) in cash, due to changes in:
Accrued interest receivable	41	(20)
Prepaid expenses and other assets	50	123
Accrued interest payable	(27)	(54)
Accounts payable and other liabilities	(148)	(22)
Federal income taxes
Current	(8)	(143)
Deferred	(247)	147
Net cash provided by operating activities	1,443	3,506
Cash flows from investing activities:
Purchase of available-for-sale securities	(12,500)	(11,000)
Investment securities maturities, prepayments and calls:
Held to maturity	2,054	13,625
Available for sale	12,514	41
Loans originated for investment, net of principal collected	2,456	3,205
Proceeds from sale of real estate owned	177	294
Additions to premises and equipment, net	(163)	(121)
Net cash provided by investing activities	4,538	6,044
Cash flows from financing activities:
Net change in deposits	(5,388)	(5,029)
Payments by borrowers for taxes and insurance, net	16	136
Proceeds from Federal Home Loan Bank advances	29,000	16,000
Repayments on Federal Home Loan Bank advances	(27,184)	(22,640)
Treasury stock repurchases	(135)	(218)
Dividends paid on common stock	(1,604)	(1,112)
Net cash used in financing activities	(5,295)	(12,863)
Net increase (decrease) in cash and cash equivalents	686	(3,313)
Beginning cash and cash equivalents	5,049	8,362
Ending cash and cash equivalents	5,735	5,049
Supplemental disclosure of cash flow information:
Federal income taxes	1,090	97
Interest on deposits and borrowings	2,218	3,343
Supplemental disclosure of noncash investing activities:
Transfers from loans to real estate acquired through foreclosure	96	4,643
Loans disbursed upon sales of real estate acquired through foreclosure	$ 2,375	$ 686

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ADVANCES FROM THE FEDERAL HOME LOAN BANK (Details Textuals) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Advances from Federal Home Loan Banks	$ 38.2	$ 37.6
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Interest Rate, Range from	1.11%	1.11%
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Interest Rate, Range to	6.95%	6.95%
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Weighted Average Interest Rate	2.27%	2.50%
Federal Home Loan Bank, Advances, General Debt Obligations, Maximum Amount Available	$ 65.9

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 10) (Management [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Management [Member]
Outstanding principal, beginning of year	$ 865	$ 593
Changes in composition of related parties	0	157
Principal disbursed during the year	53	156
Principal repaid and refinanced during the year	(121)	(41)
Outstanding principal, end of year	$ 797	$ 865

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ADVANCES FROM THE FEDERAL HOME LOAN BANK (Tables)

12 Months Ended

Jun. 30, 2012

Schedule Of Federal Home Loan Bank Advances Fhlb Bank [Abstract]

Schedule Of Federal Home Loan Bank Advances Fhlb Bank [Table Text Block]

Advances from the Federal Home Loan Bank, collateralized at June 30, 2012 and 2011 by pledges of certain residential mortgage loans totaling $38.2 million and $37.6 million, respectively, and the Banks’ investment in Federal Home Loan Bank stock, are summarized as follows:

Maturing year ended June 30, 2012
(in thousands)
2013	$	9,810
2014		7,555
2015		2,366
2016		623
2017		431
2018		2,328
2019		3,249
2020-2030		703
	$	27,065
Premium assigned to borrowings in Frankfort First acquisition, net of amortization		—
	$	27,065

At June 30, 2012 interest rates for advances were fixed ranging from 1.11% to 6.95%, with a weighted-average interest rate of 2.27%.

Maturing year ended June 30, 2011
(in thousands)
2012	$	3,184
2013		7,810
2014		7,555
2015		2,366
2016		623
2017		431
2018		2,328
2019-2030		952
	$	25,249
Premium assigned to borrowings in Frankfort First acquisition, net of amortization		12
	$	25,261

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DEPOSITS (Tables)

12 Months Ended

Jun. 30, 2012

Banking and Thrift [Abstract]

Schedule Of Deposit Liabilities Disclosures [Table Text Block]

Deposits consist of the following major classifications at June 30:

(in thousands)	2012		2011
Non-interest bearing checking accounts	$	1,704	$	996
Checking accounts		7,615		6,965
Savings accounts		36,913		34,147
Money market demand deposits		4,837		4,796
Total demand, transaction and passbook deposits		51,069		46,904
Certificates of deposit:
Original maturities of:
Less than 12 months		3,940		5,019
12 months to 36 months		72,405		81,075
More than 36 months		7,138		6,942
Total certificates of deposit		83,483		93,036
Total deposits	$	134,552	$	139,940

Schedule Of Certificates Of Deposit Fiscal Year Maturity [Table Text Block]

Maturities of outstanding certificates of deposit at June 30 are summarized as follows:

(in thousands)	2012
2013	$	56,068
2014		15,050
2015		9,649
2016		1,675
2017 and thereafter		1,041
	$	83,483

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REAL ESTATE OWNED (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Balance at beginning of year	$ 4,304	$ 748
Additions	96	4,643
Impairment charges	(67)	(71)
Disposals	(1,888)	(1,016)
Balance at end of year	$ 2,445	$ 4,304

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) (USD $)	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Loans held for sale, Carrying Value	$ 481,000	$ 0
Amortization of Mortgage Servicing Rights (MSRs)	22,000	13,000
Proceeds from Sale of Mortgage Servicing Rights (MSR)	12,600,000	15,000,000
Loan Sold Under Fhlb Program	394,000
Average Loan Serviced	13,900,000
Servicing Fees, Net	34,000	36,000
Mortgage Loans on Real Estate, Periodic Payment Terms	40 years
Mortgage Loans On Real Estate Borrowing Capacity Percentage	95.00%
Loans and Leases Receivable Consumer Home Equity Borrowing Capacity Percentage	80.00%
Deferred Compensation Arrangement with Individual, Compensation Expense	17,000	7,000
Employee Stock Ownership Plan (ESOP), Cash Contributions to ESOP	324,000
Allocated Share-based Compensation Expense		160,000
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense		54,000
Loans and Leases Receivable, Impaired, Description	Independent appraisals for collateral-dependent loans are updated periodically (usually every 9-12 months).
Impaired Loans Pledged As Collateral Principal Balance	1,500,000	1,100,000
Impaired Loans Pledged As Collateral Related Allowance	97,000	55,000
Provision For Loss On Impaired Loans	42,000
Real Estate, Gross	881,000	312,000
Real Estate, Write-down or Reserve, Amount	58,000	71,000
Amortization of intangible assets	87,000	131,000
Deposits From Related Parties	2,200,000	1,100,000
ESOP compensation expense	180,000	180,000
Employee Stock Ownership Plan Esop Shares In Esop Surrendered	27,047	26,682
Employee Stock Ownership Plan (ESOP), Debt Structure, Direct Loan, Amount	2,100,000	2,300,000
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Vested In Period Grant Date Fair Value		237,000
Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	421,216
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	10 years
Equity Incentive Plan [Member] | Management [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	168,486
First Federal Of Hazard [Member]
Defined Benefit Plan, Funded Percentage		83.79%
First Federal Of Frankfort [Member]
Defined Benefit Plan, Funded Percentage		85.95%
Pentegra Db Plan [Member]
Entity Tax Identification Number	135645888
Multiemployer Plan Number	333
Multiemployer Plans, Plan Contributions		299,700,000	203,600,000
Multiemployer Plans, Collective-Bargaining Arrangement, Percentage of Contributions	5.00%
Pension and Other Postretirement Benefit Expense	742,000	564,000
Loans To Qualified Borrowers [Member]
Loans and Leases Receivable Consumer Home Equity Borrowing Capacity Percentage	90.00%
Loans Secured By Savings [Member]
Loans and Leases Receivable Consumer Home Equity Borrowing Capacity Percentage	90.00%
First Mortgage [Member]
Mortgage Loans On Real Estate Alternate Borrowing Capacity Percentage	90.00%
Second Mortgage [Member]
Mortgage Loans On Real Estate Alternate Borrowing Capacity Percentage	10.00%
Construction Loans [Member]
Mortgage Loans On Real Estate Alternate Borrowing Capacity Percentage	80.00%
Multi Family and Nonresidential Loans [Member]
Mortgage Loans on Real Estate, Periodic Payment Terms	25 years
Mortgage Loans On Real Estate Borrowing Capacity Percentage	75.00%
Mortgage Servicing Rights [Member]
Loans Held-for-sale, Mortgages	$ 101,000	$ 120,000

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FEDERAL INCOME TAXES (Tables)

12 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

Federal income taxes on earnings differs from that computed at the statutory corporate tax rate for the years ended June 30, 2012 and 2011, as follows:

(in thousands)	2012			2011
Federal income taxes at the statutory rate	$	869		$	632
Increase (decrease) resulting primarily from:
Cash surrender value of life insurance		(30	)		(30	)
Compensation expense		-			4
Other		1			-
Allowed deduction claimed on amended return for $1.3 million paid to option holders in acquisition of Frankfort First Bancorp, Inc. and other IRS audit adjustments		-			(502	)
	$	840		$	104

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

The composition of the Company’s net deferred tax liability at June 30 is as follows:

(in thousands)	2012			2011
Taxes (payable) refundable on temporary differences at estimated corporate tax rate:
Deferred tax assets:
General loan loss allowance	$	297		$	260
Deferred compensation and benefits		257			258
Charitable contributions		3			3
Purchase accounting adjustments		—			4
Nonaccrued interest on loans		21			8
Other real estate owned adjustments		259			80
Total deferred tax assets		837			613
Deferred tax liabilities:
Federal Home Loan Bank stock dividends		(1,074	)		(1,074	)
Deferred loan origination costs		(32	)		(39	)
Loan servicing rights		(12	)		(11	)
Other		(—)			(2	)
Purchase accounting adjustments		(463	)		(248	)
Depreciation		(30	)		(260	)
Total deferred tax liabilities		(1,611	)		(1,634	)
Net deferred tax liability	$	(774	)	$	(1,021	)

Schedule of Unrecognized Tax Benefits Roll Forward [Table Text Block]

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(in thousands)	2012			2011
Balance at beginning of year	$	80		$	253
Additions/(reductions) based on tax positions for the current year		(80	)		(173	)
Balance at end of year	$	—		$	80

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REGULATORY CAPITAL (Tables)

12 Months Ended

Jun. 30, 2012

Banking and Thrift [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

The transfer to the OCC resulted is somewhat different capital ratios than reported by the OTS. To be categorized as “well-capitalized” the Banks must maintain minimum capital ratios as set forth in the following tables:

	As of June 30, 2012
											To be “well-
											capitalized” under
						For capital					prompt corrective
	Actual					adequacy purposes					action provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
Tier 1 core capital
First Federal of Hazard	$	20,764		21.2	%		³$3,926		³4.0	%		³$4,908		³ 5.0	%
First Federal of Frankfort	$	19,543		15.9	%		³$5,511		³4.0	%		³$6,889		³ 5.0	%
Consolidated	$	44,333		21.3	%		³$8,918		³4.0	%		N/A		N/A
Total risk-based capital
First Federal of Hazard	$	21,185		42.2	%		³$4,013		³8.0	%		³$5,016		³10.0	%
First Federal of Frankfort	$	19,997		28.7	%		³$5,566		³8.0	%		³$6,958		³10.0	%
Consolidated	$	45,208		38.6	%		³$9,377		³8.0	%		N/A		N/A
Tier 1 risk-based capital
First Federal of Hazard	$	20,764		41.4	%		N/A		N/A			³$3,010		³ 6.0	%
First Federal of Frankfort	$	19,543		28.1	%		N/A		N/A			³$4,175		³ 6.0	%
Consolidated	$	44,333		37.8	%		N/A		N/A			N/A		N/A

	As of June 30, 2011
											To be “well-
											capitalized” under
						For capital					prompt corrective
	Actual					adequacy purposes					action provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
Tangible capital
First Federal of Hazard	$	19,629		19.3	%		³$1,525		³1.5	%		N/A		N/A
First Federal of Frankfort	$	18,151		14.6	%		³$1,868		³1.5	%		N/A		N/A
Consolidated	$	44,100		20.8	%		³$3,175		³1.5	%		N/A		N/A
Tier 1 core capital
First Federal of Hazard	$	19,629		19.3	%		³$4,067		³4.0	%		³$5,084		³ 5.0	%
First Federal of Frankfort	$	18,151		14.6	%		³$4,980		³4.0	%		³$6,225		³ 5.0	%
Consolidated	$	44,100		20.8	%		³$9,048		³4.0	%		N/A		N/A
Total risk-based capital
First Federal of Hazard	$	19,939		40.5	%		³$3,941		³8.0	%		³$4,927		³10.0	%
First Federal of Frankfort	$	18,564		27.0	%		³$5,505		³8.0	%		³$6,881		³10.0	%
Consolidated	$	44,864		39.0	%		³$9,201		³8.0	%		N/A		N/A
Tier 1 risk-based capital
First Federal of Hazard	$	19,629		39.8	%		N/A		N/A			³$2,956		³ 6.0	%
First Federal of Frankfort	$	18,151		26.4	%		N/A		N/A			³$4,129		³ 6.0	%
Consolidated	$	44,100		38.3	%		N/A		N/A			N/A		N/A

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY [Parenthetical] (USD $)	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash dividends, per common share	$ 0.40	$ 0.40

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CONDENSED FINANCIAL STATEMENTS OF KENTUCKY FIRST FEDERAL BANCORP (Tables)

12 Months Ended

Jun. 30, 2012

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Schedule of Condensed Balance Sheet [Table Text Block]

The following condensed financial statements summarize the financial position of Kentucky First Federal Bancorp as of June 30, 2012 and 2011, and the results of its operations and its cash flows for the fiscal years ended June 30, 2012 and 2011.

KENTUCKY FIRST FEDERAL BANCORP

BALANCE SHEETS

June 30, 2012 and 2011

(In thousands)

ASSETS	2012			2011
Interest-bearing deposits in First Federal of Hazard	$	425		$	604
Interest-bearing deposits in First Federal of Frankfort		427			2,513
Other interest-bearing deposits		39			37
Investment in First Federal of Hazard		22,640			21,708
Investment in Frankfort First		34,977			33,671
Prepaid expenses and other assets		456			521
Total assets	$	58,964		$	59,054
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable and other liabilities	$	111		$	357
Total liabilities		111			357
Shareholders’ equity
Common stock		86			86
Additional paid-in capital		36,870			36,907
Retained earnings		31,971			31,860
Shares acquired by stock benefit plans		(1,772	)		(1,989	)
Shares acquired for treasury – at cost		(8,305	)		(8,170	)
Accumulated other comprehensive income		3			3
Total shareholders’ equity		58,853			58,697
Total liabilities and shareholders’ equity	$	58,964		$	59,054

Schedule of Condensed Income Statement [Table Text Block]

KENTUCKY FIRST FEDERAL BANCORP

STATEMENTS OF INCOME

Years ended June 30, 2012 and 2011

(Dollar amounts in thousands)

	2012			2011
Income
Interest income	$	121		$	164
Dividends from First Federal of Hazard		—			—
Equity in undistributed (excess distributed) earnings of First Federal of Hazard		886			644
Dividends from Frankfort First		—			378
Equity in undistributed earnings of Frankfort First		1,306			964
Total income		2,313			2,150
Non-interest expenses		838			547
Earnings before income taxes		1,475			1,603
Federal income tax expense (benefit)		(240	)		(153	)
NET INCOME	$	1,715		$	1,756

Schedule of Condensed Cash Flow Statement [Table Text Block]

KENTUCKY FIRST FEDERAL BANCORP

STATEMENTS OF CASH FLOWS

For Years ended June 30, 2012 and 2011

(Dollar amounts in thousands)

	2012			2011
Cash flows from operating activities:
Net earnings for the year	$	1,715		$	1,756
Adjustments to reconcile net earnings to net cash provided by operating activities:
Excess (deficit) distributions over earnings (undistributed earnings) from consolidated subsidiaries		(2,192	)		(1,608	)
Noncash compensation expense		134			363
Increase (decrease) in cash due to changes in:
Prepaid expenses and other assets		65			(235	)
Other liabilities		(246	)		7
Net cash provided by operating activities		(524	)		283

	2012			2011
Cash flows from financing activities:
Dividends paid on common stock		(1,604	)		(1,112	)
Repurchase of treasury shares		(135	)		(218	)
Net cash used in financing activities		(1,739	)		(1,330	)
Net increase (decrease) in cash and cash equivalents		(2,263	)		(1,047	)
Cash and cash equivalents at beginning of year		3,154			4,201
Cash and cash equivalents at end of year	$	891		$	3,154

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 7) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Available-for-sale securities, Fair Value	$ 189	$ 203
Impaired Loans [Member] | Residential Real Estate One To Four Family [Member]
Available-for-sale securities, Fair Value	807	1,033
Valuation Technique(s)	Sales comparison approach
Unobservable Input(s)	Adjustments for differences between comparable sales
Range (Weighted Average)	4.3
Impaired Loans [Member] | Residential Real Estate One To Four Family [Member] | Maximum [Member]
Range (Weighted Average)	19.8
Impaired Loans [Member] | Residential Real Estate One To Four Family [Member] | Minimum [Member]
Range (Weighted Average)	3.1
Impaired Loans [Member] | Residential Real Estate Multi Family [Member]
Available-for-sale securities, Fair Value	631
Valuation Technique(s)	Sales comparison approach
Unobservable Input(s)	Adjustments for differences between comparable sales
Range (Weighted Average)	4.8
Impaired Loans [Member] | Residential Real Estate Multi Family [Member] | Maximum [Member]
Range (Weighted Average)	15.0
Impaired Loans [Member] | Residential Real Estate Multi Family [Member] | Minimum [Member]
Range (Weighted Average)	5.9
Repossessed Assets [Member] | Residential Real Estate One To Four Family [Member]
Available-for-sale securities, Fair Value	648
Valuation Technique(s)	Sales comparison approach
Unobservable Input(s)	Adjustments for differences between comparable sales
Range (Weighted Average)	8.6
Repossessed Assets [Member] | Residential Real Estate One To Four Family [Member] | Maximum [Member]
Range (Weighted Average)	18.6
Repossessed Assets [Member] | Residential Real Estate One To Four Family [Member] | Minimum [Member]
Range (Weighted Average)	0.5
Repossessed Assets [Member] | Residential Real Estate Multi Family [Member]
Available-for-sale securities, Fair Value	$ 233
Valuation Technique(s)	Sales comparison approach
Unobservable Input(s)	Adjustments for differences between comparable sales
Range (Weighted Average)	20.8
Repossessed Assets [Member] | Residential Real Estate Multi Family [Member] | Maximum [Member]
Range (Weighted Average)	38.9
Repossessed Assets [Member] | Residential Real Estate Multi Family [Member] | Minimum [Member]
Range (Weighted Average)	20.2

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LOANS (Details 6) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Loans Receivable, Recorded Investment	$ 183,789	$ 183,827
Commercial Real Estate [Member]
Loans Receivable, Recorded Investment	11,098	12,211
Commercial Real Estate [Member] | Pass [Member]
Loans Receivable, Recorded Investment	10,831	11,943
Commercial Real Estate [Member] | Special Mention [Member]
Loans Receivable, Recorded Investment	267	268
Commercial Real Estate [Member] | Substandard [Member]
Loans Receivable, Recorded Investment	0	0
Commercial Real Estate [Member] | Doubtful [Member]
Loans Receivable, Recorded Investment	0	0
Commercial Real Estate [Member] | Not Rated [Member]
Loans Receivable, Recorded Investment	0	0
Loans On Deposits [Member]
Loans Receivable, Recorded Investment	2,281	2,405
Loans On Deposits [Member] | Pass [Member]
Loans Receivable, Recorded Investment	0	0
Loans On Deposits [Member] | Special Mention [Member]
Loans Receivable, Recorded Investment	0	0
Loans On Deposits [Member] | Substandard [Member]
Loans Receivable, Recorded Investment	0	0
Loans On Deposits [Member] | Doubtful [Member]
Loans Receivable, Recorded Investment	0	0
Loans On Deposits [Member] | Not Rated [Member]
Loans Receivable, Recorded Investment	2,281	2,405
Consumer and Other Loan [Member]
Loans Receivable, Recorded Investment	4,865	4,824
Consumer and Other Loan [Member] | Pass [Member]
Loans Receivable, Recorded Investment	0	0
Consumer and Other Loan [Member] | Special Mention [Member]
Loans Receivable, Recorded Investment	0	0
Consumer and Other Loan [Member] | Substandard [Member]
Loans Receivable, Recorded Investment	0	0
Consumer and Other Loan [Member] | Doubtful [Member]
Loans Receivable, Recorded Investment	0	0
Consumer and Other Loan [Member] | Not Rated [Member]
Loans Receivable, Recorded Investment	4,865	4,824
Residential Real Estate One To Four Family [Member]
Loans Receivable, Recorded Investment	149,086	158,821
Residential Real Estate One To Four Family [Member] | Pass [Member]
Loans Receivable, Recorded Investment	0	0
Residential Real Estate One To Four Family [Member] | Special Mention [Member]
Loans Receivable, Recorded Investment	64	67
Residential Real Estate One To Four Family [Member] | Substandard [Member]
Loans Receivable, Recorded Investment	3,057	2,180
Residential Real Estate One To Four Family [Member] | Doubtful [Member]
Loans Receivable, Recorded Investment	0	0
Residential Real Estate One To Four Family [Member] | Not Rated [Member]
Loans Receivable, Recorded Investment	145,965	156,574
Residential Real Estate Multi Family [Member]
Loans Receivable, Recorded Investment	15,495	4,504
Residential Real Estate Multi Family [Member] | Pass [Member]
Loans Receivable, Recorded Investment	12,692	4,504
Residential Real Estate Multi Family [Member] | Special Mention [Member]
Loans Receivable, Recorded Investment	0	0
Residential Real Estate Multi Family [Member] | Substandard [Member]
Loans Receivable, Recorded Investment	2,803	0
Residential Real Estate Multi Family [Member] | Doubtful [Member]
Loans Receivable, Recorded Investment	0	0
Residential Real Estate Multi Family [Member] | Not Rated [Member]
Loans Receivable, Recorded Investment	0	0
Residential Real Estate Construction [Member]
Loans Receivable, Recorded Investment	964	1,062
Residential Real Estate Construction [Member] | Pass [Member]
Loans Receivable, Recorded Investment	964	1,062
Residential Real Estate Construction [Member] | Special Mention [Member]
Loans Receivable, Recorded Investment	0	0
Residential Real Estate Construction [Member] | Substandard [Member]
Loans Receivable, Recorded Investment	0	0
Residential Real Estate Construction [Member] | Doubtful [Member]
Loans Receivable, Recorded Investment	0	0
Residential Real Estate Construction [Member] | Not Rated [Member]
Loans Receivable, Recorded Investment	$ 0	$ 0

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CONDENSED FINANCIAL STATEMENTS OF KENTUCKY FIRST FEDERAL BANCORP (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash flows from operating activities:
Net earnings for the year	$ 1,715	$ 1,756
Adjustments to reconcile net earnings to net cash provided by operating activities:
Noncash compensation expense	180	180
Increase (decrease) in cash due to changes in:
Prepaid expenses and other assets	(50)	(123)
Net cash provided by operating activities	1,443	3,506
Cash flows from financing activities:
Dividends paid on common stock	1,604	1,112
Repurchase of treasury shares	135	218
Net cash used in financing activities	(5,295)	(12,863)
Net increase (decrease) in cash and cash equivalents	686	(3,313)
Beginning cash and cash equivalents	5,049	8,362
Ending cash and cash equivalents	5,735	5,049
Parent Company [Member]
Cash flows from operating activities:
Net earnings for the year	1,715	1,756
Adjustments to reconcile net earnings to net cash provided by operating activities:
Excess (deficit) distributions over earnings (undistributed earnings) from consolidated subsidiaries	(2,192)	(1,608)
Noncash compensation expense	134	363
Increase (decrease) in cash due to changes in:
Prepaid expenses and other assets	65	(235)
Other liabilities	(246)	7
Net cash provided by operating activities	(524)	283
Cash flows from financing activities:
Dividends paid on common stock	(1,604)	(1,112)
Repurchase of treasury shares	(135)	(218)
Net cash used in financing activities	(1,739)	(1,330)
Net increase (decrease) in cash and cash equivalents	(2,263)	(1,047)
Beginning cash and cash equivalents	3,154	4,201
Ending cash and cash equivalents	$ 891	$ 3,154

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
ASSETS
Cash and due from financial institutions	$ 1,244	$ 1,002
Interest-bearing demand deposits	4,491	4,047
Cash and cash equivalents	5,735	5,049
Interest-bearing deposits in other financial institutions	100	100
Securities available for sale, Carrying Value	189	203
Securities held-to-maturity, at amortized cost- approximate fair value of $5,144 and $7,257 at June 30, 2012 and 2011, respectively	4,756	6,810
Loans held for sale	481	0
Loans, net of allowance of $875 and $764 at June 30, 2012 and 2011, respectively	182,473	182,796
Real estate owned, net	2,445	4,304
Premises and equipment, net	2,644	2,667
Federal Home Loan Bank stock, at cost	5,641	5,641
Accrued interest receivable, Carrying Value	497	538
Bank-owned life insurance	2,697	2,607
Goodwill	14,507	14,507
Other intangible assets	0	87
Prepaid FDIC assessments	246	361
Prepaid federal income taxes	30	22
Prepaid expenses and other assets	508	443
Total assets	222,949	226,135
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits	134,552	139,940
Federal Home Loan Bank advances	27,065	25,261
Advances by borrowers for taxes and insurance	487	471
Accrued interest payable	64	91
Deferred federal income taxes	774	1,021
Deferred revenue	648	0
Other liabilities	506	654
Total liabilities	164,096	167,438
Commitments and contingencies	0	0
Shareholders' equity
Preferred stock, 500,000 shares authorized, $.01 par value; no shares issued and outstanding	0	0
Common stock, 20,000,000 shares authorized, $.01 par value; 8,596,064 shares issued	86	86
Additional paid-in capital	36,870	36,907
Retained earnings	31,971	31,860
Unearned employee stock ownership plan (ESOP)	(1,772)	(1,989)
Treasury shares at cost, 826,375 and 811,375 common shares at June 30, 2012 and 2011, respectively	(8,305)	(8,170)
Accumulated other comprehensive income	3	3
Total shareholders' equity	58,853	58,697
Total liabilities and shareholders' equity	$ 222,949	$ 226,135

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SECURITIES (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Available-for-sale Securities, Estimated fair value	$ 189	$ 203
Residential Mortgage Backed Securities [Member]
Available-for-sale Securities, Amortized cost	185	199
Available-for-sale Securities, Gross unrealized/ unrecognized gains	4	4
Available-for-sale Securities, Gross unrealized/ unrecognized losses	0	0
Available-for-sale Securities, Estimated fair value	$ 189	$ 203

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Parenthetical] (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Tax portion of unrealized holding gains (losses) on securities designated as available for sale	$ 0	$ 0

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DEPOSITS (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
2013	$ 56,068
2014	15,050
2015	9,649
2016	1,675
2017 and thereafter	1,041
Total certificates of deposit	$ 83,483	$ 93,036

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Intrinsic value of options exercised	$ 0	$ 0
Cash received from option exercises	0	0
Tax benefit realized from option exercises	$ 0	$ 0

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FEDERAL INCOME TAXES (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2009
Balance at beginning of year	$ 80	$ 253
Additions/(reductions) based on tax positions for the current year	(80)	(173)	80
Balance at end of year	$ 0	$ 80

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Jun. 30, 2012

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

1.     Principles of Consolidation: The consolidated financial statements include the accounts of the Company, First Federal of Hazard, Frankfort First and First Federal of Frankfort. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

2.     Use of Estimates: To prepare financial statements in conformity with U.S. GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. The allowance for loan losses, goodwill, loan servicing rights, deferred tax assets and fair values of financial instruments are particularly subject to change.

Marketable Securities, Policy [Policy Text Block]

3. Securities: Debt securities are classified as held to maturity or available for sale. Securities classified as held to maturity are to be carried at cost only if the Company has the positive intent and ability to hold these securities to maturity. Securities designated as available for sale are carried at fair value with resulting unrealized gains or losses recorded to shareholders’ equity, net of tax. Realized gains and losses on sales of securities are recognized using the specific identification method.

Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis.

Finance, Loan and Lease Receivables, Held for Investments, Foreclosed Assets Policy [Policy Text Block]

4. Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal amount outstanding, adjusted for deferred loan origination fees and the allowance for loan losses. Interest income is accrued on the unpaid principal balance unless the collectibility of the loan is in doubt. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments. Interest income on loans is generally discontinued at the time a loan is 90 days delinquent unless the loan is well-secured and in process of collection. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. A loan is moved to non-accrual status in accordance with the Company’s policy, typically 90 days after the loan becomes delinquent.

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Finance, Loan and Lease Receivables, Held-for-sale, Policy [Policy Text Block]

5. Loans held for sale: Loans held for sale are carried at the lower of cost (less principal payments received) or fair value, calculated on an aggregate basis. At June 30, 2012 the Company had $481,000 in loans held for sale, while at June 30, 2011, no loans were held for sale.

In selling loans, the Company utilizes a program with the Federal Home Loan Bank, retaining servicing on loans sold. Mortgage servicing rights on originated loans that have been sold are initially recorded at fair value. Capitalized servicing rights are amortized in proportion to and over the period of estimated servicing revenues. The Company recorded amortization related to mortgage servicing rights totaling $22,000 and $13,000 during the years ended June 30, 2012 and 2011, respectively. The carrying value of the Company’s mortgage servicing rights, which approximated fair value, totaled approximately $101,000 and $120,000 at June 30, 2012 and 2011, respectively.

The Company was servicing mortgage loans of approximately $12.6 million and $15.0 million that had been sold to the Federal Home Loan Bank at June 30, 2012 and 2011, respectively. During the fiscal year ended June 30, 2012, we sold $394,000 in loans under the FHLB program and the average balance of loans serviced was $13.9 million.

Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income. Changes in valuation allowances are reported with other non-interest income on the income statement. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses.

Servicing fee income which is reported on the income statement as other non-interest income is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal and are recorded as income when earned. The amortization of mortgage servicing rights is netted against loan servicing fee income. Servicing fees totaled $34,000 and $36,000 for the years ended June 30, 2012 and 2011, respectively. Late fees and ancillary fees related to loan servicing are not material.

Loans and Leases Receivable, Allowance for Loan Losses Policy [Policy Text Block]

6. Allowance for Loan Losses: The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loss experience, the nature and volume of the portfolio, trends in the level of delinquent and problem loans, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral and current and anticipated economic conditions in the primary lending area. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired or loans otherwise classified as substandard or doubtful. The general component covers non-classified loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the most recent eight quarters. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment.

These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; changes in lending policies, procedures and practices; experience, ability and depth of lending management and other relevant staff; economic trends and conditions; industry conditions; and effects of changes in credit concentrations. Our portfolio segments include residential real estate, nonresidential real estate and land, loans on deposits and consumer and other loans. Risk factors associated with our portfolio segments are as follows:

Residential Real Estate

Our primary lending activity is the origination of mortgage loans, which enable a borrower to purchase or refinance existing homes in the Banks’ respective market areas. We further classify our residential real estate loans as one- to four-family, multi-family or construction. We believe that our first mortgage position on loans secured by residential real estate presents lower risk than our other loans, with the exception of loans on deposits.

We offer a mix of adjustable-rate and fixed-rate mortgage loans with terms up to 40 years for owner-occupied properties. For these properties a borrower may be able to borrow up to 95% of the value with private mortgage insurance. Alternatively, the borrower may be able to borrow up to 90% of the value with a traditional first mortgage and a second mortgage (bearing a higher rate of interest) on the additional 10% of the value. After initial fixed-rate periods of one, three, five or seven years, the interest rates on the adjustable-rate loans adjust once a year with annual limitation of one percentage point per adjustment period and a lifetime cap of five percentage points.

We also originate loans to individuals to finance the construction of residential dwellings for personal use or for use as rental property. We do not generally lend to builders for construction of speculative or custom residential properties for resale. Construction loans are generally less than one year in length, do not exceed 80% of the appraised value, and provide for the payment of interest only during the construction phase. Funds are disbursed as progress is made toward completion of the construction based on site inspections by qualified bank staff.

Multi-family and Nonresidential Loans

We offer mortgage loans secured by residential non-owner-occupied one- to four-family, residential multi-family (five or more units), and nonresidential real estate. Nonresidential real estate loans are comprised generally of commercial office buildings, churches, condominiums and properties used for other purposes. Generally, these loans are originated for 25 years or less and do not exceed 75% of the appraised value. Loans secured by multi-family and commercial real estate generally have larger balances and involve a greater degree of risk than one- to four-family residential mortgage loans. These loans depend on the borrower’s creditworthiness and the feasibility and cash flow potential of the project. Payments on loans secured by income properties often depend on successful operation and management of the properties. As a result, repayment on such loans may be subject to a greater extent to adverse conditions in the real estate market or economy than owner-occupied residential loans.

Consumer lending

Our consumer loans include home equity lines of credit and loans secured by savings deposits. Home equity loans are generally second mortgage loans subordinate only to first mortgages also held by the bank and do not exceed 80% of the estimated value of the property. We do offer home equity loans up to 90% of the estimated value to qualified borrowers and these loans carry a premium rate. Loans secured by savings are originated up to 90% of the depositor’s savings account balance and normally bear interest at two percentage points above the rate paid on the deposit account. Because the deposit account must be pledged as collateral to secure the loan, the inherent risk of this type of loan is minimal.

In years prior to the year ended June 30, 2011, the loss history of the most recent 12 quarterly periods was used in the calculation of the Company’s general component of allowance for losses on loans. A three year period is the amount of time we determined was appropriate and provided a representative time frame from which we might estimate losses within our portfolio. Although prior to the 2011 fiscal year the Company had not incurred substantial losses, we did incur losses which have been discussed in previous financial statements and regulatory filings. When a loss event occurs it is prudent to shorten the period of time that is deemed representative of the loss period. This shortening process focuses much more attention on recent events than the normal period would focus, and, in our case, increased the amount that we determined was proper for our allowance for losses on loans. After a loss event occurs it is also prudent to re-extend the period of time used to represent the Company’s loss history. Failure to lengthen the time period would have the undesirable effect of focusing too closely on recent loss history and could result in losing sight of the loss event that prompted the change in the first place. Therefore, during the 2011 year our loss history lookback period was shortened to the most recent four quarters, while during the 2012 year we began to lengthen the lookback period and used the most recent eight quarterly periods. We believe that the change to our lookback period was proper in determining an adequate amount loan loss allowance.

The Banks account for impaired loans by determining the present value of expected future cash flows discounted at the loan’s effective interest rate or, as an alternative, at the loan’s observable market price or fair value of the collateral, reduced by estimated selling costs.

A loan is considered impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. Although all of our loans are secured by collateral, we rely heavily on the capacity of our borrowers to generate sufficient cash flow to service their debt. As a result, our loans do not become collateral-dependent until there is deterioration in the borrower’s cash flow and financial condition, which makes it necessary for us to look to the collateral for our sole source of repayment. Collateral-dependent loans which are more than ninety days delinquent are considered to constitute more than a minimum delay in repayment and are evaluated for impairment under the policy at that time.

In the calculation of our general valuation allowance we consider the potential for outdated appraisal values to be of minimal risk and, therefore, do not attribute a specific factor to it.

With respect to the Banks’ investment in troubled debt restructurings, multi-family and nonresidential loans, and the evaluation of impairment thereof, such loans are nonhomogenous and, as such, may be deemed to be collateral-dependent when they become more than ninety days delinquent. We obtain updated independent appraisals in these situations or when we suspect that the previous appraisal may no longer be reflective of the property’s current fair value. This process varies from loan to loan, borrower to borrower, and also varies based on the nature of the collateral.

We utilize updated independent appraisals to determine fair value for collateral-dependent loans, adjusted for estimated selling costs, in determining our specific reserve. In some situations management does not secure an updated independent appraisal. These situations may involve small loan amounts or loans that, in management’s opinion, have an abnormally low loan-to-value ratio.

Federal Home Loan Bank Stock [Policy Text Block]

7. Federal Home Loan Bank Stock: The banks are members of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

Loans and Leases Receivable, Real Estate Acquired Through Foreclosure, Policy [Policy Text Block]

8. Real Estate Owned: Real estate acquired through or instead of foreclosure is initially recorded at fair value less estimated selling expenses at the date of acquisition, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If fair value declines subsequently, the carrying value is adjusted through a valuation allowance and the amount is recorded through expense. Costs relating to holding real estate owned, net of rental income, are charged against earnings as incurred.

Property, Plant and Equipment, Policy [Policy Text Block]

9. Premises and Equipment: Land is carried at cost. Premises and equipment are carried at cost less accumulated depreciation. The cost of premises and equipment includes expenditures which extend the useful lives of existing assets. Maintenance, repairs and minor renewals are expensed as incurred. For financial reporting, depreciation is provided on the straight-line method over the useful lives of the assets, estimated to be forty years for buildings, ten to forty years for building improvements, and five to ten years for furniture and equipment.

Income Tax, Policy [Policy Text Block]

10. Income Taxes: Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. Deferred tax assets are recorded only to the extent that the amount of net deductible temporary differences or carryforward attributes may be utilized against current period earnings, carried back against prior years earnings, offset against taxable temporary differences reversing in future periods, or utilized to the extent of management’s estimate of future taxable income. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. Deferred tax liabilities are provided on the total amount of net temporary differences taxable in the future.

A tax provision is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest and/or penalties related to income tax matters as income tax expense.

Kentucky First Federal Bancorp and Frankfort First Bancorp, Inc., each are subject to state income taxes in the Commonwealth of Kentucky. Neither of the Banks are subject to state income tax in the Commonwealth. With few exceptions, the Company is no longer subject to U.S. federal, state and local tax examinations by tax authorities for years before 2009.

Postemployment Benefit Plans, Policy [Policy Text Block]

11. Retirement and Employee Benefit Plans: The Banks each participate in the Pentegra Defined Benefit Plan for Financial Institutions (“The Pentegra DB Plan”), which is a tax-qualified, multi-employer defined benefit pension fund covering all employees who qualify as to length of service. The Pentegra DB Plan’s Employer Identification Number is 13-5645888 and the Plan Number is 333. The Pentegra DB Plan operates as a multi-employer plan for accounting purposes and as a multiple-employer plan under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code. The Pentegra DB Plan is a single plan under Internal Revenue Code Section 413(c) and, as a result, all of the assets stand behind all of the liabilities. Accordingly, under the Pentegra DB Plan contributions made by a participating employer may be used to provide benefits to participants of other participating employers. Total contributions made to the Pentegra DB Plan, as reported on Form 5500, equal $299.7 million and $203.6 million for the plan years ended June 30, 2011 and 2010, respectively. Our contributions for fiscal 2012 and 2011 was not more than 5% of the total contributions made to the Pentegra DB Plan. Pension expense is the net contributions, which are based upon covered employees’ ages and salaries and are dependent upon the ultimate prescribed benefits of the participants and the funded status of the plan. The Company recognized expense related to the plans totaling approximately $742,000 and $564,000 for the fiscal years ended June 30, 2012 and 2011. There are no collective bargaining agreements in place that require contributions to the Pentegra DB Plan. As of July 1, 2011, the most recent period for which information is available, First Federal of Hazard had a funded status of 83.79%, while First Federal of Frankfort had a funded status of 85.95%. There are no funding improvement plans or surcharges to participants.

The Company also maintains a nonqualified deferred compensation plan for the benefit of certain directors, which is closed to any future deferrals. Under the plan, the Company pays each participant, or their beneficiary, the amount of fees deferred plus interest under terms selected by the individual participants prior to compensation deferral. Payments are made to participants either in a lump sum or in monthly installments not to exceed 10 years. Payments may commence upon the director’s attainment of a certain age or upon the individual’s termination of service. The expense incurred for the deferred compensation was $17,000 and $7,000 for the fiscal years ended June 30, 2012 and 2011, respectively.

First Federal of Hazard has an Employee Stock Ownership Plan (“ESOP”) which provides retirement benefits for substantially all full-time employees who have completed one year of service and have attained the age of 21. Annual contributions are made to the ESOP equal to the ESOP’s debt service less dividends received by the ESOP on unallocated shares. Shares in the ESOP were acquired using funds provided by a loan from the Company and, accordingly, the cost of those shares is shown as a reduction of stockholders’ equity. Shares are released to participants proportionately as the loan is repaid. Dividends on allocated shares are recorded as dividends and charged to retained earnings. Dividends on unallocated shares are used to repay loan principal and accrued interest. Compensation expense is recorded equal to the fair value of shares committed to be released during a given fiscal year. Allocation of shares to the ESOP participants is contingent upon the repayment of a loan to Kentucky First Federal Bancorp totaling $2.1 million and $2.3 million at June 30, 2012 and 2011, respectively. The Company recorded expense for the ESOP of approximately $180,000 and $171,000 for each of the years ended June 30, 2012 and 2011, respectively. Shares may be surrendered from the plan as employees leave employment. Total shares surrendered from the plan were 27,047 and 26,682 at June 30, 2012 and 2011, respectively. The amount contributed to the ESOP during the year just ended was $324,000.

	For the fiscal year ended
	June 30,
	2012		2011
Allocated shares		122,249		100,961
Shares committed to be released		9,338		10,445
Unearned shares		178,339		198,885
Total ESOP shares		309,926		310,291
Fair value of unearned shares at end of period (dollars in thousands)	$	1,514	$	1,790

First Federal of Frankfort maintains a 401(k) plan for the benefit of all full-time employees. No employer contributions have been made to the 401(k) plan.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

12. Share-Based Compensation Plans: Compensation cost is recognized for stock options and restricted stock awards issued to employees, based on the fair value of these awards at the date of the grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of the grant is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. In fiscal 2006, the Company initiated the 2005 Equity Incentive Plan (“EIP” or the “Plan”) which provides for two share-based compensation plans, which are described below.

No compensation cost was charged against income for those share-based plans for the fiscal year ended June 30, 2012, while $160,000 was charged against income for the fiscal year ended June 30, 2011. The total income tax benefit recognized in the statement of income for share-based compensation arrangements was $54,000 for the fiscal year ended June 30, 2011, while there was no income tax benefit recognized for the recent fiscal year ended.

The EIP provides for grants of up to 421,216 stock options. It also provides that one-fifth of the options granted become vested and exercisable on the first five anniversaries of the date of grant. The contractual term of the options is ten years. All option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant.

At June 30, 2012, the only options outstanding are related to those granted in the fiscal year 2006.

A summary of the status of the Company’s stock option plan as of June 30, 2012, and changes during the year then ended is presented below:

			Weighted-		Aggregate
			average		Intrinsic
			exercise		Value
	Shares		price		($000)
Outstanding at beginning of year		325,800	$	10.10
Granted		-		-
Exercised		-		-
Forfeited		-		-
Outstanding at end of year		325,800	$	10.10	$	-
Options exercisable at end of year		325,800	$	10.10	$	-
Weighted average fair value of options granted					$	1.75
Weighted average remaining contractual term of options outstanding and exercisable						3.5 years

Information related to the stock option plan during each year ended June 30, follows:

(in thousands)	2012		2011
Intrinsic value of options exercised	$	-	$	-
Cash received from option exercises		-		-
Tax benefit realized from option exercises		-		-

As of June 30, 2012, there was no unrecognized compensation cost related to nonvested stock options granted under the Plan.

The EIP also provides for the purchase of 168,486 shares of common stock and the issuance of such shares in the form of restricted stock awards to members of the board of directors, management and certain employees. Common shares awarded under the restricted stock plan vest over a five year period, commencing with the date of the grant and are expensed based on their fair value at the grant date.

The following table summarizes the activity with regard to restricted stock awards during fiscal 2012:

			Weighted-average
			grant date
	Shares		fair value
Nonvested at July 1, 2011		—	$	—
Vested		—		—
Forfeited		—		—
Nonvested at June 30, 2012		—	$	—

As of June 30, 2012, there was no unrecognized compensation cost related to the restricted stock awards. The total fair value of shares vested during the year ended June 30, 2011 was $237,000.

Earnings Per Share, Policy [Policy Text Block]

13. 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. There is no adjustment to net earnings for the calculation of diluted earnings per share. The factors used in the basic and diluted earnings per share computations for the fiscal years ended June 30 follow:

(in thousands)	2012		2011
Net income	$	1,715	$	1,756
Less earnings allocated to unvested shares		—		7
Net income allocated to common shareholders, basic and diluted	$	1,715	$	1,749

	2012		2011
Basic
Weighted-average common shares including unvested common shares outstanding		7,546,120		7,530,603
Less: Weighted-average unvested common shares		—		11,256
Weighted-average common shares outstanding		7,546,120		7,519,347
Diluted
Add: Dilutive effect of assumed exercise of stock options		—		—
Weighted-average common shares outstanding (diluted)		7,546,120		7,519,347

Basic earnings per share is computed based upon the weighted-average shares outstanding during the year less shares in the ESOP that are unallocated and not committed to be released and unearned restricted stock. For fiscal years 2012 and 2011 all options were antidilutive, as the exercise price was greater than the average market price of the common stock.

Fair Value Measurement, Policy [Policy Text Block]

14. Fair Value of Assets and Liabilities: Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 - Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access as of the measurement date.

Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in 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 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Following is a description of the valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the accompanying statement of condition, 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 matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities bur rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The following table presents the fair value measurements of assets and liabilities measured at fair value on a recurring basis at June 30, 2012 and 2011. The securities represented are only those classified as available-for sale.

	Fair Value Measurements Using
			Quotes Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)
2012
Agency mortgage-backed: residential	$	189	$	-	$	189	$	-
2011
Agency mortgage-backed: residential	$	203		-		203		-

There were no transfers between levels 1 and 2.

Impaired Loans

The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent independent 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 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. Independent appraisals for collateral-dependent loans are updated periodically (usually every 9-12 months).

Other Real Estate

Nonrecurring adjustments to real estate properties classified as other real estate owned (“OREO”) are measured at fair value, less costs to sell. Fair values are based on recent real estate appraisals. These appraisals may use 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.

The following table presents the fair value measurements of assets and liabilities measured at fair value on a nonrecurring basis at June 30, 2012 and 2011.

	Fair Value Measurements Using
			Quotes Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)
2012
Impaired loans
One- to four-family	$	807	$	-	$	-	$	807
Multi-family		631		-		-		631
Other real estate owned, net
One- to four-family		648		-		-		648
Multi-family		233		-		-		233
2011
Impaired loans
One- to four-family	$	1,033	$	-	$	-	$	1,033
Other real estate owned, net
One- to four-family		126		-		-		126
Multi-family		186		-		-		186

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $1.5 million, with a valuation allowance of $97,000 at June 30, 2012. At June 30, 2011, impaired loans had a principal balance of $1.1 million, with a valuation allowance of $55,000. A provision for loss on impaired loans of $42,000 was made during fiscal 2012.

Other real estate owned measured at fair value less costs to sell, had a carrying amount of $881,000 and $312,000 at June 30, 2012 and 2011, respectively, after write-down of $58,000 and $71,000 for the years ended June 30, 2012 and 2011, respectively.

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 June 30, 2012:

					Range
	Fair Value		Valuation	Unobservable	(Weighted
	(in thousands)		Technique(s)	Input(s)	Average)
Impaired Loans:
Residential real estate 1-4 family	$	807	Sales comparison approach	Adjustments for differences between comparable sales		3.1% To 19.8% (4.3%)
Multi-family		631	Sales comparison approach	Adjustments for differences between comparable sales		5.9% To 15.0% (4.8%)
Repossessed assets:
1-4 family	$	648	Sales comparison approach	Adjustments for differences between comparable sales		0.5% To 18.6% (8.6%)
Multi-family		233	Sales comparison approach	Adjustments for differences between comparable sales		20.2% To 38.9% (20.8%)

The following disclosure of the fair value of financial instruments, both assets and liabilities, whether or not recognized in the consolidated statement of financial condition, for which it is practicable to estimate that value. For financial instruments where quoted market prices are not available, fair values are based on estimates using present value and other valuation methods.

The methods used are greatly affected by the assumptions applied, including the discount rate and estimates of future cash flows. Therefore, the fair values presented may not represent amounts that could be realized in an exchange for certain financial instruments.

The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying statements of financial condition at amounts other than fair value at June 30, 2012 and 2011:

Cash and cash equivalents: 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 methods for securities were previously described.

Loans held for sale: Loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value 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.

Federal Home Loan Bank stock: It was 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. The historical carrying amount of accrued interest payable on deposits is deemed to approximate fair value.

Advances from the Federal Home Loan Bank: 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 June 30, 2012 and 2011, was not material.

Based on the foregoing methods and assumptions, the carrying value and fair value of the Company’s financial instruments at June 30, 2012 and June 30, 2011 are as follows:

			Fair Value Measurements at
(in thousands)			June 30, 2012 Using
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	5,735	$	5,735					$	5,735
Interest-earning deposits		100		100						100
Available-for-sale securities		189			$	189				189
Held-to-maturity securities		4,756				5,144				5,144
Loans held for sale		481				500				500
Loans receivable - net		182,473					$	190,354		190,354
Federal Home Loan Bank stock		5,641								n/a
Accrued interest receivable		497						497		497
Financial liabilities
Deposits	$	134,552	$	51,069	$	83,906			$	134,975
Federal Home Loan Bank advances		27,065				29,429				29,429
Advances by borrowers for taxes and insurance		487					$	487		487
Accrued interest payable		64				64				64

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. This process is different from the process performed by the Office of Thrift Supervision, which was utilized by the Company until December 31, 2011, when the service was discontinued.

The carrying amounts and estimated fair values of financial instruments at June 30, 2011, are as follows:

	Carrying		Fair
(in thousands)	value		value
Financial assets
Cash and cash equivalents	$	5,049	$	5,049
Interest-earning deposits		100		100
Available-for-sale securities		203		203
Held-to-maturity securities		6,810		7,257
Loans held for sale		—		—
Loans receivable - net		182,796		190,183
Federal Home Loan Bank stock		5,641		n/a
Accrued interest receivable		538		538
Financial liabilities
Deposits	$	139,940	$	141,408
Federal Home Loan Bank advances		25,261		23,797
Advances by borrowers for taxes and insurance		471		471
Accrued interest payable		91		91

Cash and Cash Equivalents, Policy [Policy Text Block]

15. Cash and Cash Equivalents: For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks and interest-bearing deposits in other financial institutions with original maturities of less than ninety days.

Goodwill and Intangible Assets, Policy [Policy Text Block]

16. Goodwill and Other Intangible Assets: Goodwill resulting from business combinations prior to January 1, 2009 represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Goodwill resulting from business combinations after January 1, 2009, is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually. The Company has selected March 31 as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill is the only intangible asset with an indefinite life on our balance sheet.

The Company’s core deposit intangible is being amortized on a straight-line basis over an original period of seven years. The carrying basis and accumulated amortization of recognized intangible assets at June 30, 2012 and 2011 is as follows:

(in thousands)	2012		2011
Core deposits
Gross Carrying Amount	$	918	$	918
Accumulated Amortization		918		831
	$	—	$	87

Amortization expense for the years ended June 30, 2012 and 2011 was $87,000 and $131,000, respectively.

Cash Surrender Value Of Life Insurance [Policy Text Block]

17. Cash Surrender Value of Life Insurance: First Federal of Frankfort has purchased life insurance policies on certain key executives. Bank-owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Treasury Stock [Policy Text Block]

18. Treasury Stock: Treasury stock is stated at cost. Cost is determined by the first-in, first-out method.

Related Party Transaction [Policy Text Block]

19. Related Party Transactions: Loans outstanding to executive officers, directors, significant shareholders and their affiliates (related parties) at June 30, 2012 and 2011 are summarized as follows:

(in thousands)	2012			2011
Outstanding principal, beginning of year	$	865		$	593
Changes in composition of related parties		—			157
Principal disbursed during the year		53			156
Principal repaid and refinanced during the year		(121	)		(41	)
Outstanding principal, end of year	$	797		$	865

Deposits from related parties held by the Company at June 30, 2012 and 2011 totaled $2.2 million and $1.1 million, respectively.

Comprehensive Income, Policy [Policy Text Block]

20. Comprehensive Income: Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available for sale which are also recognized as separate components of equity.

Contingent Liability Reserve Estimate, Policy [Policy Text Block]

21. Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the financial statements.

Stockholders' Equity, Policy [Policy Text Block]

22. Equity: Stock dividends in excess of 20% are reported by transferring the par value of the stock issued from retained earnings to common stock. Stock dividends for 20% or less are reported by transferring the fair value, as of the ex-dividend date, of the stock issued from retained earnings to common stock and additional paid-in capital. Fractional share amounts are paid in cash with a reduction in retained earnings.

Policyholders' Dividend, Policy [Policy Text Block]

23. Dividend Restriction: Banking regulations require maintaining certain capital levels and may limit the dividends paid by the bank to the holding company or by the holding company to shareholders.

Segment Reporting, Policy [Policy Text Block]

24. Operating Segments: While the chief decision-makers monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Operating segments are aggregated into one as operating results for all segments are similar. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

Reclassification, Policy [Policy Text Block]

25. Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation.

New Accounting Pronouncements, Policy [Policy Text Block]

27. New Accounting Standards In July 2012, the FASB issued an update (ASU No. 2012-02).  The update will allow the Company to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test. Under the update, the Company would not be required to calculate the fair value of an indefinite-lived intangible asset unless the Company determines, based on a qualitative assessment, that it is not more likely than not, the indefinite-lived intangible asset is impaired. The update includes a number of events and circumstances for the Company to consider in conducting the qualitative assessment.  The update is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012.  Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if the Company’s financial statements for the most recent annual or interim period have not yet been issued.  The Company did not elect early adoption of this update and has not evaluated to date if any future adoption will have a material impact on the Company’s consolidated financial statements or results of operations.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) (USD $)	12 Months Ended
	Jun. 30, 2012
Shares, Nonvested at July 1, 2011	0
Shares, Vested	0
Shares, Forfeited	0
Shares, Nonvested at June 30, 2012	0
Weighted-average grant date fair value, Nonvested at July 1, 2011 (in dollars per share)	$ 0
Weighted-average grant date fair value, Vested (in dollars per share)	$ 0
Weighted-average grant date fair value, Forfeited (in dollars per share)	$ 0
Weighted-average grant date fair value, Nonvested at June 30, 2012 (in dollars per share)	$ 0

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SECURITIES (Tables)

12 Months Ended

Jun. 30, 2012

Investments, Debt and Equity Securities [Abstract]

Available-for-sale Securities [Table Text Block]

The gains and losses are as follows:

			2012
(in thousands)	Amortized cost		Gross unrealized/ unrecognized gains		Gross unrealized/ unrecognized losses		Estimated fair value
Available-for-sale Securities
Agency mortgage-backed:residential	$	185	$	4	$	-	$	189

			2011
(in thousands)	Amortized cost		Gross unrealized/ unrecognized gains		Gross unrealized/ unrecognized losses		Estimated fair value
Available-for-sale Securities
Agency mortgage-backed:residential	$	199	$	4	$	-	$	203

Held-to-maturity Securities [Table Text Block]

The gains and losses are as follows:

			2012
(in thousands)	Amortized cost		Gross unrealized/ unrecognized gains		Gross unrealized/ unrecognized losses		Estimated fair value
Held-to-maturity Securities
Agency mortgage-backed:residential	$	4,756	$	388	$	-	$	5,144

			2011
(in thousands)	Amortized cost		Gross unrealized/ unrecognized gains		Gross unrealized/ unrecognized losses		Estimated fair value
Held-to maturity Securities
Agency mortgage-backed:residential	$	6,810	$	447	$	-	$	7,257

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REGULATORY CAPITAL (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Tier 1 core capital, Actual Amount	$ 44,333	$ 44,100
Tier 1 core capital, Actual Ratio	21.30%	20.80%
Tier 1 core capital, For capital adequacy purposes Amount	8,918	9,048
Tier 1 core capital, For capital adequacy purposes Ratio	4.00%	4.00%
Total risk-based capital, Actual Amount	45,208	44,864
Total risk-based capital, Actual Ratio	38.60%	39.00%
Total risk-based capital, For capital adequacy purposes Amount	9,377	9,201
Total risk-based capital, For capital adequacy purposes Ratio	8.00%	8.00%
Tier 1 risk-based capital, Actual Amount	44,333	44,100
Tier 1 risk-based capital, Actual Ratio	37.80%	38.30%
Tangible capital, Actual Amount		44,100
Tangible capital, Actual Ratio		20.80%
Tangible capital, For capital adequacy purposes Amount		3,175
Tangible capital, For capital adequacy purposes Ratio		1.50%
First Federal Of Hazard [Member]
Tier 1 core capital, Actual Amount	20,764	19,629
Tier 1 core capital, Actual Ratio	21.20%	19.30%
Tier 1 core capital, For capital adequacy purposes Amount	3,926	4,067
Tier 1 core capital, For capital adequacy purposes Ratio	4.00%	4.00%
Tier 1 core capital, To be Well capitalized under prompt corrective action provisions Amount	4,908	5,084
Tier 1 core capital, To be Well capitalized under prompt corrective action provisions Ratio	5.00%	5.00%
Total risk-based capital, Actual Amount	21,185	19,939
Total risk-based capital, Actual Ratio	42.20%	40.50%
Total risk-based capital, For capital adequacy purposes Amount	4,013	3,941
Total risk-based capital, For capital adequacy purposes Ratio	8.00%	8.00%
Total risk-based capital, To be Well capitalized under prompt corrective action provisions Amount	5,016	4,927
Total risk-based capital, To be Well capitalized under prompt corrective action provisions Ratio	10.00%	10.00%
Tier 1 risk-based capital, Actual Amount	20,764	19,629
Tier 1 risk-based capital, Actual Ratio	41.40%	39.80%
Tier 1 risk-based capital, To be Well capitalized under prompt corrective action provisions Amount	3,010	2,956
Tier 1 risk-based capital, To be Well capitalized under prompt corrective action provisions Ratio	6.00%	6.00%
Tangible capital, Actual Amount		19,629
Tangible capital, Actual Ratio		19.30%
Tangible capital, For capital adequacy purposes Amount		1,525
Tangible capital, For capital adequacy purposes Ratio		1.50%
First Federal Of Frankfort [Member]
Tier 1 core capital, Actual Amount	19,543	18,151
Tier 1 core capital, Actual Ratio	15.90%	14.60%
Tier 1 core capital, For capital adequacy purposes Amount	5,511	4,980
Tier 1 core capital, For capital adequacy purposes Ratio	4.00%	4.00%
Tier 1 core capital, To be Well capitalized under prompt corrective action provisions Amount	6,889	6,225
Tier 1 core capital, To be Well capitalized under prompt corrective action provisions Ratio	5.00%	5.00%
Total risk-based capital, Actual Amount	19,997	18,564
Total risk-based capital, Actual Ratio	28.70%	27.00%
Total risk-based capital, For capital adequacy purposes Amount	5,566	5,505
Total risk-based capital, For capital adequacy purposes Ratio	8.00%	8.00%
Total risk-based capital, To be Well capitalized under prompt corrective action provisions Amount	6,958	6,881
Total risk-based capital, To be Well capitalized under prompt corrective action provisions Ratio	10.00%	10.00%
Tier 1 risk-based capital, Actual Amount	19,543	18,151
Tier 1 risk-based capital, Actual Ratio	28.10%	26.40%
Tier 1 risk-based capital, To be Well capitalized under prompt corrective action provisions Amount	4,175	4,129
Tier 1 risk-based capital, To be Well capitalized under prompt corrective action provisions Ratio	6.00%	6.00%
Tangible capital, Actual Amount		18,151
Tangible capital, Actual Ratio		14.60%
Tangible capital, For capital adequacy purposes Amount		$ 1,868
Tangible capital, For capital adequacy purposes Ratio		1.50%

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (USD $) In Thousands	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Unearned Employee Stock Ownership Plan (ESOP) [Member]	Treasury shares [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance at Jun. 30, 2010	$ 86	$ 36,623	$ 31,216	$ (2,169)	$ (7,952)	$ 4	$ 57,808
Net income	0	0	1,756	0	0	0	1,756
Allocation of ESOP shares	0	(15)	0	180	0	0	165
Amortization expense of stock benefit plans	0	242	0	0	0	0	242
Compensation expense related to vesting stock options	0	57	0	0	0	0	57
Acquisition of shares for Treasury	0	0	0	0	(218)	0	(218)
Unrealized gains on securities designated as available for sale, net of related tax effects	0	0	0	0	0	(1)	(1)
Cash dividends of $0.40 per common share	0	0	(1,112)	0	0	0	(1,112)
Balance at Jun. 30, 2011	86	36,907	31,860	(1,989)	(8,170)	3	58,697
Net income	0	0	1,715	0	0	0	1,715
Allocation of ESOP shares	0	(37)	0	217	0	0	180
Acquisition of shares for Treasury	0	0	0	0	(135)	0	(135)
Unrealized gains on securities designated as available for sale, net of related tax effects							0
Cash dividends of $0.40 per common share	0	0	(1,604)	0	0	0	(1,604)
Balance at Jun. 30, 2012	$ 86	$ 36,870	$ 31,971	$ (1,772)	$ (8,305)	$ 3	$ 58,853

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CONSOLIDATED BALANCE SHEETS [Parenthetical] (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Fair value of held-to-maturity securities (in dollars)	$ 5,144	$ 7,257
Allowance for loan losses (in dollars)	$ 875	$ 764
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	8,596,064	8,596,064
Treasury stock, shares	826,375	811,375

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FEDERAL INCOME TAXES

12 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE H - FEDERAL INCOME TAXES

Federal income taxes on earnings differs from that computed at the statutory corporate tax rate for the years ended June 30, 2012 and 2011, as follows:

(in thousands)	2012			2011
Federal income taxes at the statutory rate	$	869		$	632
Increase (decrease) resulting primarily from:
Cash surrender value of life insurance		(30	)		(30	)
Compensation expense		-			4
Other		1			-
Allowed deduction claimed on amended return for $1.3 million paid to option holders in acquisition of Frankfort First Bancorp, Inc. and other IRS audit adjustments		-			(502	)
	$	840		$	104

The composition of the Company’s net deferred tax liability at June 30 is as follows:

(in thousands)	2012			2011
Taxes (payable) refundable on temporary differences at estimated corporate tax rate:
Deferred tax assets:
General loan loss allowance	$	297		$	260
Deferred compensation and benefits		257			258
Charitable contributions		3			3
Purchase accounting adjustments		—			4
Nonaccrued interest on loans		21			8
Other real estate owned adjustments		259			80
Total deferred tax assets		837			613
Deferred tax liabilities:
Federal Home Loan Bank stock dividends		(1,074	)		(1,074	)
Deferred loan origination costs		(32	)		(39	)
Loan servicing rights		(12	)		(11	)
Other		(—)			(2	)
Purchase accounting adjustments		(463	)		(248	)
Depreciation		(30	)		(260	)
Total deferred tax liabilities		(1,611	)		(1,634	)
Net deferred tax liability	$	(774	)	$	(1,021	)

The 2011 provision for federal income taxes included a credit of $502,000, which related to a refund provided by the Internal Revenue Service and a reversal of an uncertain tax position. This credit is not expected to reoccur.

Prior to 1997, the Banks were allowed a special bad debt deduction, generally limited to 8% of otherwise taxable income, and subject to certain limitations based on aggregate loans and deposit account balances at the end of the year. If the amounts that qualified as deductions for federal income taxes are later used for purposes other than bad debt losses, including distributions in excess of accumulated earnings and profits, such distributions will be subject to federal income taxes at the then current corporate income tax rate. Retained earnings at June 30, 2012, include approximately $5.2 million for which federal income taxes have not been provided. The amount of unrecognized deferred tax liability relating to the cumulative bad debt deduction was approximately $1.8 million at June 30, 2012.

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(in thousands)	2012			2011
Balance at beginning of year	$	80		$	253
Additions/(reductions) based on tax positions for the current year		(80	)		(173	)
Balance at end of year	$	—		$	80

Cash settlements occurred during the period July 1, 2011 through June 30, 2012. Because of uncertainty regarding the proper inclusion or exclusion of income from Bank-owned life insurance (‘BOLI”) in the earnings and profits calculation, the Company amended its June 30, 2009 federal return to report additional tax liability of $80,000 and reversed the corresponding reserve. The Company expects its unrecognized benefits will change in the next twelve months. The Company has amended its 2009 tax return claiming that its BOLI income is includible in the earnings and profits calculation and that it is entitled to a refund of the $80,000.

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DOCUMENT AND ENTITY INFORMATION (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Sep. 17, 2012
Entity Registrant Name	Kentucky First Federal Bancorp
Entity Central Index Key	0001297341
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company
Trading Symbol	kffb
Entity Common Stock, Shares Outstanding		7,539,564
Document Type	10-K
Amendment Flag	false
Document Period End Date	Jun. 30, 2012
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2012
Entity Well-Known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float	$ 21.1

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LOAN COMMITMENTS

12 Months Ended

Jun. 30, 2012

Disclosure Text Block Supplement [Abstract]

Commitments Disclosure [Text Block]

NOTE I - LOAN COMMITMENTS

The Banks are a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of their customers, including commitments to extend credit. Such commitments involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the consolidated statements of financial condition. The contract or notional amounts of the commitments reflect the extent of the Banks’ involvement in such financial instruments.

The Banks’ exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. The Banks use the same credit policies in making commitments and conditional obligations as those utilized for on-balance-sheet instruments.

At June 30, 2012 and 2011, the Banks had outstanding commitments of approximately $1.8 million and $1.7 million, respectively, to originate mortgage loans. Additionally, First Federal of Frankfort was obligated under unused lines of credit for one-to four-family equity loans totaling $8.3 million and $8.9 million at the end of fiscal years 2012 and 2011, respectively. Commitments to make loans are generally made for periods of 60 days or less. The fixed rate loan commitments at June 30, 2012 totaled $592,000 and had interest rates ranging from 4.53% to 7.25% and maturities ranging from 10 years to 30 years, while the fixed rate loan commitments at June 30, 2011 totaled $614,000 and had interest rates ranging from 4.63% to 8.0% with maturities ranging from 15 years to 30 years.

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CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Interest income
Loans	$ 9,664	$ 10,146
Mortgage-backed securities	256	355
Other securities	1	2
Interest-bearing deposits and other	235	246
Total interest income	10,156	10,749
Interest expense
Deposits	1,567	2,486
Borrowings	612	695
Total interest expense	2,179	3,181
Net interest income	7,977	7,568
Provision for loan losses	139	668
Net interest income after provision for loan losses	7,838	6,900
Non-interest income
Gains on sales of loans	23	155
Earnings on bank-owned life insurance	90	90
Net gains (losses) on sales of real estate owned	1	(36)
Unrealized loss-other real estate	(67)	(71)
Other	93	104
Total non-interest income	140	242
Non-interest expense
Salaries and employee benefits	3,238	3,057
Occupancy and equipment	355	355
Legal fees	365	135
Outside service fees	267	100
Data processing	241	246
Audit and accounting	84	205
Federal deposit insurance	144	197
Franchise and other taxes	182	191
Amortization of intangible assets	87	131
Real estate owned expense, net	(14)	159
Other operating	474	506
Total non-interest expense	5,423	5,282
Income before income taxes	2,555	1,860
Federal income taxes
Current	1,087	(43)
Deferred	(247)	147
Total federal income taxes	840	104
NET INCOME	$ 1,715	$ 1,756
EARNINGS PER SHARE
Basic and diluted (in dollars per share)	$ 0.23	$ 0.23

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LOANS

12 Months Ended

Jun. 30, 2012

Receivables [Abstract]

Financing Receivables [Text Block]

NOTE C - LOANS

The composition of the loan portfolio at June 30 was as follows:

(in thousands)	2012			2011
Residential real estate
One- to four-family	$	149,086		$	158,821
Multi-family		15,495			4,504
Construction		964			1,062
Nonresidential real estate and land		11,098			12,211
Loans on deposits		2,281			2,405
Consumer and other		4,865			4,824
		183,789			183,827
Less:
Undisbursed portion of loans in process		544			353
Deferred loan origination fees (cost)		(103	)		(86	)
Allowance for loan losses		875			764
	$	182,473		$	182,796

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, 2012 and 2011. There were no loans acquired with deteriorated credit quality at June 30, 2012 and 2011.

June 30, 2012:
(in thousands)	Recorded investment in loans		Ending allowance attributed to loans		Unallocated allowance		Total allowance
Loans individually evaluated for impairment:
Residential real estate:
One- to four-family	$	2,757	$	97	$	—	$	97
Loans collectively evaluated for impairment:
Residential real estate:
One- to four-family	$	146,329	$	468	$	—	$	468
Multi-family		15,495		49		—		49
Construction		964		3		—		3
Nonresidential real estate and land		11,098		35		—		35
Loans on deposits		2,281		7		—		7
Consumer and other		4,865		16		—		16
Unallocated		—		—		200		200
		181,032		578		200		778
	$	183,789	$	675	$	200	$	875

June 30, 2011:
(in thousands)	Recorded investment in loans		Ending allowance attributed to loans		Unallocated allowance		Total allowance
Loans individually evaluated for impairment:
Residential real estate:
One- to four-family	$	2,224	$	55	$	—	$	55
Loans collectively evaluated for impairment:
Residential real estate:
One- to four-family	$	156,597	$	439	$	—	$	439
Multi-family		4,504		13		—		13
Construction		1,062		3		—		3
Nonresidential real estate and land		12,211		34		—		34
Loans on deposits		2,405		7		—		7
Consumer and other		4,824		13		—		13
Unallocated		—		—		200		200
		181,603		509		200		709
	$	183,827	$	564	$	200	$	764

The following tables present impaired loans by class of loans as of and for the years ended June 30, 2012 and 2011:

June 30, 2012:     (in thousands)	Unpaid Principal Balance and Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized		Cash Basis Income Recognized
With no related allowance recorded:
One- to four-family	$	1,222	$	—	$	889	$	45	$	45
With an allowance recorded:
One- to four-family		1,535		97		1,434		27		27
	$	2,757	$	97	$	2,323	$	72	$	72

June 30, 2011:     (in thousands)	Unpaid Principal Balance and Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized		Cash Received
With no related allowance recorded:
One- to four-family	$	1,136	$	—	$	1,296	$	44	$	47
With an allowance recorded:
One- to four-family		1,088		55		1,213		33		33
	$	2,224	$	55	$	2,509	$	77	$	77

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 June 30, 2012 and 2011:

	June 30, 2012				June 30, 2011
(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	$	1,593	$	201	$	876	$	-

Troubled Debt Restructurings:

During the year ended June 30, 2012, the terms of four loans were modified as a troubled debt restructuring. The modification of the terms of two loans involved extending the maturity dates of the loans, which resulted in lower monthly payments for the borrowers. The interest rate on one loan was reduced from 5.5% to 5.47% and $9,000 in additional credit was extended.

In order to determine whether a borrower is experiencing financial difficulty, we consider the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.

The following table presents loans by class modified as TDRs during the year ended June 30, 2012, and their performance, by modification type:

	Number  of Loans		Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		TDRs Performing to Modified Terms		TDRs Not Performing to Modified Terms
Residential Real Estate:
1-4 Family		4	$	179	$	188	$	187	$	-

The Company had allocated $2,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of June 30, 2012, and had $6,000 of specific reserves at June 30, 2011. The Company has no commitments to lend additional amounts as of June 30, 2012 and 2011, to customers with outstanding loans that are classified as troubled debt restructurings.

The following tables present the aging of the principal balance outstanding in past due loans as of June 30, 2012 and 2011, by class of loans:

June 30, 2012:

(in thousands)	30-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate:
One-to four-family	$	4,332	$	1,794	$	6,126	$	142,960	$	149,086
Multi-family		—		—		—		15,495		15,495
Construction		—		—		—		964		964
Nonresidential real estate and land		—		—		—		11,098		11,098
Loans on deposits		—		—		—		2,281		2,281
Consumer and other		—		—		—		4,865		4,865
Total	$	4,332	$	1,794	$	6,126	$	177,663	$	183,789

June 30, 2011:
(in thousands)	30-89 Days Past Due		Greater than 90 Days  Past Due		Total Past Due		Loans Not Past Due		Total
Residential real estate:
One-to four-family	$	3,181	$	876	$	4,057	$	154,764	$	158,821
Multi-family		—		—		—		4,504		4,504
Construction		—		—		—		1,062		1,062
Nonresidential real estate and land		—		—		—		12,211		12,211
Loans on deposits		—		—		—		2,405		2,405
Consumer and other		—		—		—		4,824		4,824
Total	$	3,181	$	876	$	4,057	$	179,770	$	183,827

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 June 30, 2012, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

June 30, 2012:
(in thousands)	Pass		Special Mention		Substandard		Doubtful		Not  rated
Residential real estate:
One- to four-family	$	—	$	64	$	3,057	$	—	$	145,965
Multi-family		12,692		—		2,803		—		—
Construction		964		—		—		—		—
Nonresidential real estate and land		10,831		267		—		—		—
Loans on deposits		—		—		—		—		2,281
Consumer and other		—		—		—		—		4,865

June 30, 2011:

(in thousands)	Pass		Special Mention		Substandard		Doubtful		Not rated
Residential real estate:
One- to four-family	$	—	$	67	$	2,180	$	—	$	156,574
Multi-family		4,504		—		—		—		—
Construction		1,062		—		—		—		—
Nonresidential real estate and land		11,943		268		—		—		—
Loans on deposits		—		—		—		—		2,405
Consumer and other		—		—		—		—		4,824

The activity in the allowance for loan losses is summarized as follows for the years ended June 30:

(in thousands)	2012			2011
Balance at beginning of year	$	764		$	1,535
Provision for losses on loans		139			668
Charge-offs		(28	)		(1,439	)
Balance at end of year	$	875		$	764

The following tables present the activity in the allowance for loan losses by portfolio segment for the years ended June 30, 2012 and 2011:

June 30, 2012:

(in thousands)	Beginning balance		Provision for loan losses			Loans charged off			Recoveries		Ending balance
Residential real estate:
One- to four-family	$	490	$	79		$	(4	)	$	—	$	565
Multi-family		11		38			—			—		49
Construction		5		(2	)		—			—		3
Nonresidential real estate and land		36		(1	)		—			—		35
Loans on deposits		8		(1	)		—			—		7
Consumer and other		14		26			(24	)		—		16
Unallocated		200		—			—			—		200
Totals	$	764	$	139		$	(28	)	$	—	$	875

June 30, 2011:

(in thousands)	Beginning balance		Provision for loan losses		Loans charged off			Recoveries		Ending balance
Residential real estate:
One- to four-family	$	1,261	$	668	$	(1,439	)	$	—	$	490
Multi-family		11		—		—			—		11
Construction		5		—		—			—		5
Nonresidential real estate and land		36		—		—			—		36
Loans on deposits		8		—		—			—		8
Consumer and other		14		—		—			—		14
Unallocated		200		—		—			—		200
Totals	$	1,535	$	668	$	(1,439	)	$	—	$	764

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SECURITIES

12 Months Ended

Jun. 30, 2012

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE B - SECURITIES

The following table summarizes the amortized cost and fair value of the available for sale securities and held to maturity investment securities portfolio at June 30, 2012 and 2011 and the corresponding amounts of gross unrealized or unrecognized gains and losses. Unrealized gains or losses apply to available-for-sale securities and are recognized in accumulated other comprehensive income, while unrealized gains or losses on held-to-maturity securities are not recognized in the financial statements. The gains and losses are as follows:

			2012
(in thousands)	Amortized cost		Gross unrealized/ unrecognized gains		Gross unrealized/ unrecognized losses		Estimated fair value
Available-for-sale Securities
Agency mortgage-backed:residential	$	185	$	4	$	-	$	189
Held-to-maturity Securities
Agency mortgage-backed:residential	$	4,756	$	388	$	-	$	5,144

			2011
(in thousands)	Amortized cost		Gross unrealized/ unrecognized gains		Gross unrealized/ unrecognized losses		Estimated fair value
Available-for-sale Securities
Agency mortgage-backed:residential	$	199	$	4	$	-	$	203
Held-to maturity Securities
Agency mortgage-backed:residential	$	6,810	$	447	$	-	$	7,257

The amortized cost and estimated fair value of securities as of June 30, 2012 and 2011, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities without a single maturity, primarily mortgage-backed, are shown separately.

	2012				2011
(in thousands)	Estimated fair value		Amortized cost		Estimated fair value		Amortized cost
Available-for-sale Securities
Agency mortgage-backed:residential	$	189	$	185	$	203	$	199
Held-to maturity Securities
Agency mortgage-backed:residential	$	5,144	$	4,756	$	7,257	$	6,810

There were no sales of securities during the fiscal years ended June 30, 2012 or 2011. At June 30, 2012 and 2011, the Company had no securities with unrealized losses.

There are no pledged securities at June 30, 2012.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Jun. 30, 2012

Accounting Policies [Abstract]

Schedule Of Retirement and Employee Benefit Plans [Table Text Block]

	For the fiscal year ended
	June 30,
	2012		2011
Allocated shares		122,249		100,961
Shares committed to be released		9,338		10,445
Unearned shares		178,339		198,885
Total ESOP shares		309,926		310,291
Fair value of unearned shares at end of period (dollars in thousands)	$	1,514	$	1,790

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

A summary of the status of the Company’s stock option plan as of June 30, 2012, and changes during the year then ended is presented below:

			Weighted-		Aggregate
			average		Intrinsic
			exercise		Value
	Shares		price		($000)
Outstanding at beginning of year		325,800	$	10.10
Granted		-		-
Exercised		-		-
Forfeited		-		-
Outstanding at end of year		325,800	$	10.10	$	-
Options exercisable at end of year		325,800	$	10.10	$	-
Weighted average fair value of options granted					$	1.75
Weighted average remaining contractual term of options outstanding and exercisable						3.5 years

Schedule of Share-based Compensation, Activity [Table Text Block]

Information related to the stock option plan during each year ended June 30, follows:

(in thousands)	2012		2011
Intrinsic value of options exercised	$	-	$	-
Cash received from option exercises		-		-
Tax benefit realized from option exercises		-		-

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

The following table summarizes the activity with regard to restricted stock awards during fiscal 2012:

			Weighted-average
			grant date
	Shares		fair value
Nonvested at July 1, 2011		—	$	—
Vested		—		—
Forfeited		—		—
Nonvested at June 30, 2012		—	$	—

Schedule of Earnings Per Share Reconciliation [Table Text Block]

The securities represented are only those classified as available-for sale.

	Fair Value Measurements Using
			Quotes Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)
2012
Agency mortgage-backed: residential	$	189	$	-	$	189	$	-
2011
Agency mortgage-backed: residential	$	203		-		203		-

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

The following table presents the fair value measurements of assets and liabilities measured at fair value on a nonrecurring basis at June 30, 2012 and 2011.

	Fair Value Measurements Using
			Quotes Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)
2012
Impaired loans
One- to four-family	$	807	$	-	$	-	$	807
Multi-family		631		-		-		631
Other real estate owned, net
One- to four-family		648		-		-		648
Multi-family		233		-		-		233
2011
Impaired loans
One- to four-family	$	1,033	$	-	$	-	$	1,033
Other real estate owned, net
One- to four-family		126		-		-		126
Multi-family		186		-		-		186

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

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 June 30, 2012:

					Range
	Fair Value		Valuation	Unobservable	(Weighted
	(in thousands)		Technique(s)	Input(s)	Average)
Impaired Loans:
Residential real estate 1-4 family	$	807	Sales comparison approach	Adjustments for differences between comparable sales		3.1% To 19.8% (4.3%)
Multi-family		631	Sales comparison approach	Adjustments for differences between comparable sales		5.9% To 15.0% (4.8%)
Repossessed assets:
1-4 family	$	648	Sales comparison approach	Adjustments for differences between comparable sales		0.5% To 18.6% (8.6%)
Multi-family		233	Sales comparison approach	Adjustments for differences between comparable sales		20.2% To 38.9% (20.8%)

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques [Table Text Block]

Based on the foregoing methods and assumptions, the carrying value and fair value of the Company’s financial instruments at June 30, 2012 and June 30, 2011 are as follows:

			Fair Value Measurements at
(in thousands)			June 30, 2012 Using
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	5,735	$	5,735					$	5,735
Interest-earning deposits		100		100						100
Available-for-sale securities		189			$	189				189
Held-to-maturity securities		4,756				5,144				5,144
Loans held for sale		481				500				500
Loans receivable - net		182,473					$	190,354		190,354
Federal Home Loan Bank stock		5,641								n/a
Accrued interest receivable		497						497		497
Financial liabilities
Deposits	$	134,552	$	51,069	$	83,906			$	134,975
Federal Home Loan Bank advances		27,065				29,429				29,429
Advances by borrowers for taxes and insurance		487					$	487		487
Accrued interest payable		64				64				64

The carrying amounts and estimated fair values of financial instruments at June 30, 2011, are as follows:

	Carrying		Fair
(in thousands)	value		value
Financial assets
Cash and cash equivalents	$	5,049	$	5,049
Interest-earning deposits		100		100
Available-for-sale securities		203		203
Held-to-maturity securities		6,810		7,257
Loans held for sale		—		—
Loans receivable - net		182,796		190,183
Federal Home Loan Bank stock		5,641		n/a
Accrued interest receivable		538		538
Financial liabilities
Deposits	$	139,940	$	141,408
Federal Home Loan Bank advances		25,261		23,797
Advances by borrowers for taxes and insurance		471		471
Accrued interest payable		91		91

Fair Value, by Balance Sheet Grouping [Table Text Block]

Based on the foregoing methods and assumptions, the carrying value and fair value of the Company’s financial instruments at June 30, 2012 and June 30, 2011 are as follows:

			Fair Value Measurements at
(in thousands)			June 30, 2012 Using
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	5,735	$	5,735					$	5,735
Interest-earning deposits		100		100						100
Available-for-sale securities		189			$	189				189
Held-to-maturity securities		4,756				5,144				5,144
Loans held for sale		481				500				500
Loans receivable - net		182,473					$	190,354		190,354
Federal Home Loan Bank stock		5,641								n/a
Accrued interest receivable		497						497		497
Financial liabilities
Deposits	$	134,552	$	51,069	$	83,906			$	134,975
Federal Home Loan Bank advances		27,065				29,429				29,429
Advances by borrowers for taxes and insurance		487					$	487		487
Accrued interest payable		64				64				64

The carrying amounts and estimated fair values of financial instruments at June 30, 2011, are as follows:

	Carrying		Fair
(in thousands)	value		value
Financial assets
Cash and cash equivalents	$	5,049	$	5,049
Interest-earning deposits		100		100
Available-for-sale securities		203		203
Held-to-maturity securities		6,810		7,257
Loans held for sale		—		—
Loans receivable - net		182,796		190,183
Federal Home Loan Bank stock		5,641		n/a
Accrued interest receivable		538		538
Financial liabilities
Deposits	$	139,940	$	141,408
Federal Home Loan Bank advances		25,261		23,797
Advances by borrowers for taxes and insurance		471		471
Accrued interest payable		91		91

Schedule of Finite-Lived Intangible Assets [Table Text Block]

The carrying basis and accumulated amortization of recognized intangible assets at June 30, 2012 and 2011 is as follows:

(in thousands)	2012		2011
Core deposits
Gross Carrying Amount	$	918	$	918
Accumulated Amortization		918		831
	$	—	$	87

Schedule of Related Party Transactions [Table Text Block]

Loans outstanding to executive officers, directors, significant shareholders and their affiliates (related parties) at June 30, 2012 and 2011 are summarized as follows:

(in thousands)	2012			2011
Outstanding principal, beginning of year	$	865		$	593
Changes in composition of related parties		—			157
Principal disbursed during the year		53			156
Principal repaid and refinanced during the year		(121	)		(41	)
Outstanding principal, end of year	$	797		$	865

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REGULATORY CAPITAL

12 Months Ended

Jun. 30, 2012

Banking and Thrift [Abstract]

Regulatory Capital Requirements under Banking Regulations [Text Block]

NOTE J - REGULATORY CAPITAL

The Banks are subject to minimum regulatory capital standards promulgated by the Office of the Controller of the Currency (the “OCC”), the successor to the Office of Thrift Supervision (the “OTS”). Failure to meet minimum capital requirements can initiate certain mandatory — and possibly additional discretionary — actions by regulators that, if undertaken, could have a direct material effect on the consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Banks must meet specific capital guidelines that involve quantitative measures of the Banks’ assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Banks’ capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

The minimum capital standards of the OCC generally require the maintenance of regulatory capital sufficient to meet each of three tests, hereinafter described as the tangible capital requirement, the core capital requirement and the risk-based capital requirement. The core capital requirement provides for minimum core capital (tangible capital plus certain forms of supervisory goodwill and other qualifying intangible assets) generally equal to 4.0% of adjusted total assets, except for those associations with the highest examination rating and acceptable levels of risk. The risk-based capital requirement provides for the maintenance of core capital plus general loss allowances equal to 8.0% of risk-weighted assets. In computing risk-weighted assets, the Banks multiply the value of each asset on their respective statements of financial condition by a defined risk-weighting factor, e.g., one- to four-family residential loans carry a risk-weighted factor of 50%.

During fiscal 2011, the Banks were notified by the OTS that each was categorized as “well-capitalized” under the regulatory framework for prompt corrective action. Although the OCC has not notified the Company of the classification of its capital status since it succeeded the OTS, there are no conditions or events since the OTS notification that management believes has changed the Banks’ categories. The transfer to the OCC resulted is somewhat different capital ratios than reported by the OTS. To be categorized as “well-capitalized” the Banks must maintain minimum capital ratios as set forth in the following tables:

	As of June 30, 2012
											To be “well-
											capitalized” under
						For capital					prompt corrective
	Actual					adequacy purposes					action provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
Tier 1 core capital
First Federal of Hazard	$	20,764		21.2	%		³$3,926		³4.0	%		³$4,908		³ 5.0	%
First Federal of Frankfort	$	19,543		15.9	%		³$5,511		³4.0	%		³$6,889		³ 5.0	%
Consolidated	$	44,333		21.3	%		³$8,918		³4.0	%		N/A		N/A
Total risk-based capital
First Federal of Hazard	$	21,185		42.2	%		³$4,013		³8.0	%		³$5,016		³10.0	%
First Federal of Frankfort	$	19,997		28.7	%		³$5,566		³8.0	%		³$6,958		³10.0	%
Consolidated	$	45,208		38.6	%		³$9,377		³8.0	%		N/A		N/A
Tier 1 risk-based capital
First Federal of Hazard	$	20,764		41.4	%		N/A		N/A			³$3,010		³ 6.0	%
First Federal of Frankfort	$	19,543		28.1	%		N/A		N/A			³$4,175		³ 6.0	%
Consolidated	$	44,333		37.8	%		N/A		N/A			N/A		N/A

	As of June 30, 2011
											To be “well-
											capitalized” under
						For capital					prompt corrective
	Actual					adequacy purposes					action provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
Tangible capital
First Federal of Hazard	$	19,629		19.3	%		³$1,525		³1.5	%		N/A		N/A
First Federal of Frankfort	$	18,151		14.6	%		³$1,868		³1.5	%		N/A		N/A
Consolidated	$	44,100		20.8	%		³$3,175		³1.5	%		N/A		N/A
Tier 1 core capital
First Federal of Hazard	$	19,629		19.3	%		³$4,067		³4.0	%		³$5,084		³ 5.0	%
First Federal of Frankfort	$	18,151		14.6	%		³$4,980		³4.0	%		³$6,225		³ 5.0	%
Consolidated	$	44,100		20.8	%		³$9,048		³4.0	%		N/A		N/A
Total risk-based capital
First Federal of Hazard	$	19,939		40.5	%		³$3,941		³8.0	%		³$4,927		³10.0	%
First Federal of Frankfort	$	18,564		27.0	%		³$5,505		³8.0	%		³$6,881		³10.0	%
Consolidated	$	44,864		39.0	%		³$9,201		³8.0	%		N/A		N/A
Tier 1 risk-based capital
First Federal of Hazard	$	19,629		39.8	%		N/A		N/A			³$2,956		³ 6.0	%
First Federal of Frankfort	$	18,151		26.4	%		N/A		N/A			³$4,129		³ 6.0	%
Consolidated	$	44,100		38.3	%		N/A		N/A			N/A		N/A

As of June 30, 2012 and 2011, management believes that First Federal of Hazard and First Federal of Frankfort met all capital adequacy requirements to which the Banks were subject.

The Banks’ management believes that, under the current regulatory capital regulations, both Banks will continue to meet their minimum capital requirements in the foreseeable future. However, events beyond the control of the Banks, such as increased interest rates or a downturn in the economy in the Banks’ market area, could adversely affect future earnings and, consequently, the ability to meet future minimum regulatory capital requirements.

Regulations of the OCC governing mutual holding companies require First Federal MHC to meet certain criteria before the company may waive the receipt by it of any common stock dividend declared by Kentucky First Federal Bancorp. During the fiscal year ended June 30, 2012, and pursuant to the provisions allowed by the OCC, First Federal MHC waived $1.4 million in dividends.

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DEPOSITS

12 Months Ended

Jun. 30, 2012

Banking and Thrift [Abstract]

Deposit Liabilities Disclosures [Text Block]

NOTE F - DEPOSITS

Deposits consist of the following major classifications at June 30:

(in thousands)	2012		2011
Non-interest bearing checking accounts	$	1,704	$	996
Checking accounts		7,615		6,965
Savings accounts		36,913		34,147
Money market demand deposits		4,837		4,796
Total demand, transaction and passbook deposits		51,069		46,904
Certificates of deposit:
Original maturities of:
Less than 12 months		3,940		5,019
12 months to 36 months		72,405		81,075
More than 36 months		7,138		6,942
Total certificates of deposit		83,483		93,036
Total deposits	$	134,552	$	139,940

At June 30, 2012 and 2011, the Banks had certificate of deposit accounts with balances equal to or in excess of $100,000 totaling approximately $28.7 million and $32.0 million, respectively.

Maturities of outstanding certificates of deposit at June 30 are summarized as follows:

(in thousands)	2012
2013	$	56,068
2014		15,050
2015		9,649
2016		1,675
2017 and thereafter		1,041
	$	83,483

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DEPOSITS (Details Textual) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Time Deposits, $100,000 or More	$ 28.7	$ 32.0

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REAL ESTATE OWNED

12 Months Ended

Jun. 30, 2012

Real Estate [Abstract]

Real Estate Owned [Text Block]

NOTE D – REAL ESTATE OWNED

Activity in real estate owned for the years ended June 30 was as follows:

(in thousands)	2012			2011
Balance at beginning of year	$	4,304		$	748
Additions		96			4,643
Impairment charges		(67	)		(71	)
Disposals		(1,888	)		(1,016	)
Balance at end of year	$	2,445		$	4,304

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PREMISES AND EQUIPMENT

12 Months Ended

Jun. 30, 2012

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

NOTE E - PREMISES AND EQUIPMENT

Premises and equipment at June 30 are comprised of the following:

(in thousands)	2012		2011
Land	$	860	$	860
Buildings and improvements		3,842		3,747
Furniture and equipment		1,097		1,126
Automobiles		29		29
		5,828		5,762
Less: accumulated depreciation		3,184		3,095
Balance at end of year	$	2,644	$	2,667

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ADVANCES FROM THE FEDERAL HOME LOAN BANK

12 Months Ended

Jun. 30, 2012

Schedule Of Federal Home Loan Bank Advances Fhlb Bank [Abstract]

Schedule Of Federal Home Loan Bank Advances Fhlb Bank [Text Block]

NOTE G - ADVANCES FROM THE FEDERAL HOME LOAN BANK

Advances from the Federal Home Loan Bank, collateralized at June 30, 2012 and 2011 by pledges of certain residential mortgage loans totaling $38.2 million and $37.6 million, respectively, and the Banks’ investment in Federal Home Loan Bank stock, are summarized as follows:

Maturing year ended June 30, 2012
(in thousands)
2013	$	9,810
2014		7,555
2015		2,366
2016		623
2017		431
2018		2,328
2019		3,249
2020-2030		703
	$	27,065
Premium assigned to borrowings in Frankfort First acquisition, net of amortization		—
	$	27,065

At June 30, 2012 interest rates for advances were fixed ranging from 1.11% to 6.95%, with a weighted-average interest rate of 2.27%.

Maturing year ended June 30, 2011
(in thousands)
2012	$	3,184
2013		7,810
2014		7,555
2015		2,366
2016		623
2017		431
2018		2,328
2019-2030		952
	$	25,249
Premium assigned to borrowings in Frankfort First acquisition, net of amortization		12
	$	25,261

At June 30, 2011 interest rates for advances were fixed ranging from 1.11% to 6.95%, with a weighted-average interest rate of 2.50%.

Each advance is payable at its maturity date, with a prepayment penalty for fixed rate advances. Based on collateral composed of first mortgage loans and the Company’s holdings of FHLB stock, the Company was eligible to borrow up to $65.9 million as of June 30, 2012.

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FEDERAL INCOME TAXES (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Deferred tax assets:
General loan loss allowance	$ 297	$ 260
Deferred compensation and benefits	257	258
Charitable contributions	3	3
Purchase accounting adjustments	0	4
Nonaccrued interest on loans	21	8
Other real estate owned adjustments	259	80
Total deferred tax assets	837	613
Deferred tax liabilities:
Federal Home Loan Bank stock dividends	(1,074)	(1,074)
Deferred loan origination costs	(32)	(39)
Loan servicing rights	(12)	(11)
Other	0	(2)
Purchase accounting adjustments	(463)	(248)
Depreciation	(30)	(260)
Total deferred tax liabilities	(1,611)	(1,634)
Deferred federal income taxes	$ (774)	$ (1,021)

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FEDERAL INCOME TAXES (Details Textual) (USD $)	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2009	Jun. 30, 2006
Effective Income Tax Rate Reconciliation, Deductions, Bad Debt				8.00%
Retained Earnings Not Recognized Federal Income Taxes	$ 5,200,000
Deferred Tax Liability Not Recognized, Cumulative Amount of Temporary Difference	1,800,000
Additions/(reductions) based on tax positions for the current year	(80,000)	(173,000)	80,000
Internal Revenue Service (Irs) [Member]
Tax Adjustments, Settlements, and Unusual Provisions		$ 1,300,000

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FEDERAL INCOME TAXES (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Federal income taxes at the statutory rate	$ 869	$ 632
Increase (decrease) resulting primarily from:
Cash surrender value of life insurance	(30)	(30)
Compensation expense	0	4
Other	1	0
Allowed deduction claimed on amended return for $1.3 million paid to option holders in acquisition of Frankfort First Bancorp, Inc. and other IRS audit adjustments	0	(502)
Federal Income Tax Expense (Benefit), Continuing Operations	$ 840	$ 104

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Jun. 30, 2012
Shares, Outstanding at beginning of year	325,800
Shares, Granted	0
Shares, Exercised	0
Shares, Forfeited	0
Shares, Outstanding at end of year	325,800
Shares, Options exercisable at end of year	325,800
Weighted-average exercise price, Outstanding at beginning of year (in dollars per share)	$ 10.10
Weighted-average exercise price, Granted (in dollars per share)	$ 0
Weighted-average exercise price, Exercised (in dollars per share)	$ 0
Weighted-average exercise price, Forfeited (in dollars per share)	$ 0
Weighted-average exercise price, Outstanding at end of year (in dollars per share)	$ 10.10
Weighted-average exercise price, Options exercisable at end of year (in dollars per share)	$ 10.10
Aggregate Intrinsic Value, Outstanding at end of year (in dollars)	$ 0
Aggregate Intrinsic Value, Options exercisable at end of year (in dollars)	$ 0
Weighted average fair value of options granted (in dollars per share)	$ 1.75
Weighted average remaining contractual term of options outstanding and exercisable	3 years 6 months

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LOANS (Details 4) (Residential Real Estate One To Four Family [Member], Troubled Debt Restructuring [Member], USD $)	Jun. 30, 2012
Residential Real Estate One To Four Family [Member] | Troubled Debt Restructuring [Member]
TDRs, Number of Loans	4
TDRs, Pre Modification Outstanding Recorded Investment	$ 179
TDRs, Post Modification Outstanding Recorded Investment	188
TDRs Performing to Modified Terms	187
TDRs Not Performing to Modified Terms	$ 0

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PENDING MERGER (unaudited)

12 Months Ended

Jun. 30, 2012

Business Combinations [Abstract]

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

NOTE L – PENDING MERGER (unaudited)

On November 3, 2011, the Company entered into an agreement of merger with CFK Bancorp, Inc. (“CKP”) and Central Kentucky Federal Savings Bank, whereby CKF will merger with and into the Company with the Company being the surviving corporation. In connection with the merger, Central Kentucky Federal Savings Bank will merge into First Federal of Frankfort and will operate under the name “Central Kentucky Federal Savings Bank” as a division of First Federal of Frankfort. The CFK Bancorp, Inc. stockholders, who can elect to receive cash, the Company’s stock, or a combination of cash and the Company’s stock, approved the merger on July 3, 2012. The merger is also subject to regulatory approval and Kentucky First has filed the appropriate applications with its primary regulator, the Board of Governors of the Federal Reserve System. As of June 30, 2012, CFK Bancorp, Inc., maintained $125.3 million in assets, $101.8 million in net loans, $103.1 million in deposits and $12.8 million in tangible equity capital. The merger consideration is expected to be valued at $11.6 million and the combination is expected to be completed during the fourth quarter of 2012. Please refer to Form 424B3 – Prospectus [Rule 242(b)(3)] filed with the Securities and Exchange Commission on May 23, 2012, for additional information about the proposed merger.

On November 3, 2011, the Company entered into an agreement of merger with CFK Bancorp, Inc. (“CKP”) and Central Kentucky Federal Savings Bank, whereby CKF will merger with and into the Company with the Company being the surviving corporation. In connection with the merger, Central Kentucky Federal Savings Bank will merge into First Federal of Frankfort and will operate under the name “Central Kentucky Federal Savings Bank” as a division of First Federal of Frankfort. The CFK Bancorp, Inc. stockholders, who can elect to receive cash, the Company’s stock, or a combination of cash and the Company’s stock, approved the merger on July 3, 2012. The merger is also subject to regulatory approval and Kentucky First has filed the appropriate applications with its primary regulator, the Board of Governors of the Federal Reserve System. As of June 30, 2012, CFK Bancorp, Inc., maintained $125.3 million in assets, $101.8 million in net loans, $103.1 million in deposits and $12.8 million in tangible equity capital. The merger consideration is expected to be valued at $11.6 million and the combination is expected to be completed during the fourth quarter of 2012. Please refer to Form 424B3 – Prospectus [Rule 242(b)(3)] filed with the Securities and Exchange Commission on May 23, 2012, for additional information about the proposed merger.

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REAL ESTATE OWNED (Tables)

12 Months Ended

Jun. 30, 2012

Real Estate [Abstract]

Other Real Estate, Roll Forward [Table Text Block]

Activity in real estate owned for the years ended June 30 was as follows:

(in thousands)	2012			2011
Balance at beginning of year	$	4,304		$	748
Additions		96			4,643
Impairment charges		(67	)		(71	)
Disposals		(1,888	)		(1,016	)
Balance at end of year	$	2,445		$	4,304

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LOANS (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Impaired loans, Unpaid Principal Balance and Recorded Investment	$ 2,757	$ 2,224
Impaired loans, Allowance for Loan Losses Allocated	675	564
Impaired loans, Average Recorded Investment	2,323	2,509
Impaired loans, Interest Income Recognized	72	77
Impaired loans, Cash Basis Income Recognized	72	77
Residential Real Estate One To Four Family [Member] | Loans Individually Evaluated For Impairment With Related Allowance [Member]
Impaired loans, Unpaid Principal Balance and Recorded Investment	1,535	1,088
Impaired loans, Allowance for Loan Losses Allocated	97	55
Impaired loans, Average Recorded Investment	1,434	1,213
Impaired loans, Interest Income Recognized	27	33
Impaired loans, Cash Basis Income Recognized	27	33
Residential Real Estate One To Four Family [Member] | Loans Individually Evaluated For Impairment With No Related Allowance [Member]
Impaired loans, Unpaid Principal Balance and Recorded Investment	1,222	1,136
Impaired loans, Allowance for Loan Losses Allocated	0	0
Impaired loans, Average Recorded Investment	889	1,296
Impaired loans, Interest Income Recognized	45	44
Impaired loans, Cash Basis Income Recognized	$ 45	$ 47

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 8) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2010
Financial assets
Cash and cash equivalents, Carrying Value	$ 5,735	$ 5,049	$ 8,362
Interest-earning deposits, Carrying Value	100	100
Available-for-sale securities, Carrying Value	189	203
Held-to-maturity securities, Carrying Value	4,756	6,810
Loans held for sale, Carrying Value	481	0
Loans receivable - net, Carrying Value	182,473	182,796
Federal Home Loan Bank stock, Carrying Value	5,641	5,641
Accrued interest receivable, Carrying Value	497	538
Cash and cash equivalents, Fair Value	5,735	5,049
Interest-earning deposits, Fair Value	100	100
Available-for-sale securities, Fair Value	189	203
Held-to-maturity securities, Fair Value	5,144	7,257
Loans Held-for-sale, Fair Value Disclosure	500	0
Loans receivable - net, Fair Value	190,354	190,183
Accrued interest receivable, Fair Value	497	538
Financial liabilities
Deposits, Carrying Value	134,552	139,940
Federal Home Loan Bank advances, Carrying Value	27,065	25,261
Advances by borrowers for taxes and insurance, Carrying Value	487	471
Accrued interest payable, Carrying Value	64	91
Deposits, Fair Value	134,975	141,408
Federal Home Loan Bank advances, Fair Value	29,429	23,797
Advances by borrowers for taxes and insurance, Fair Value	487	471
Accrued interest payable, Fair Value	64	91
Fair Value, Inputs, Level 1 [Member]
Financial assets
Cash and cash equivalents, Fair Value	5,735
Interest-earning deposits, Fair Value	100
Financial liabilities
Deposits, Fair Value	51,069
Fair Value, Inputs, Level 2 [Member]
Financial assets
Available-for-sale securities, Fair Value	189
Held-to-maturity securities, Fair Value	5,144
Loans Held-for-sale, Fair Value Disclosure	500
Financial liabilities
Deposits, Fair Value	83,906
Federal Home Loan Bank advances, Fair Value	29,429
Accrued interest payable, Fair Value	64
Fair Value, Inputs, Level 3 [Member]
Financial assets
Loans receivable - net, Fair Value	190,354
Accrued interest receivable, Fair Value	497
Financial liabilities
Advances by borrowers for taxes and insurance, Fair Value	$ 487

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Net income	$ 1,715	$ 1,756
Other comprehensive income (loss), net of tax-related effects:
Unrealized holding gains (losses) on securities available for sale during the year, net of tax (benefit) of $0 and $0 in 2012 and 2011, respectively	0	(1)
Comprehensive income	$ 1,715	$ 1,755

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Jun. 30, 2012

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Kentucky First Federal Bancorp (the “Company”) is a savings and loan holding company whose activities are primarily limited to holding the stock and managing the operations of First Federal Savings and Loan Association of Hazard, Kentucky (“First Federal of Hazard”) and Frankfort First Bancorp, Inc., (“Frankfort First”) the holding company for First Federal Savings Bank of Frankfort (“First Federal of Frankfort”). First Federal of Hazard and First Federal of Frankfort are collectively referred to herein as “the Banks.” First Federal of Hazard is a community-oriented savings and loan association dedicated to serving consumers in Perry and surrounding counties in eastern Kentucky, while First Federal of Frankfort operates through three banking offices located in Frankfort, Kentucky. Both institutions engage primarily in the business of attracting deposits from the general public and applying those funds to the origination of loans for residential and consumer purposes. First Federal of Frankfort also originates, to a lesser extent, church loans, home equity and other loans. Other than a predominance of one- to four-family residential property, which is common in most thrifts, there are no significant concentrations of loans to any one industry or customer. However, the customers’ ability to repay their loans is dependent on the real estate and general economic conditions in the Banks’ specific operating areas. The Banks’ profitability is significantly dependent on net interest income, which is the difference between interest income generated from interest-earning assets (i.e. loans and investments) and the interest expense paid on interest-bearing liabilities (i.e. customer deposits and borrowed funds). Net interest income is affected by the relative amount of interest-earning assets and interest-bearing liabilities and the interest received or paid on these balances. The level of interest rates paid or received by the Banks can be significantly influenced by a number of environmental factors, such as governmental monetary policy, that are outside of management’s control.

The consolidated financial information presented herein has been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). In preparing consolidated financial statements in accordance with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from such estimates.

The following is a summary of the Company’s significant accounting policies which have been consistently applied in the preparation of the accompanying consolidated financial statements.

1.     Principles of Consolidation: The consolidated financial statements include the accounts of the Company, First Federal of Hazard, Frankfort First and First Federal of Frankfort. All significant intercompany accounts and transactions have been eliminated in consolidation.

2.     Use of Estimates: To prepare financial statements in conformity with U.S. GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. The allowance for loan losses, goodwill, loan servicing rights, deferred tax assets and fair values of financial instruments are particularly subject to change.

3. Securities: Debt securities are classified as held to maturity or available for sale. Securities classified as held to maturity are to be carried at cost only if the Company has the positive intent and ability to hold these securities to maturity. Securities designated as available for sale are carried at fair value with resulting unrealized gains or losses recorded to shareholders’ equity, net of tax. Realized gains and losses on sales of securities are recognized using the specific identification method.

Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis.

4. Loans: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal amount outstanding, adjusted for deferred loan origination fees and the allowance for loan losses. Interest income is accrued on the unpaid principal balance unless the collectibility of the loan is in doubt. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments. Interest income on loans is generally discontinued at the time a loan is 90 days delinquent unless the loan is well-secured and in process of collection. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. A loan is moved to non-accrual status in accordance with the Company’s policy, typically 90 days after the loan becomes delinquent.

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

5. Loans held for sale: Loans held for sale are carried at the lower of cost (less principal payments received) or fair value, calculated on an aggregate basis. At June 30, 2012 the Company had $481,000 in loans held for sale, while at June 30, 2011, no loans were held for sale.

In selling loans, the Company utilizes a program with the Federal Home Loan Bank, retaining servicing on loans sold. Mortgage servicing rights on originated loans that have been sold are initially recorded at fair value. Capitalized servicing rights are amortized in proportion to and over the period of estimated servicing revenues. The Company recorded amortization related to mortgage servicing rights totaling $22,000 and $13,000 during the years ended June 30, 2012 and 2011, respectively. The carrying value of the Company’s mortgage servicing rights, which approximated fair value, totaled approximately $101,000 and $120,000 at June 30, 2012 and 2011, respectively.

The Company was servicing mortgage loans of approximately $12.6 million and $15.0 million that had been sold to the Federal Home Loan Bank at June 30, 2012 and 2011, respectively. During the fiscal year ended June 30, 2012, we sold $394,000 in loans under the FHLB program and the average balance of loans serviced was $13.9 million.

Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income. Changes in valuation allowances are reported with other non-interest income on the income statement. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses.

Servicing fee income which is reported on the income statement as other non-interest income is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal and are recorded as income when earned. The amortization of mortgage servicing rights is netted against loan servicing fee income. Servicing fees totaled $34,000 and $36,000 for the years ended June 30, 2012 and 2011, respectively. Late fees and ancillary fees related to loan servicing are not material.

6. Allowance for Loan Losses: The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance required using past loss experience, the nature and volume of the portfolio, trends in the level of delinquent and problem loans, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral and current and anticipated economic conditions in the primary lending area. Allocations of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s judgment, should be charged off.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired or loans otherwise classified as substandard or doubtful. The general component covers non-classified loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the most recent eight quarters. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment.

These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; changes in lending policies, procedures and practices; experience, ability and depth of lending management and other relevant staff; economic trends and conditions; industry conditions; and effects of changes in credit concentrations. Our portfolio segments include residential real estate, nonresidential real estate and land, loans on deposits and consumer and other loans. Risk factors associated with our portfolio segments are as follows:

Residential Real Estate

Our primary lending activity is the origination of mortgage loans, which enable a borrower to purchase or refinance existing homes in the Banks’ respective market areas. We further classify our residential real estate loans as one- to four-family, multi-family or construction. We believe that our first mortgage position on loans secured by residential real estate presents lower risk than our other loans, with the exception of loans on deposits.

We offer a mix of adjustable-rate and fixed-rate mortgage loans with terms up to 40 years for owner-occupied properties. For these properties a borrower may be able to borrow up to 95% of the value with private mortgage insurance. Alternatively, the borrower may be able to borrow up to 90% of the value with a traditional first mortgage and a second mortgage (bearing a higher rate of interest) on the additional 10% of the value. After initial fixed-rate periods of one, three, five or seven years, the interest rates on the adjustable-rate loans adjust once a year with annual limitation of one percentage point per adjustment period and a lifetime cap of five percentage points.

We also originate loans to individuals to finance the construction of residential dwellings for personal use or for use as rental property. We do not generally lend to builders for construction of speculative or custom residential properties for resale. Construction loans are generally less than one year in length, do not exceed 80% of the appraised value, and provide for the payment of interest only during the construction phase. Funds are disbursed as progress is made toward completion of the construction based on site inspections by qualified bank staff.

Multi-family and Nonresidential Loans

We offer mortgage loans secured by residential non-owner-occupied one- to four-family, residential multi-family (five or more units), and nonresidential real estate. Nonresidential real estate loans are comprised generally of commercial office buildings, churches, condominiums and properties used for other purposes. Generally, these loans are originated for 25 years or less and do not exceed 75% of the appraised value. Loans secured by multi-family and commercial real estate generally have larger balances and involve a greater degree of risk than one- to four-family residential mortgage loans. These loans depend on the borrower’s creditworthiness and the feasibility and cash flow potential of the project. Payments on loans secured by income properties often depend on successful operation and management of the properties. As a result, repayment on such loans may be subject to a greater extent to adverse conditions in the real estate market or economy than owner-occupied residential loans.

Consumer lending

Our consumer loans include home equity lines of credit and loans secured by savings deposits. Home equity loans are generally second mortgage loans subordinate only to first mortgages also held by the bank and do not exceed 80% of the estimated value of the property. We do offer home equity loans up to 90% of the estimated value to qualified borrowers and these loans carry a premium rate. Loans secured by savings are originated up to 90% of the depositor’s savings account balance and normally bear interest at two percentage points above the rate paid on the deposit account. Because the deposit account must be pledged as collateral to secure the loan, the inherent risk of this type of loan is minimal.

In years prior to the year ended June 30, 2011, the loss history of the most recent 12 quarterly periods was used in the calculation of the Company’s general component of allowance for losses on loans. A three year period is the amount of time we determined was appropriate and provided a representative time frame from which we might estimate losses within our portfolio. Although prior to the 2011 fiscal year the Company had not incurred substantial losses, we did incur losses which have been discussed in previous financial statements and regulatory filings. When a loss event occurs it is prudent to shorten the period of time that is deemed representative of the loss period. This shortening process focuses much more attention on recent events than the normal period would focus, and, in our case, increased the amount that we determined was proper for our allowance for losses on loans. After a loss event occurs it is also prudent to re-extend the period of time used to represent the Company’s loss history. Failure to lengthen the time period would have the undesirable effect of focusing too closely on recent loss history and could result in losing sight of the loss event that prompted the change in the first place. Therefore, in consultation with the regulators during the 2011 year our loss history lookback period was shortened to the most recent four quarters, while during the 2012 year we began to lengthen the lookback period and used the most recent eight quarterly periods. We believe that the change to our lookback period was proper in determining an adequate amount loan loss allowance.

The Banks account for impaired loans by determining the present value of expected future cash flows discounted at the loan’s effective interest rate or, as an alternative, at the loan’s observable market price or fair value of the collateral, reduced by estimated selling costs.

A loan is considered impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. Although all of our loans are secured by collateral, we rely heavily on the capacity of our borrowers to generate sufficient cash flow to service their debt. As a result, our loans do not become collateral-dependent until there is deterioration in the borrower’s cash flow and financial condition, which makes it necessary for us to look to the collateral for our sole source of repayment. Collateral-dependent loans which are more than ninety days delinquent are considered to constitute more than a minimum delay in repayment and are evaluated for impairment under the policy at that time.

In the calculation of our general valuation allowance we consider the potential for outdated appraisal values to be of minimal risk and, therefore, do not attribute a specific factor to it.

With respect to the Banks’ investment in troubled debt restructurings, multi-family and nonresidential loans, and the evaluation of impairment thereof, such loans are nonhomogenous and, as such, may be deemed to be collateral-dependent when they become more than ninety days delinquent. We obtain updated independent appraisals in these situations or when we suspect that the previous appraisal may no longer be reflective of the property’s current fair value. This process varies from loan to loan, borrower to borrower, and also varies based on the nature of the collateral.

We utilize updated independent appraisals to determine fair value for collateral-dependent loans, adjusted for estimated selling costs, in determining our specific reserve. In some situations management does not secure an updated independent appraisal. These situations may involve small loan amounts or loans that, in management’s opinion, have an abnormally low loan-to-value ratio.

7. Federal Home Loan Bank Stock: The banks are members of the FHLB system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

8. Real Estate Owned: Real estate acquired through or instead of foreclosure is initially recorded at fair value less estimated selling expenses at the date of acquisition, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If fair value declines subsequently, the carrying value is adjusted through a valuation allowance and the amount is recorded through expense. Costs relating to holding real estate owned, net of rental income, are charged against earnings as incurred.

9. Premises and Equipment: Land is carried at cost. Premises and equipment are carried at cost less accumulated depreciation. The cost of premises and equipment includes expenditures which extend the useful lives of existing assets. Maintenance, repairs and minor renewals are expensed as incurred. For financial reporting, depreciation is provided on the straight-line method over the useful lives of the assets, estimated to be forty years for buildings, ten to forty years for building improvements, and five to ten years for furniture and equipment.

10. Income Taxes: Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. Deferred tax assets are recorded only to the extent that the amount of net deductible temporary differences or carryforward attributes may be utilized against current period earnings, carried back against prior years earnings, offset against taxable temporary differences reversing in future periods, or utilized to the extent of management’s estimate of future taxable income. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. Deferred tax liabilities are provided on the total amount of net temporary differences taxable in the future.

A tax provision is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company recognizes interest and/or penalties related to income tax matters as income tax expense.

Kentucky First Federal Bancorp and Frankfort First Bancorp, Inc., each are subject to state income taxes in the Commonwealth of Kentucky. Neither of the Banks are subject to state income tax in the Commonwealth. With few exceptions, the Company is no longer subject to U.S. federal, state and local tax examinations by tax authorities for years before 2009.

11. Retirement and Employee Benefit Plans: The Banks each participate in the Pentegra Defined Benefit Plan for Financial Institutions (“The Pentegra DB Plan”), which is a tax-qualified, multi-employer defined benefit pension fund covering all employees who qualify as to length of service. The Pentegra DB Plan’s Employer Identification Number is 13-5645888 and the Plan Number is 333. The Pentegra DB Plan operates as a multi-employer plan for accounting purposes and as a multiple-employer plan under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code. The Pentegra DB Plan is a single plan under Internal Revenue Code Section 413(c) and, as a result, all of the assets stand behind all of the liabilities. Accordingly, under the Pentegra DB Plan contributions made by a participating employer may be used to provide benefits to participants of other participating employers. Total contributions made to the Pentegra DB Plan, as reported on Form 5500, equal $299.7 million and $203.6 million for the plan years ended June 30, 2011 and 2010, respectively. Our contributions for fiscal 2012 and 2011 was not more than 5% of the total contributions made to the Pentegra DB Plan. Pension expense is the net contributions, which are based upon covered employees’ ages and salaries and are dependent upon the ultimate prescribed benefits of the participants and the funded status of the plan. The Company recognized expense related to the plans totaling approximately $742,000 and $564,000 for the fiscal years ended June 30, 2012 and 2011. There are no collective bargaining agreements in place that require contributions to the Pentegra DB Plan. As of July 1, 2011, the most recent period for which information is available, First Federal of Hazard had a funded status of 83.79%, while First Federal of Frankfort had a funded status of 85.95%. There are no funding improvement plans or surcharges to participants.

The Company also maintains a nonqualified deferred compensation plan for the benefit of certain directors, which is closed to any future deferrals. Under the plan, the Company pays each participant, or their beneficiary, the amount of fees deferred plus interest under terms selected by the individual participants prior to compensation deferral. Payments are made to participants either in a lump sum or in monthly installments not to exceed 10 years. Payments may commence upon the director’s attainment of a certain age or upon the individual’s termination of service. The expense incurred for the deferred compensation was $17,000 and $7,000 for the fiscal years ended June 30, 2012 and 2011, respectively.

First Federal of Hazard has an Employee Stock Ownership Plan (“ESOP”) which provides retirement benefits for substantially all full-time employees who have completed one year of service and have attained the age of 21. Annual contributions are made to the ESOP equal to the ESOP’s debt service less dividends received by the ESOP on unallocated shares. Shares in the ESOP were acquired using funds provided by a loan from the Company and, accordingly, the cost of those shares is shown as a reduction of stockholders’ equity. Shares are released to participants proportionately as the loan is repaid. Dividends on allocated shares are recorded as dividends and charged to retained earnings. Dividends on unallocated shares are used to repay loan principal and accrued interest. Compensation expense is recorded equal to the fair value of shares committed to be released during a given fiscal year. Allocation of shares to the ESOP participants is contingent upon the repayment of a loan to Kentucky First Federal Bancorp totaling $2.1 million and $2.3 million at June 30, 2012 and 2011, respectively. The Company recorded expense for the ESOP of approximately $180,000 and $171,000 for each of the years ended June 30, 2012 and 2011, respectively. Shares may be surrendered from the plan as employees leave employment. Total shares surrendered from the plan were 27,047 and 26,682 at June 30, 2012 and 2011, respectively. The amount contributed to the ESOP during the year just ended was $324,000.

	For the fiscal year ended
	June 30,
	2012		2011
Allocated shares		122,249		100,961
Shares committed to be released		9,338		10,445
Unearned shares		178,339		198,885
Total ESOP shares		309,926		310,291
Fair value of unearned shares at end of period (dollars in thousands)	$	1,514	$	1,790

First Federal of Frankfort maintains a 401(k) plan for the benefit of all full-time employees. No employer contributions have been made to the 401(k) plan.

12. Share-Based Compensation Plans: Compensation cost is recognized for stock options and restricted stock awards issued to employees, based on the fair value of these awards at the date of the grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of the grant is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. In fiscal 2006, the Company initiated the 2005 Equity Incentive Plan (“EIP” or the “Plan”) which provides for two share-based compensation plans, which are described below.

No compensation cost was charged against income for those share-based plans for the fiscal year ended June 30, 2012, while $160,000 was charged against income for the fiscal year ended June 30, 2011. The total income tax benefit recognized in the statement of income for share-based compensation arrangements was $54,000 for the fiscal year ended June 30, 2011, while there was no income tax benefit recognized for the recent fiscal year ended.

The EIP provides for grants of up to 421,216 stock options. It also provides that one-fifth of the options granted become vested and exercisable on the first five anniversaries of the date of grant. The contractual term of the options is ten years. All option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant.

At June 30, 2012, the only options outstanding are related to those granted in the fiscal year 2006.

A summary of the status of the Company’s stock option plan as of June 30, 2012, and changes during the year then ended is presented below:

			Weighted-		Aggregate
			average		Intrinsic
			exercise		Value
	Shares		price		($000)
Outstanding at beginning of year		325,800	$	10.10
Granted		-		-
Exercised		-		-
Forfeited		-		-
Outstanding at end of year		325,800	$	10.10	$	-
Options exercisable at end of year		325,800	$	10.10	$	-
Weighted average fair value of options granted					$	1.75
Weighted average remaining contractual term of options outstanding and exercisable						3.5 years

Information related to the stock option plan during each year ended June 30, follows:

(in thousands)	2012		2011
Intrinsic value of options exercised	$	-	$	-
Cash received from option exercises		-		-
Tax benefit realized from option exercises		-		-

As of June 30, 2012, there was no unrecognized compensation cost related to nonvested stock options granted under the Plan.

The EIP also provides for the purchase of 168,486 shares of common stock and the issuance of such shares in the form of restricted stock awards to members of the board of directors, management and certain employees. Common shares awarded under the restricted stock plan vest over a five year period, commencing with the date of the grant and are expensed based on their fair value at the grant date.

The following table summarizes the activity with regard to restricted stock awards during fiscal 2012:

			Weighted-average
			grant date
	Shares		fair value
Nonvested at July 1, 2011		—	$	—
Vested		—		—
Forfeited		—		—
Nonvested at June 30, 2012		—	$	—

As of June 30, 2012, there was no unrecognized compensation cost related to the restricted stock awards. The total fair value of shares vested during the year ended June 30, 2011 was $237,000.

13. 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. There is no adjustment to net earnings for the calculation of diluted earnings per share. The factors used in the basic and diluted earnings per share computations for the fiscal years ended June 30 follow:

(in thousands)	2012		2011
Net income	$	1,715	$	1,756
Less earnings allocated to unvested shares		—		7
Net income allocated to common shareholders, basic and diluted	$	1,715	$	1,749

	2012		2011
Basic
Weighted-average common shares including unvested common shares outstanding		7,546,120		7,530,603
Less: Weighted-average unvested common shares		—		11,256
Weighted-average common shares outstanding		7,546,120		7,519,347
Diluted
Add: Dilutive effect of assumed exercise of stock options		—		—
Weighted-average common shares outstanding (diluted)		7,546,120		7,519,347

Basic earnings per share is computed based upon the weighted-average shares outstanding during the year less shares in the ESOP that are unallocated and not committed to be released and unearned restricted stock. For fiscal years 2012 and 2011 all options were antidilutive, as the exercise price was greater than the average market price of the common stock.

14. Fair Value of Assets and Liabilities: Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 - Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access as of the measurement date.

Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in 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 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Following is a description of the valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the accompanying statement of condition, 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 matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities bur rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The following table presents the fair value measurements of assets and liabilities measured at fair value on a recurring basis at June 30, 2012 and 2011. The securities represented are only those classified as available-for sale.

	Fair Value Measurements Using
			Quotes Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)
2012
Agency mortgage-backed: residential	$	189	$	-	$	189	$	-
2011
Agency mortgage-backed: residential	$	203		-		203		-

There were no transfers between levels 1 and 2.

Impaired Loans

The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent independent 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 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. Independent appraisals for collateral-dependent loans are updated periodically (usually every 9-12 months).

Other Real Estate

Nonrecurring adjustments to real estate properties classified as other real estate owned (“OREO”) are measured at fair value, less costs to sell. Fair values are based on recent real estate appraisals. These appraisals may use 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.

The following table presents the fair value measurements of assets and liabilities measured at fair value on a nonrecurring basis at June 30, 2012 and 2011.

	Fair Value Measurements Using
			Quotes Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
(in thousands)	Fair Value		(Level 1)		(Level 2)		(Level 3)
2012
Impaired loans
One- to four-family	$	807	$	-	$	-	$	807
Multi-family		631		-		-		631
Other real estate owned, net
One- to four-family		648		-		-		648
Multi-family		233		-		-		233
2011
Impaired loans
One- to four-family	$	1,033	$	-	$	-	$	1,033
Other real estate owned, net
One- to four-family		126		-		-		126
Multi-family		186		-		-		186

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $1.5 million, with a valuation allowance of $97,000 at June 30, 2012. At June 30, 2011, impaired loans had a principal balance of $1.1 million, with a valuation allowance of $55,000. A provision for loss on impaired loans of $42,000 was made during fiscal 2012.

Other real estate owned measured at fair value less costs to sell, had a carrying amount of $881,000 and $312,000 at June 30, 2012 and 2011, respectively, after write-down of $58,000 and $71,000 for the years ended June 30, 2012 and 2011, respectively.

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 June 30, 2012:

					Range
	Fair Value		Valuation	Unobservable	(Weighted
	(in thousands)		Technique(s)	Input(s)	Average)
Impaired Loans:
Residential real estate 1-4 family	$	807	Sales comparison approach	Adjustments for differences between comparable sales		3.1% To 19.8% (4.3%)
Multi-family		631	Sales comparison approach	Adjustments for differences between comparable sales		5.9% To 15.0% (4.8%)
Repossessed assets:
1-4 family	$	648	Sales comparison approach	Adjustments for differences between comparable sales		0.5% To 18.6% (8.6%)
Multi-family		233	Sales comparison approach	Adjustments for differences between comparable sales		20.2% To 38.9% (20.8%)

The following disclosure of the fair value of financial instruments, both assets and liabilities, whether or not recognized in the consolidated statement of financial condition, for which it is practicable to estimate that value. For financial instruments where quoted market prices are not available, fair values are based on estimates using present value and other valuation methods.

The methods used are greatly affected by the assumptions applied, including the discount rate and estimates of future cash flows. Therefore, the fair values presented may not represent amounts that could be realized in an exchange for certain financial instruments.

The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying statements of financial condition at amounts other than fair value at June 30, 2012 and 2011:

Cash and cash equivalents: 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 methods for securities were previously described.

Loans held for sale: Loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value 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.

Federal Home Loan Bank stock: It was 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. The historical carrying amount of accrued interest payable on deposits is deemed to approximate fair value.

Advances from the Federal Home Loan Bank: 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 June 30, 2012 and 2011, was not material.

Based on the foregoing methods and assumptions, the carrying value and fair value of the Company’s financial instruments at June 30, 2012 and June 30, 2011 are as follows:

			Fair Value Measurements at
(in thousands)			June 30, 2012 Using
	Carrying
	Value		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	5,735	$	5,735					$	5,735
Interest-earning deposits		100		100						100
Available-for-sale securities		189			$	189				189
Held-to-maturity securities		4,756				5,144				5,144
Loans held for sale		481				500				500
Loans receivable - net		182,473					$	190,354		190,354
Federal Home Loan Bank stock		5,641								n/a
Accrued interest receivable		497						497		497
Financial liabilities
Deposits	$	134,552	$	51,069	$	83,906			$	134,975
Federal Home Loan Bank advances		27,065				29,429				29,429
Advances by borrowers for taxes and insurance		487					$	487		487
Accrued interest payable		64				64				64

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. This process is different from the process performed by the Office of Thrift Supervision, which was utilized by the Company until December 31, 2011, when the service was discontinued.

The carrying amounts and estimated fair values of financial instruments at June 30, 2011, are as follows:

	Carrying		Fair
(in thousands)	value		value
Financial assets
Cash and cash equivalents	$	5,049	$	5,049
Interest-earning deposits		100		100
Available-for-sale securities		203		203
Held-to-maturity securities		6,810		7,257
Loans held for sale		—		—
Loans receivable - net		182,796		190,183
Federal Home Loan Bank stock		5,641		n/a
Accrued interest receivable		538		538
Financial liabilities
Deposits	$	139,940	$	141,408
Federal Home Loan Bank advances		25,261		23,797
Advances by borrowers for taxes and insurance		471		471
Accrued interest payable		91		91

15. Cash and Cash Equivalents: For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks and interest-bearing deposits in other financial institutions with original maturities of less than ninety days.

16. Goodwill and Other Intangible Assets: Goodwill resulting from business combinations prior to January 1, 2009 represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Goodwill resulting from business combinations after January 1, 2009, is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually. The Company has selected March 31 as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill is the only intangible asset with an indefinite life on our balance sheet.

The Company’s core deposit intangible is being amortized on a straight-line basis over an original period of seven years. The carrying basis and accumulated amortization of recognized intangible assets at June 30, 2012 and 2011 is as follows:

(in thousands)	2012		2011
Core deposits
Gross Carrying Amount	$	918	$	918
Accumulated Amortization		918		831
	$	—	$	87

Amortization expense for the years ended June 30, 2012 and 2011 was $87,000 and $131,000, respectively.

17. Cash Surrender Value of Life Insurance: First Federal of Frankfort has purchased life insurance policies on certain key executives. Bank-owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

18. Treasury Stock: Treasury stock is stated at cost. Cost is determined by the first-in, first-out method.

19. Related Party Transactions: Loans outstanding to executive officers, directors, significant shareholders and their affiliates (related parties) at June 30, 2012 and 2011 are summarized as follows:

(in thousands)	2012			2011
Outstanding principal, beginning of year	$	865		$	593
Changes in composition of related parties		—			157
Principal disbursed during the year		53			156
Principal repaid and refinanced during the year		(121	)		(41	)
Outstanding principal, end of year	$	797		$	865

Deposits from related parties held by the Company at June 30, 2012 and 2011 totaled $2.2 million and $1.1 million, respectively.

20. Comprehensive Income: Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available for sale which are also recognized as separate components of equity.

21. Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the financial statements.

22. Equity: Stock dividends in excess of 20% are reported by transferring the par value of the stock issued from retained earnings to common stock. Stock dividends for 20% or less are reported by transferring the fair value, as of the ex-dividend date, of the stock issued from retained earnings to common stock and additional paid-in capital. Fractional share amounts are paid in cash with a reduction in retained earnings.

23. Dividend Restriction: Banking regulations require maintaining certain capital levels and may limit the dividends paid by the bank to the holding company or by the holding company to shareholders.

24. Operating Segments: While the chief decision-makers monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Operating segments are aggregated into one as operating results for all segments are similar. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

25. Reclassifications: Some items in the prior year financial statements were reclassified to conform to the current presentation.

27. New Accounting Standards In July 2012, the FASB issued an update (ASU No. 2012-02).  The update will allow the Company to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test. Under the update, the Company would not be required to calculate the fair value of an indefinite-lived intangible asset unless the Company determines, based on a qualitative assessment, that it is not more likely than not, the indefinite-lived intangible asset is impaired. The update includes a number of events and circumstances for the Company to consider in conducting the qualitative assessment.  The update is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012.  Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if the Company’s financial statements for the most recent annual or interim period have not yet been issued.  The Company did not elect early adoption of this update and has not evaluated to date if any future adoption will have a material impact on the Company’s consolidated financial statements or results of operations.

XML

DEPOSITS (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Non-interest bearing checking accounts	$ 1,704	$ 996
Checking accounts	7,615	6,965
Savings accounts	36,913	34,147
Money market demand deposits	4,837	4,796
Total demand, transaction and passbook deposits	51,069	46,904
Certificates of deposit:
Less than 12 months	3,940	5,019
12 months to 36 months	72,405	81,075
More than 36 months	7,138	6,942
Total certificates of deposit	83,483	93,036
Total deposits	$ 134,552	$ 139,940

XML

REGULATORY CAPITAL (Details Textual) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Tier 1 core capital, Actual Ratio	21.30%	20.80%
Tier 1 risk-based capital, Actual Ratio	37.80%	38.30%
Dividends Waived	$ 1.4
Residential Real Estate One To Four Family [Member]
Tier 1 core capital, Actual Ratio	4.00%
Tier 1 risk-based capital, Actual Ratio	8.00%
Capital to Risk Weighted Assets	50.00%

XML

PREMISES AND EQUIPMENT (Tables)

12 Months Ended

Jun. 30, 2012

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

Premises and equipment at June 30 are comprised of the following:

(in thousands)	2012		2011
Land	$	860	$	860
Buildings and improvements		3,842		3,747
Furniture and equipment		1,097		1,126
Automobiles		29		29
		5,828		5,762
Less: accumulated depreciation		3,184		3,095
Balance at end of year	$	2,644	$	2,667

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 5) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Jun. 30, 2011
Available-for-sale securities, Fair Value	$ 189	$ 203
Residential Mortgage Backed Securities [Member]
Available-for-sale securities, Fair Value	189	203
Fair Value, Inputs, Level 1 [Member] | Residential Mortgage Backed Securities [Member]
Available-for-sale securities, Fair Value	0	0
Fair Value, Inputs, Level 2 [Member]
Available-for-sale securities, Fair Value	189
Fair Value, Inputs, Level 2 [Member] | Residential Mortgage Backed Securities [Member]
Available-for-sale securities, Fair Value	189	203
Fair Value, Inputs, Level 3 [Member] | Residential Mortgage Backed Securities [Member]
Available-for-sale securities, Fair Value	$ 0	$ 0

XML

CONDENSED FINANCIAL STATEMENTS OF KENTUCKY FIRST FEDERAL BANCORP

12 Months Ended

Jun. 30, 2012

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Condensed Financial Information of Parent Company Only Disclosure [Text Block]

NOTE K - CONDENSED FINANCIAL STATEMENTS OF KENTUCKY FIRST FEDERAL BANCORP

The following condensed financial statements summarize the financial position of Kentucky First Federal Bancorp as of June 30, 2012 and 2011, and the results of its operations and its cash flows for the fiscal years ended June 30, 2012 and 2011.

KENTUCKY FIRST FEDERAL BANCORP

BALANCE SHEETS

June 30, 2012 and 2011

(In thousands)

ASSETS	2012			2011
Interest-bearing deposits in First Federal of Hazard	$	425		$	604
Interest-bearing deposits in First Federal of Frankfort		427			2,513
Other interest-bearing deposits		39			37
Investment in First Federal of Hazard		22,640			21,708
Investment in Frankfort First		34,977			33,671
Prepaid expenses and other assets		456			521
Total assets	$	58,964		$	59,054
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable and other liabilities	$	111		$	357
Total liabilities		111			357
Shareholders’ equity
Common stock		86			86
Additional paid-in capital		36,870			36,907
Retained earnings		31,971			31,860
Shares acquired by stock benefit plans		(1,772	)		(1,989	)
Shares acquired for treasury – at cost		(8,305	)		(8,170	)
Accumulated other comprehensive income		3			3
Total shareholders’ equity		58,853			58,697
Total liabilities and shareholders’ equity	$	58,964		$	59,054

KENTUCKY FIRST FEDERAL BANCORP

STATEMENTS OF INCOME

Years ended June 30, 2012 and 2011

(Dollar amounts in thousands)

	2012			2011
Income
Interest income	$	121		$	164
Dividends from First Federal of Hazard		—			—
Equity in undistributed (excess distributed) earnings of First Federal of Hazard		886			644
Dividends from Frankfort First		—			378
Equity in undistributed earnings of Frankfort First		1,306			964
Total income		2,313			2,150
Non-interest expenses		838			547
Earnings before income taxes		1,475			1,603
Federal income tax expense (benefit)		(240	)		(153	)
NET INCOME	$	1,715		$	1,756

KENTUCKY FIRST FEDERAL BANCORP

STATEMENTS OF CASH FLOWS

For Years ended June 30, 2012 and 2011

(Dollar amounts in thousands)

	2012			2011
Cash flows from operating activities:
Net earnings for the year	$	1,715		$	1,756
Adjustments to reconcile net earnings to net cash provided by operating activities:
Excess (deficit) distributions over earnings (undistributed earnings) from consolidated subsidiaries		(2,192	)		(1,608	)
Noncash compensation expense		134			363
Increase (decrease) in cash due to changes in:
Prepaid expenses and other assets		65			(235	)
Other liabilities		(246	)		7
Net cash provided by operating activities		(524	)		283

	2012			2011
Cash flows from financing activities:
Dividends paid on common stock		(1,604	)		(1,112	)
Repurchase of treasury shares		(135	)		(218	)
Net cash used in financing activities		(1,739	)		(1,330	)
Net increase (decrease) in cash and cash equivalents		(2,263	)		(1,047	)
Cash and cash equivalents at beginning of year		3,154			4,201
Cash and cash equivalents at end of year	$	891		$	3,154

Prior to July 21, 2011, the Banks were subject to regulations imposed by the OTS regarding the amount of capital distributions payable to the Company. Generally, the Banks’ payments of dividends were limited, without prior OTS approval, to net earnings for the current calendar year plus the two preceding calendar years, less capital distributions paid over the comparable time period.