Kentucky First Federal Bancorp Reports Net Loss Due to Goodwill Impairment Charge

Strategic Insights -

Kentucky First Federal Bancorp, the holding company for First Federal Savings and Loan Association of Hazard and First Federal Savings Bank of Kentucky, has announced a goodwill impairment charge of $947,000 that contributed to a net loss of $1.1 million for the three months ended June 30, 2024. The company recorded a goodwill impairment charge, which had no tax impact, of $947,000, or $0.12 per common share, during the quarter ended June 30, 2024, representing 100.0% of goodwill previously reported. The impairment charge is a result of a prolonged decline in the stock price of the Company, leading to recognition of the impairment pursuant to management's performance of a goodwill impairment analysis as of June 30, 2024.

Key Takeaways:

  • The goodwill impairment charge of $947,000 contributed to a net loss of $1.1 million for the three months ended June 30, 2024.
  • The goodwill impairment charge represented 100.0% of goodwill previously reported, totaling $14.5 million.
  • The impairment charge had no tax impact, but resulted in a net loss of $1.1 million for the quarter.
  • Non-interest expense increased $1.1 million or 56.0% for the three months ended June 30, 2024, primarily due to the goodwill impairment charge.
  • Vendor and consulting fees increased $105,000, and auditing and accounting expenses increased $85,000, for the three months ended June 30, 2024.
  • Net interest income decreased $29,000 or 1.5% to $1.9 million for the three months ended June 30, 2024, primarily due to interest expense increasing more than interest income.
  • The company's stock price has been negatively impacted by lower earnings, suspension of dividend, and OCC agreement, contributing to the goodwill impairment charge.

Statistics:

  • Goodwill impairment charge: $947,000
  • Net loss for the three months ended June 30, 2024: $1.1 million
  • Net interest income for the three months ended June 30, 2024: $1.9 million
  • Average rate earned on interest-earning assets: 6.16%
  • Average interest-earning assets: $352.5 million
  • Average rate paid on interest-bearing liabilities: 4.17%
  • Increase in interest income: $3.5 million or 27.6%
  • Increase in interest expense: $5.4 million or 137.9%

Sources:

  • Nasdaq: KFFB
  • News release from Kentucky First Federal Bancorp, dated June 30, 2024.