***Parent      company of***

***First      Federal Savings and Loan Association of Hazard***

***and***

***First      Federal Savings Bank of Frankfort***

***2008***

***Annual      Report***

----

**KENTUCKY      FIRST FEDERAL BANCORP**

----

**MARKET      INFORMATION**

|                          |   | **High** |   | **Low** |   | **Dividends****Per Share** |   |
|-------------------------------|--------|----------|--------|---------|--------|---------------------------------|--------|
| **Fiscal 2008**          |   |     |   |    |   |                            |   |
| First                quarter  |   | $        | 10.59  |    | $      | 9.50                            |   | $ | 0.10 |   |
| Second                quarter |   |     | 10.18  |    |   | 9.80                            |   |   | 0.10 |   |
| Third                quarter  |   |     | 10.23  |    |   | 9.75                            |   |   | 0.10 |   |
| Fourth                quarter |   |     | 10.24  |    |   | 9.35                            |   |   | 0.10 |   |

|                           |   | **High** |   | **Low** |   | **Dividends****Per Share** |   |
|--------------------------------|--------|----------|--------|---------|--------|---------------------------------|--------|
| **Fiscal                2007** |   |     |   |    |   |                            |   |
| First                quarter   |   | $        | 10.84  |    | $      | 9.76                            |   | $ | 0.10 |   |
| Second                quarter  |   |     | 10.50  |    |   | 10.05                           |   |   | 0.10 |   |
| Third                quarter   |   |     | 10.47  |    |   | 9.86                            |   |   | 0.10 |   |
| Fourth                quarter  |   |     | 10.30  |    |   | 9.60                            |   |   | 0.10 |   |

----

**Comparative      Stock Performance Graph **

**CUMULATIVE      TOTAL STOCKHOLDER RETURN**

**COMPARED      WITH PERFORMANCE OF SELECTED INDEXES**

**March      3, 2005 to June 30, 2008**

**COMPARISON      OF CUMULATIVE TOTAL RETURN***

**AMONG      KENTUCKY FIRST FEDERAL BANCORP, **

**THE      NASDAQ STOCK MARKET (U.S.) INDEX AND AMERICA'S COMMUNITY BANKERS      INDEX**

|                                             |   | 3/3/05 |   | 6/30/05 |   | 6/30/06 |   | 6/30/07 |   | 6/30/08 |   |
|--------------------------------------------------|--------|--------|--------|---------|--------|---------|--------|---------|--------|---------|--------|
| KENTUCKY                  FIRST FEDERAL BANCORP  |   |   | 100.00 |    |   | 102.84  |   |    | 102.04 |    |   | 102.46 |   |   | 98.25 |   |
| NASDAQ                  STOCK MARKET (COMPOSITE) |   |   | 100.00 |    |   | 99.55   |   |    | 107.22 |    |   | 129.54 |   |   | 115.16 |   |
| AMERICA'S                  COMMUNITY BANKERS     |   |   | 100.00 |    |   | 101.18  |   |    | 108.54 |    |   | 102.45 |   |   | 69.62 |   |

----

**TABLE        OF CONTENTS**

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| Kentucky                First Federal Bancorp                                                                             | (ii)  |
|---------------------------------------------------------------------------------------------------------------------------|-------|
| Market                Information                                                                                         | (ii)  |
| Comparative                Stock Performance Graph                                                                        | (iii) |
| 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                                                                                      | 59    |

----

| Tony                Whitaker       | Don                D. Jennings      |
|------------------------------------|-------------------------------------|
| Chairman                and C.E.O. | President                and C.O.O. |

----

**SELECTED      CONSOLIDATED FINANCIAL AND OTHER DATA**

----

**Selected      Financial Condition Data (1)**

|                                                                |   | **At June 30,** |    |
|---------------------------------------------------------------------|--------|---------------------------|---------|
|                                                                |   | **2008**                  |    | **2007** |   | **2006** |   | **2005** |   | **2004** |   |
|                                                                |   | **(In thousands)**   |    |
|                                                                |   |                      |    |
| Total                assets                                    |   | $                         | 247,655 |   | $ | 268,916 |   | $ | 261,941 |   | $ | 273,915 |   | $ | 139,823 |   |
| Cash                and cash equivalents                       |   |                      | 15,966  |   |   | 2,720 |   |   | 2,294 |   |   | 8,358 |   |   | 16,862 |   |
| Interest-bearing                deposits                       |   |                      | 100     |   |   | 100 |   |   | 100 |   |   | 100 |   |   | — |   |
| Investment                securities held to maturity          |   |                      | 16,959  |   |   | 59,606 |   |   | 64,029 |   |   | 72,189 |   |   | 73,823 |   |
| Investment                securities available for sale   |   |                      | 5,480   |   |   | 13,298 |   |   | 13,290 |   |   | 14,547 |   |   | 12,391 |   |
| Loans                receivable, net                           |   |                      | 182,051 |   |   | 166,156 |   |   | 155,386 |   |   | 151,712 |   |   | 33,568 |   |
| Deposits                                                       |   |                      | 137,634 |   |   | 139,893 |   |   | 141,238 |   |   | 155,044 |   |   | 98,751 |   |
| Federal                Home Loan Bank advances                 |   |                      | 47,801  |   |   | 65,132 |   |   | 54,849 |   |   | 50,985 |   |   | 9,000 |   |
| Shareholders’                equity (2)                  |   |                      | 59,793  |   |   | 61,445 |   |   | 63,881 |   |   | 65,939 |   |   | 31,043 |   |
| Allowance                for loan losses                       |   |                      | 666     |   |   | 720 |   |   | 724 |   |   | 708 |   |   | 665 |   |
| Nonperforming                loans                             |   |                      | 1,277   |   |   | 968 |   |   | 1,427 |   |   | 1,747 |   |   | 1,154 |   |

**Selected      Operating Data (1)**

|                                                                                        |   | **Year                Ended June 30,**                           |   |
|---------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------|--------|
|                                                                                        |   | **2008**                                                         |   | **2007** |   | **2006** |   | **2005** |   | **2004** |   |
|                                                                                        |   | **(Dollars                in thousands, except per share data)** |   |
|                                                                                        |   |                                                             |   |   |   |   |   |   |   |   |   |
| Total                interest income                                                   |   | $                                                                | 13,087 |   | $ | 12,948 |   | $ | 12,709 |   | $ | 8,153 |   | $ | 5,601 |   |
| Total                interest expense                                                  |   |                                                             | 7,565  |   |   | 7,456 |   |   | 6,096 |   |   | 3,353 |   |   | 2,220 |   |
| Net                interest income                                                     |   |                                                             | 5,522  |   |   | 5,492 |   |   | 6,613 |   |   | 4,800 |   |   | 3,381 |   |
| Provision                for losses on loans                                      |   |                                                             | 12     |   |   | — |   |   | 32 |   |   | 53 |   |   | 10 |   |
| Net                    interest income after provision for losses on loans        |   |                                                             | 5,510  |   |   | 5,492 |   |   | 6,581 |   |   | 4,747 |   |   | 3,371 |   |
| Total                other income (loss)                                               |   |                                                             | 182    |   |   | 174 |   |   | 216 |   |   | 263 |   |   | (35 | ) |
| Total                    general, administrative and other                    expenses |   |                                                             | 4,321  |   |   | 4,364 |   |   | 4,486 |   |   | 2,509 |   |   | 2,183 |   |
| Income                before federal income taxes                                      |   |                                                             | 1,371  |   |   | 1,302 |   |   | 2,311 |   |   | 2,501 |   |   | 1,153 |   |
| Federal                income taxes                                                    |   |                                                             | 439    |   |   | 417 |   |   | 723 |   |   | 872 |   |   | 392 |   |
| Net                income                                                              |   | $                                                                | 932    |   | $ | 885 |   | $ | 1,588 |   | $ | 1,629 |   | $ | 761 |   |
|                                                                                        |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                earnings per share – basic                               |   | $                                                                | 0.12   |   | $ | 0.11 |   | $ | 0.19 |   | $ | N/A |   | $ | N/A |   |
|                                                                                        |   |                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                earnings per share – diluted                                  |   | $                                                                | 0.12   |   | $ | 0.11 |   | $ | 0.19 |   | $ | N/A |   | $ | N/A |   |
| Cash                dividends declared per common share                                |   | $                                                                | 0.40   |   | $ | 0.40 |   | $ | 0.40 |   | $ | 0.10 |   | $ | N/A |   |

| (1) | The                incorporation of the Company, the issuance of its stock and the                acquisition of Frankfort First were completed on March 2, 2005.                 Information                as of dates and for periods prior to March 2, 2005 are for First                Federal                of Hazard in mutual form. In accordance with the purchase method                of                accounting, the Company’s results of operations for the year ended June                30, 2005 only reflect Frankfort First’s                operating results for the four-month period ended June 30,                2005. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Consists                of only retained earnings at June 30,                2004. |
|-----|------------------------------------------------------------------------------------|

----

**Selected      Financial Ratios and Other Data (1)**

|                                                                                                                                                                       |   | **Year                Ended June 30,** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                                                                                                                                       |   | **2008**                               |   | **2007** |   | **2006** |   | **2005** |   | **2004** |   |
| **Performance                Ratios:**                                                                                                                                     |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return                on average assets(net                income divided by average total assets)                                                                         |   |                                   | 0.35   | % |   | 0.33 | % |   | 0.59 | % |   | 0.88 | % |   | 0.56 | % |
| Return                on average equity  (net                income divided by average equity)                                                                   |   |                                   | 1.54   |   |   | 1.41 |   |   | 2.68 |   |   | 4.46 |   |   | 2.44 |   |
| Interest                rate spread  (combined                weighted average interest rate earned less combined weighted average                interest rate cost) |   |                                   | 1.65   |   |   | 1.61 |   |   | 2.15 |   |   | 2.30 |   |   | 2.04 |   |
| Net                interest margin  (net                interest income divided by average interest-earning                assets)                                    |   |                                   | 2.29   |   |   | 2.26 |   |   | 2.63 |   |   | 2.69 |   |   | 2.54 |   |
| Ratio                of average interest-earning assets to average interest-bearing                liabilities                                                        |   |                                   | 120.28 |   |   | 121.16 |   |   | 118.77 |   |   | 120.74 |   |   | 129.55 |   |
| Ratio                of total general administrative and other expenses to average total                assets                                                        |   |                                   | 1.64   |   |   | 1.64 |   |   | 1.62 |   |   | 1.35 |   |   | 1.62 |   |
| Efficiency                ratio (2)                                                                                                                    |   |                                   | 75.75  |   |   | 77.02 |   |   | 65.02 |   |   | 49.56 |   |   | 65.24 |   |
| Dividend                payout ratio (3)                                                                                                                              |   |                                   | 126.82 |   |   | 153.11 |   |   | 97.36 |   |   | N/A |   |   | N/A |   |
|                                                                                                                                                                       |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Asset                Quality Ratios:**                                                                                                                                   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nonperforming                loans as a percent of total loans at end of period                (4)                                                                    |   |                                   | 0.70   |   |   | 0.58 |   |   | 0.92 |   |   | 1.15 |   |   | 3.44 |   |
| Nonperforming                assets as a percent of total assets at end of period                                                                                     |   |                                   | 0.52   |   |   | 0.36 |   |   | 0.54 |   |   | 0.66 |   |   | 0.83 |   |
| Allowance                for loan losses as a percent of total loans at end of period                                                                       |   |                                   | 0.36   |   |   | 0.43 |   |   | 0.46 |   |   | 0.47 |   |   | 1.98 |   |
| Allowance                for loan losses as a percent of nonperforming loans at end of                period                                                |   |                                   | 52.15  |   |   | 74.38 |   |   | 50.74 |   |   | 40.53 |   |   | 57.63 |   |
| Provision                for loan losses to total loans                                                                                                               |   |                                   | 0.01   |   |   | — |   |   | 0.02 |   |   | 0.03 |   |   | 0.03 |   |
| Net                charge-offs to average loans outstanding                                                                                                           |   |                                   | 0.04   |   |   | — |   |   | 0.01 |   |   | 0.20 |   |   | 0.17 |   |
|                                                                                                                                                                       |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Capital                Ratios:**                                                                                                                                         |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average                equity to average assets                                                                                                                       |   |                                   | 22.94  |   |   | 23.64 |   |   | 21.95 |   |   | 19.68 |   |   | 23.14 |   |
| Shareholders’                equity or capital to total assets at end of period                                                                                      |   |                                   | 24.14  |   |   | 22.85 |   |   | 24.39 |   |   | 24.07 |   |   | 22.20 |   |
|                                                                                                                                                                       |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Regulatory                Capital Ratios:**                                                                                                                              |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tangible                capital                                                                                                                                       |   |                                   | 16.33  |   |   | 16.61 |   |   | 17.42 |   |   | 17.18 |   |   | 22.42 |   |
| Core                capital                                                                                                                                           |   |                                   | 16.33  |   |   | 16.61 |   |   | 17.42 |   |   | 17.18 |   |   | 22.42 |   |
| Risk-based                capital                                                                                                                                     |   |                                   | 34.03  |   |   | 38.61 |   |   | 41.92 |   |   | 43.83 |   |   | 82.40 |   |
| Number                of banking offices                                                                                                                              |   |                                   | 4      |   |   | 4 |   |   | 4 |   |   | 4 |   |   | 1 |   |

| (1) | The                incorporation of the Company, the issuance of its stock and the                acquisition of Frankfort First were completed on March 2, 2005.                Information as of dates and for periods prior to March 2, 2005 are                for                First Federal of Hazard in mutual form. In accordance with the purchase                method of accounting, the Company’s results of operations for the year                ended June 30, 2005 only reflect Frankfort First’s operating results for                the four-month period ended June 30,                2005. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Efficiency                ratio represents the ratio of general, administrative and other expenses                divided by the sum of net interest income and total other                income. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Represents                dividends paid to minority shareholders only as a percent of net                earnings.                Does not include dividends waived by First Federal                MHC. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Nonperforming                loans consist of nonaccrual loans and accruing loans greater than                90 days                delinquent, while nonperforming assets consist of nonperforming loans                and real estate acquired through foreclosure. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**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**

**General**

----

***Income***
**.**

***Expenses***
**.**
** **

**Critical      Accounting Policies**
** **

----

**Our      Operating Strategy**

|   | · | 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; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | increasing                the yield on First Federal of Hazard’s assets by decreasing its reliance                on low yielding government securities and reinvesting these assets                into                whole loans originated by First Federal of Frankfort, with First                Federal                of Frankfort retaining servicing on any loans sold. The Banks have                begun                such sales and through June 30, 2008, First Federal of Hazard had                purchased approximately $44.1 million in loans from First Federal                of                Frankfort; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | pursuing                larger borrowing relationships than would otherwise be available                to our                separate banks (because of federal restrictions on loans to one borrower)                by utilizing the ability to sell loans and participations between                the                banks; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 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. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Market      Risk Analysis **

***Qualitative      Aspects of Market Risk***
**.      **
** **

***Asset/Liability      Management***
**.**

----

|                                      |   | **June 30, 2008**                |                   |
|-------------------------------------------|--------|--------------------------------------------|------------------------|
| **   **                    |   | **Net Portfolio Value (1)** |                   | **NPV as % of Portfolio****Value of Assets (2)** |   |
|                                      |   | **Change in****Rates**                |                   | **Amount** |   | **$ Change** |   | **% Change** |   | **NPV****Ratio** **(3)** |   | **Basis****Point****Changes** |   |
|                                      |   | **(Dollars in thousands)**       |                   |
|                                      |   |                                       |                   |   |   |   |   |   |   |   |   |   |   |
| First                Federal of Hazard    |   |                                       | +300                bp |   | $ | 18,491 |   |   | -3,515 |   |   | -16 | % |   | 17.11 | % |   | -220bp |   |
|                                      |   |                                       | +200                bp |   |   | 19,901 |   |   | -2,105 |   |   | -10 | % |   | 18.06 | % |   | -125bp |   |
|                                      |   |                                       | +100                bp |   |   | 21,137 |   |   | -869 |   |   | -4 | % |   | 18.83 | % |   | -48bp |   |
|                                      |   |                                       | 0                bp    |   |   | 22,006 |   |   |   |   |   |   |   |   | 19.31 | % |   |   |   |
|                                      |   |                                       | -100                bp |   |   | 22,390 |   |   | 384 |   |   | 2 | % |   | 19.41 | % |   | 10bp |   |
|                                      |   |                                       |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| First                Federal of Frankfort |   |                                       | +300                bp |   | $ | 15,233 |   |   | -2,626 |   |   | -15 | % |   | 12.49 | % |   | -159bp |   |
|                                      |   |                                       | +200                bp |   |   | 16,388 |   |   | -1,471 |   |   | -8 | % |   | 13.24 | % |   | -84bp |   |
|                                      |   |                                       | +100                bp |   |   | 17,299 |   |   | -560 |   |   | -3 | % |   | 13.79 | % |   | -29bp |   |
|                                      |   |                                       | 0                bp    |   |   | 17,859 |   |   |   |   |   |   |   |   | 14.08 | % |   |   |   |
|                                      |   |                                       | -100                bp |   |   | 18,119 |   |   | 260 |   |   | 1 | % |   | 14.15 | % |   | 7bp |   |
|                                      |   |                                       |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                              |   |                                       | +300                bp |   | $ | 33,724 |   |   | -6,141 |   |   | -15 | % |   | 14.66 | % |   | -189bp |   |
|                                      |   |                                       | +200                bp |   |   | 36,289 |   |   | -3,576 |   |   | -9 | % |   | 15.51 | % |   | -104bp |   |
|                                      |   |                                       | +100                bp |   |   | 38,436 |   |   | -1,429 |   |   | -4 | % |   | 16.17 | % |   | -38bp |   |
|                                      |   |                                       | 0                bp    |   |   | 39,865 |   |   |   |   |   |   |   |   | 16.55 | % |   |   |   |
|                                      |   |                                       | -100                bp |   |   | 40,509 |   |   | 644 |   |   | 2 | % |   | 16.64 | % |   | 9bp |   |

----

|                                      |   | **June 30, 2007**                |                   |
|-------------------------------------------|--------|--------------------------------------------|------------------------|
| **   **                    |   | **Net Portfolio Value (1)** |                   | **NPV as % of Portfolio****Value of Assets (2)** |   |
|                                      |   | **Change in****Rates**                |                   | **Amount** |   | **$ Change** |   | **% Change** |   | **NPV**** ****Ratio** **(3)** |   | **Basis****Point****Changes** |   |
|                                      |   | **(Dollars                in thousands)**  |                   |
|                                      |   |                                       |                   |   |   |   |   |   |   |   |   |   |   |
| First                Federal of Hazard    |   |                                       | +300                bp |   | $ | 18,824 |   |   | -6,556 |   |   | -26 | % |   | 16.18 | % |   | -414bp |   |
|                                      |   |                                       | +200                bp |   |   | 21,006 |   |   | -4,374 |   |   | -17 | % |   | 17.63 | % |   | -269bp |   |
|                                      |   |                                       | +100                bp |   |   | 23,217 |   |   | -2,163 |   |   | -9 | % |   | 19.03 | % |   | -130bp |   |
|                                      |   |                                       | 0                bp    |   |   | 25,380 |   |   |   |   |   |   |   |   | 20.32 | % |   |   |   |
|                                      |   |                                       | -100                bp |   |   | 27,131 |   |   | 1,751 |   |   | 7 | % |   | 21.30 | % |   | 98bp |   |
|                                      |   |                                       | -200                bp |   |   | 28,522 |   |   | 3,142 |   |   | 12 | % |   | 22.03 | % |   | 170bp |   |
|                                      |   |                                       |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| First                Federal of Frankfort |   |                                       | +300                bp |   | $ | 11,033 |   |   | -6,316 |   |   | -36 | % |   | 9.71 | % |   | -431bp |   |
|                                      |   |                                       | +200                bp |   |   | 13,671 |   |   | -3,678 |   |   | -21 | % |   | 11.08 | % |   | -240bp |   |
|                                      |   |                                       | +100                bp |   |   | 15,902 |   |   | -1,447 |   |   | -8 | % |   | 12.60 | % |   | -89bp |   |
|                                      |   |                                       | 0                bp    |   |   | 17,349 |   |   |   |   |   |   |   |   | 13.48 | % |   |   |   |
|                                      |   |                                       | -100                bp |   |   | 18,203 |   |   | 854 |   |   | 5 | % |   | 13.92 | % |   | 44bp |   |
|                                      |   |                                       | -200                bp |   |   | 18,617 |   |   | 1,268 |   |   | 7 | % |   | 14.06 | % |   | 58bp |   |
|                                      |   |                                       |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consolidated                              |   |                                       | +300                bp |   | $ | 29,857 |   |   | -12,872 |   |   | -30 | % |   | 12.62 | % |   | -423bp |   |
|                                      |   |                                       | +200                bp |   |   | 34,677 |   |   | -8,052 |   |   | -19 | % |   | 14.30 | % |   | -255bp |   |
|                                      |   |                                       | +100                bp |   |   | 39,119 |   |   | -3,610 |   |   | -8 | % |   | 15.76 | % |   | -110bp |   |
|                                      |   |                                       | 0                bp    |   |   | 42,729 |   |   |   |   |   |   |   |   | 16.85 | % |   |   |   |
|                                      |   |                                       | -100                bp |   |   | 45,334 |   |   | 2,605 |   |   | 6 | % |   | 17.57 | % |   | 71bp |   |
|                                      |   |                                       | -200                bp |   |   | 47,139 |   |   | 4,410 |   |   | 10 | % |   | 18.00 | % |   | 115bp |   |

| (1) | Net                portfolio value represents the discounted present value of the difference                between incoming cash flows on interest-earning and other assets                and                outgoing cash flows on interest-bearing                liabilities. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Present                value of assets represents the discounted present value of incoming                cash                flows on interest-earning assets. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | NPV                Ratio represents the net portfolio value divided by the present value                of                assets. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

----

**Statement      of Financial Condition**

***General.***

***Loans***
**.**

|                                          |   | **At June 30,**            |    |
|-----------------------------------------------|--------|--------------------------------------|---------|
|                                          |   | **2008**                             |    | **2007** |   | **2006** |   | **2005** |   | **2004** |   |
|                                          |   | **Amount**                           |    | **Percent** |   | **Amount** |   | **Percent** |   | **Amount** |   | **Percent** |   | **Amount** |   | **Percent** |   | **Amount** |   | **Percent** |   |
|                                          |   | **(Dollars in thousands)** |    |
| Real                estate loans:             |   |                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| One-                to four-family            |   | $                                    | 158,007 |   |   | 86.1 | % | $ | 146,602 |   |   | 86.7 | % | $ | 139,356 |   |   | 88.5 | % | $ | 134,117 |   |   | 87.3 | % | $ | 29,760 |   |   | 86.4 | % |
| Construction                                  |   |                                 | 3,528   |   |   | 1.9 | % |   | 6,671 |   |   | 3.9 | % |   | 2,703 |   |   | 1.7 | % |   | 1,925 |   |   | 1.3 | % |   | 130 |   |   | 0.4 | % |
| Multi-family                                  |   |                                 | 2,684   |   |   | 1.5 | % |   | 1,497 |   |   | 0.9 | % |   | 296 |   |   | 0.2 | % |   | 321 |   |   | 0.2 | % |   | 280 |   |   | 0.8 | % |
| Nonresidential                and other       |   |                                 | 11,318  |   |   | 6.2 | % |   | 6,898 |   |   | 4.1 | % |   | 6,412 |   |   | 4.1 | % |   | 7,202 |   |   | 4.7 | % |   | 757 |   |   | 2.2 | % |
| Consumer:                                     |   |                                 |    |   |   |  |   |   |   |   |   |  |   |   |   |   |   |  |   |   |   |   |   |  |   |   |   |   |   |   |   |
| Consumer                and other             |   |                                 | 4,503   |   |   | 2.5 | % |   | 4,290 |   |   | 2.5 | % |   | 5,211 |   |   | 3.3 | % |   | 6,024 |   |   | 3.9 | % |   | 0 |   |   | 0.0 | % |
| Loans                on deposits              |   |                                 | 3,384   |   |   | 1.8 | % |   | 3,204 |   |   | 1.9 | % |   | 3,432 |   |   | 2.2 | % |   | 4,027 |   |   | 2.6 | % |   | 3,523 |   |   | 10.2 | % |
| Total                loans                    |   |                                 | 183,424 |   |   | 100 | % |   | 169,162 |   |   | 100 | % |   | 157,410 |   |   | 100 | % |   | 153,616 |   |   | 100 | % |   | 34,450 |   |   | 100 | % |
|                                          |   |                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance                for loan losses      |   |                                 | (666    | ) |   |   |   |   | (720 | ) |   |   |   |   | (724 | ) |   |   |   |   | (708 | ) |   |   |   |   | (665 | ) |   |   |   |
| Undisbursed                construction loans |   |                                 | (696    | ) |   |   |   |   | (2,176 | ) |   |   |   |   | (1,169 | ) |   |   |   |   | (1,016 | ) |   |   |   |   | (36 | ) |   |   |   |
| Deferred                loan origination fees |   |                                 | (11     | ) |   |   |   |   | (110 | ) |   |   |   |   | (131 | ) |   |   |   |   | (180 | ) |   |   |   |   | (181 | ) |   |   |   |
| Loans                receivable, net          |   | $                                    | 182,051 |   |   |   |   | $ | 166,156 |   |   |   |   | $ | 155,386 |   |   |   |   | $ | 151,712 |   |   |   |   | $ | 33,568 |   |   |   |   |

----

|                                                  |   | **Real                Estate****Loans** |    | **Consumer****Loans** |   | **Total                Loans** |   |
|-------------------------------------------------------|--------|-----------------------------------------|---------|-----------------------|--------|--------------------------------|--------|
|                                                  |   | **(In                thousands)**       |    |
|                                                  |   |                                    |    |
| One                year or less                  |   | $                                       | 36,187  |                  | $      | 7,887                          |   | $ | 44,074 |   |
| More                than one year to five years  |   |                                    | 102,691 |                  |   | —                        |   |   | 102,691 |   |
| More                than five years              |   |                                    | 36,659  |                  |   | —                        |   |   | 36,659 |   |
| Total                                                 |   | $                                       | 175,537 |                  | $      | 7,887                          |   | $ | 183,424 |   |

|                                                                      |   | **Year Ended June 30,** |    |
|---------------------------------------------------------------------------|--------|----------------------------------------|---------|
|                                                                      |   | **2008**                               |    | **2007** |   | **2006** |   |
|                                                                      |   | **(In thousands)**                |    |
|                                                                      |   |                                   |    |   |   |   |   |
| Net                loans at beginning of year                        |   | $                                      | 166,156 |   | $ | 155,386 |   | $ | 151,712 |   |
| Loans                originated:                                          |   |                                   |    |   |   |   |   |   |   |   |
| Real                estate loans:                                         |   |                                   |    |   |   |   |   |   |   |   |
| Residential                                                          |   |                                   | 44,843  |   |   | 30,647 |   |   | 28,739 |   |
| Construction                                                         |   |                                   | 4,380   |   |   | 6,355 |   |   | 2,197 |   |
| Multi-family                                                         |   |                                   | 2,383   |   |   | 1,203 |   |   | — |   |
| Nonresidential                and other                              |   |                                   | 2,396   |   |   | 1,030 |   |   | 973 |   |
| Consumer                loans                                        |   |                                   | 1,717   |   |   | 75 |   |   | 4,962 |   |
| Total                loans originated                                |   |                                   | 55,719  |   |   | 39,310 |   |   | 36,871 |   |
| Deduct:                                                                   |   |                                   |    |   |   |   |   |   |   |   |
| Real                estate loan principal repayments                 |   |                                   | (38,118 | ) |   | (27,387 | ) |   | (30,374 | ) |
| Loan                sales                                            |   |                                   | (1,564  | ) |   | (888 | ) |   | (2,712 | ) |
| Transfer                to real estate acquired through foreclosure  |   |                                   | (28     | ) |   | (312 | ) |   | (101 | ) |
| Other                                                                |   |                                   | (114    | ) |   | 47 |   |   | (10 | ) |
| Net                loan activity                                     |   |                                   | 15,895  |   |   | 10,770 |   |   | 3,674 |   |
| Net                loans at end of period                            |   | $                                      | 182,051 |   | $ | 166,156 |   | $ | 155,386 |   |

***Allowance      for Loan Losses and Asset Quality***
**.**

----

***Summary      of Loan Loss Experience.***
** **

|                                                                       |   | **Year                Ended June 30,**    |    |
|----------------------------------------------------------------------------|--------|-------------------------------------------|---------|
|                                                                       |   | **2008**                                  |    | **2007** |   | **2006** |   | **2005** |   | **2004** |   |
|                                                                       |   | **(Dollars                in thousands)** |    |
|                                                                       |   |                                      |    |   |   |   |   |   |   |   |   |
| Allowance                at beginning of period                  |   | $                                         | 720     |   | $ | 724 |   | $ | 708 |   | $ | 665 |   | $ | 720 |   |
| Allowance                acquired – Frankfort First             |   |                                      | — |   |   | — |   |   | — |   |   | 133 |   |   | — |   |
| Provision                for loan losses                              |   |                                      | 12      |   |   | — |   |   | 32 |   |   | 53 |   |   | 10 |   |
| Charge-offs:                                                               |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real                estate loans                                      |   |                                      | (66     | ) |   | (4 | ) |   | (16 | ) |   | (145 | ) |   | (65 | ) |
| Consumer                loans                                         |   |                                      | — |   |   | — |   |   | — |   |   | — |   |   | — |   |
| Total                charge-offs                                      |   |                                      | (66     | ) |   | (4 | ) |   | (16 | ) |   | (145 | ) |   | (65 | ) |
|                                                                       |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Recoveries:                                                                |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real                estate loans                                      |   |                                      | — |   |   | — |   |   | — |   |   | 2 |   |   | — |   |
| Consumer                loans                                         |   |                                      | — |   |   | — |   |   | — |   |   | — |   |   | — |   |
| Total                recoveries                                       |   |                                      | — |   |   | — |   |   | — |   |   | 2 |   |   | — |   |
|                                                                       |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                charge-offs                                        |   | $                                         | (66     | ) | $ | (4 | ) | $ | (16 | ) | $ | (143 | ) | $  | (65 | ) |
| Allowance                at end of period                             |   | $                                         | 666     |   | $ | 720 |   | $ | 724 |   | $ | 708 |   | $ | 665 |   |
|                                                                       |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance                to nonperforming loans                       |   |                                      | 52.15   | % |   | 74.38 | % |   | 50.74 | % |   | 40.53 | % |   | 57.63 | % |
| Allowance                to total loans outstanding at end of period  |   |                                      | 0.36    | % |   | 0.43 | % |   | 0.46 | % |   | 0.47 | % |   | 1.98 | % |
| Net                charge-offs to average loans outstanding                |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| during                the period                                      |   |                                      | 0.04    | % |   | — | % |   | 0.01 | % |   | 0.20 | % |   | 0.17 | % |

----

|                                                   |   | **At                  June 30,** |    |
|--------------------------------------------------------|--------|----------------------------------|---------|
|                                                   |   | **2008**                         |    | **2007** |   | **2006** |   | **2005** |   | **2004** |   |
|                                                   |   | **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)**            |   |
|                                                   |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real                  Estate Loans:                    |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                                            |   | $                                | 584     |   |   | 87.7 | % |   | 86.1 | % | $ | 636 |   |   | 88.3 | % |   | 86.7 | % | $ | 633 |   |   | 87.4 | % |   | 88.5 | % | $ | 626 |   |   | 88.3 | % |   | 87.3 | % | $ | 574 |   |   | 86.3 | % |   | 86.4 | % |
| Construction                                           |   |                             | 13      |   |   | 2.0 |   |   | 1.9 |   |   | 29 |   |   | 4.0 |   |   | 3.9 |   |   | 12 |   |   | 1.7 |   |   | 1.7 |   |   | 7 |   |   | 1.1 |   |   | 1.3 |   |   | 3 |   |   | 0.5 |   |   | 0.4 |   |
| Multi-family                                           |   |                             | 10      |   |   | 1.4 |   |   | 1.5 |   |   | 7 |   |   | 1.0 |   |   | 0.9 |   |   | 9 |   |   | 1.3 |   |   | 0.2 |   |   | 1 |   |   | 0.2 |   |   | 0.2 |   |   | 5 |   |   | 0.8 |   |   | 0.8 |   |
| Nonresidential                  & other            |   |                             | 42      |   |   | 6.3 |   |   | 6.2 |   |   | 30 |   |   | 4.2 |   |   | 4.1 |   |   | 30 |   |   | 4.1 |   |   | 4.1 |   |   | 31 |   |   | 4.4 |   |   | 4.7 |   |   | 15 |   |   | 2.2 |   |   | 2.2 |   |
|                                                   |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consumer                  Loans:                       |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consumer                  and other                    |   |                             | 17      |   |   | 2.6 |   |   | 2.5 |   |   | 18 |   |   | 2.5 |   |   | 2.5 |   |   | 24 |   |   | 3.3 |   |   | 3.3 |   |   | 26 |   |   | 3.6 |   |   | 3.9 |   |   | 0 |   |   | 0.0 |   |   | 0.0 |   |
| Loans                  secured by deposits             |   |                             | — |   |   | — |   |   | 1.8 |   |   | — |   |   | — |   |   | 1.9 |   |   | 16 |   |   | 2.2 |   |   | 2.2 |   |   | 17 |   |   | 2.4 |   |   | 2.6 |   |   | 68 |   |   | 10.2 |   |   | 10.2 |   |
| Total                  allowance for loan losses  |   | $                                | 666     |   |   | 100.0 | % |   | 100.0 | % | $ | 720 |   |   | 100.0 | % |   | 100.0 | % | $ | 724 |   |   | 100.0 | % |   | 100.0 | % | $ | 708 |   |   | 100.0 | % |   | 100.0 | % | $ | 665 |   |   | 100.0 | % |   | 100.0 | % |

----

***Nonperforming      and Classified Assets***
**.      **

|                                                                                               |   | **Year                Ended June 30,**    |    |
|----------------------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|
|                                                                                               |   | **2008**                                  |    | **2007** |   | **2006** |   | **2005** |   | **2004** |   |
|                                                                                               |   | **(Dollars                in thousands)** |    |
|                                                                                               |   |                                      |    |   |   |   |   |   |   |   |   |
| Nonaccrual                loans:                                                                   |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real                estate loans                                                              |   | $                                         | 666     |   | $ | 713 |   | $ | 819 |   | $ | 874 |   | $ | 989 |   |
| Consumer                loans                                                                 |   |                                      | — |   |   | — |   |   | — |   |   | — |   |   | — |   |
| Total                                                                                         |   |                                      | 666     |   |   | 713 |   |   | 819 |   |   | 874 |   |   | 989 |   |
|                                                                                               |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accruing                loans past due 90 days or more:                                            |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real                estate loans                                                              |   |                                      | 611     |   |   | 255 |   |   | 608 |   |   | 873 |   |   | 165 |   |
| Consumer                loans                                                                 |   |                                      | — |   |   | — |   |   | — |   |   | — |   |   | — |   |
| Total                          of accruing loans past due 90 days or                          more |   |                                      | 611     |   |   | 255 |   |   | 608 |   |   | 873 |   |   | 165 |   |
| Total                nonperforming loans                                                      |   |                                      | 1,277   |   |   | 968 |   |   | 1,427 |   |   | 1,747 |   |   | 1,154 |   |
| Real                estate acquired through foreclosure                                       |   |                                      | 21      |   |   | 8 |   |   | 51 |   |   | 60 |   |   | — |   |
| Total                nonperforming assets                                                     |   | $                                         | 1,298   |   | $ | 976 |   | $ | 1,478 |   | $ | 1,807 |   | $ | 1,154 |   |
|                                                                                               |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                nonperforming loans to total loans                                       |   |                                      | 0.70    | % |   | 0.58 | % |   | 0.92 | % |   | 1.15 | % |   | 3.44 | % |
|                                                                                               |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                nonperforming loans to total assets                                      |   |                                      | 0.52    | % |   | 0.36 | % |   | 0.54 | % |   | 0.64 | % |   | 0.83 | % |
|                                                                                               |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                nonperforming assets to total assets                                     |   |                                      | 0.52    | % |   | 0.36 | % |   | 0.56 | % |   | 0.66 | % |   | 0.83 | % |

----

|                                         |   | **At                June 30,**    |    |
|----------------------------------------------|--------|-----------------------------------|---------|
|                                         |   | **2008**                          |    | **2007** |   | **2006** |   |
|                                         |   | **(In                thousands)** |    |
| Substandard                assets       |   | $                                 | 2,051   |   | $ | 1,490 |   | $ | 1,698 |   |
| Doubtful                assets          |   |                              | — |   |   | — |   |   | — |   |
| Loss                assets              |   |                              | — |   |   | — |   |   | — |   |
| Total                classified assets  |   | $                                 | 2,051   |   | $ | 1,490 |   | $ | 1,698 |   |

***Delinquencies.***

|                             |   | **At                June 30,**                           |    |
|----------------------------------|--------|----------------------------------------------------------|---------|
|                             |   | **2008**                                                 |    | **2007** |   |
|                             |   | **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 |   | $                                                        | 1,437   |   | $ | 1,378 |   | $ | 1,629 |   | $ | 1,051 |   |
| Consumer                loans    |   |                                                     | — |   |   | — |   |   | — |   |   | — |   |
| Total                            |   | $                                                        | 1,437   |   | $ | 1,378 |   | $ | 1,629 |   | $ | 1,051 |   |

----

***Securities***
**.**

|                                                |   | **At                  June 30,**    |   |
|-----------------------------------------------------|--------|-------------------------------------|--------|
|                                                |   | **2008**                            |   | **2007** |   | **2006** |   |
|                                                |   | **Amortized****Cost**               |   | **Fair****Value** |   | **Amortized****Cost** |   | **Fair****Value** |   | **Amortized****Cost** |   | **Fair****Value** |   |
|                                                |   | **(In                  thousands)** |   |
| Available                  for sale securities:     |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                  Government agency obligations |   | $                                   | 4,999  |   | $ | 5,030 |   | $ | 12,999 |   | $ | 12,571 |   | $ | 12,999 |   | $ | 12,211 |   |
| Mortgage-backed                  securities         |   |                                | 455    |   |   | 450 |   |   | 734 |   |   | 727 |   |   | 1,104 |   |   | 1,079 |   |
| Total                                               |   | $                                   | 5,454  |   | $ | 5,480 |   | $ | 13,733 |   | $ | 13,298 |   | $ | 14,103 |   | $ | 13,290 |   |
|                                                |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held                  to maturity securities:       |   |                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                  Government agency obligations |   | $                                   | 3,000  |   | $ | 3,001 |   | $ | 43,848 |   | $ | 42,957 |   | $ | 45,844 |   | $ | 43,919 |   |
| Mortgage-backed                  securities         |   |                                | 13,959 |   |   | 13,408 |   |   | 15,758 |   |   | 14,878 |   |   | 18,185 |   |   | 17,028 |   |
| Total                                               |   | $                                   | 16,959 |   | $ | 16,409 |   | $ | 59,606 |   | $ | 57,835 |   | $ | 64,029 |   | $ | 60,947 |   |

----

|                                                       |   | **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:            |   |                                        |    |                                                                       |   |                                                                        |   |                                         |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                  Government agency obligations   |   | $                                           | — |                                                                       |   | —                                                                     | %      | $                                            | 4,999  |                                     |   | 3.50 | % | $ | — |   |   | — | % | $ | — |   |   | — | % | $ | 4,999 |   | $ | 5,030 |   |   | 3.50 | % |
| Mortgage-backed                  securities           |   |                                        | 9       |                                                                       |   | 5.18                                                                        |   |                                         | 42     |                                     |   | 5.18 |   |   | 66 |   |   | 5.18 |   |   | 338 |   |   | 5.18 |   |   | 455 |   |   | 450 |   |   | 5.18 |   |
| Total                  available for sale securities  |   | $                                           | 9       |                                                                       |   |                                                                        |   | $                                            | 5,041  |                                     |   |   |   | $ | 66 |   |   |   |   | $ | 338 |   |   |   |   | $ | 5,454 |   | $ | 5,480 |   |   |   |   |
|                                                       |   |                                        |    |                                                                       |   |                                                                        |   |                                         |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held                  to maturity securities:              |   |                                        |    |                                                                       |   |                                                                        |   |                                         |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                  Government agency obligations   |   | $                                           | — |                                                                       |   | —                                                                     |   | $                                            | 3,000  |                                     |   | 3.02 |   | $ | — |   |   | — |   | $ | — |   |   | — |   | $ | 3,000 |   | $ | 3,001 |   |   | 3.02 |   |
| Mortgage-backed                  securities           |   |                                        | 950     |                                                                       |   | 4.19                                                                        |   |                                         | 4,204  |                                     |   | 4.18 |   |   | 6,346 |   |   | 4.19 |   |   | 2,459 |   |   | 4.94 |   |   | 13,959 |   |   | 13,408 |   |   | 4.32 |   |
| Total                  held-to-maturity securities    |   | $                                           | 950     |                                                                       |   |                                                                        |   | $                                            | 7,204  |                                     |   |   |   | $ | 6,346 |   |   |   |   | $ | 2,459 |   |   |   |   | $ | 16,959 |   | $ | 16,409 |   |   |   |   |

----

**Other      Assets.**

***Deposits***
**.**

|                                                                         |   | **At                June 30,**    |    |
|------------------------------------------------------------------------------|--------|-----------------------------------|---------|
|                                                                         |   | **2008**                          |    | **2007** |   | **2006** |   |
|                                                                         |   | **(In                thousands)** |    |
| Certificate                of deposit accounts                          |   | $                                 | 97,020  |   | $ | 96,354 |   | $ | 90,782 |   |
| Demand,                transaction and passbook savings accounts   |   |                              | 40,614  |   |   | 43,539 |   |   | 50,456 |   |
| Total                                                                   |   | $                                 | 137,634 |   | $ | 139,893 |   | $ | 141,238 |   |

| **Maturity                Period**                         |   | **Certificates****of                Deposit** |   |
|------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                       |   | **(In thousands)**                       |   |
|                                                       |   |                                          |   |
| Three                months or less                   |   | $                                             | 4,789  |   |
| Over                three months through six months   |   |                                          | 4,606  |   |
| Over                six months through twelve months  |   |                                          | 12,137 |   |
| Over                twelve months                     |   |                                          | 7,811  |   |
| Total                                                 |   | $                                             | 29,343 |   |

|                              |   | **At                June 30,**    |    |
|-----------------------------------|--------|-----------------------------------|---------|
|                              |   | **2008**                          |    | **2007** |   | **2006** |   |
|                              |   | **(In                thousands)** |    |
| **Rate**                          |   |                              |    |   |   |   |   |
| 1.00                - 1.99%  |   | $                                 | 1,241   |   | $ | 199 |   | $ | 3,192 |   |
| 2.00                - 2.99   |   |                              | 12,039  |   |   | 4,890 |   |   | 9,350 |   |
| 3.00                - 3.99   |   |                              | 21,375  |   |   | 14,568 |   |   | 39,763 |   |
| 4.00                - 4.99   |   |                              | 32,011  |   |   | 16,637 |   |   | 30,690 |   |
| 5.00                - 5.99   |   |                              | 30,354  |   |   | 60,060 |   |   | 7,783 |   |
| 6.00                - 6.99   |   |                              | — |   |   | — |   |   | 4 |   |
| 7.00                - 7.99   |   |                              | — |   |   | — |   |   | — |   |
| Total                        |   | $                                 | 97,020  |   | $ | 96,354 |   | $ | 90,782 |   |

----

|                             |   | **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)**               |   |
| 1.00                -1.99%  |   | $                                                       | 1,239  |                                                                              | $      | 2                                                                |   | $ | — |   | $ | — |   | $ | 1,241 |   |   | 1.28 | % |
| 2.00                - 2.99  |   |                                                    | 11,588 |                                                                              |   | 451                                                              |   |   | — |   |   | — |   |   | 12,039 |   |   | 12.41 |   |
| 3.00                - 3.99  |   |                                                    | 16,064 |                                                                              |   | 3,784                                                            |   |   | 1,294 |   |   | 233 |   |   | 21,375 |   |   | 22.03 |   |
| 4.00                - 4.99  |   |                                                    | 23,335 |                                                                              |   | 5,572                                                            |   |   | 1,496 |   |   | 1,608 |   |   | 32,011 |   |   | 32.99 |   |
| 5.00                - 5.99  |   |                                                    | 15,213 |                                                                              |   | 7,314                                                            |   |   | 6,894 |   |   | 933 |   |   | 30,354 |   |   | 31.29 |   |
| Total                       |   | $                                                       | 67,439 |                                                                              | $      | 17,123                                                           |   | $ | 9,684 |   | $ | 2,774 |   | $ | 97,020 |   |   | 100.00 | % |

|                                      |   | **Year                Ended June 30,**    |   |
|-------------------------------------------|--------|-------------------------------------------|--------|
|                                      |   | **2008**                                  |   | **2007** |   | **2006** |   |
|                                      |   | **Average**                               |   | **Average** |   | **Average** |   | **Average** |   | **Average** |   | **Average** |   |
|                                      |   | **Balance**                               |   | **Rate** |   | **Balance** |   | **Rate** |   | **Balance** |   | **Rate** |   |
|                                      |   | **(Dollars                in thousands)** |   |
| Noninterest-bearing                demand |   | $                                         | 719    |   |   | 0.00 | % | $ | 762 |   |   | 0.00 | % | $ | 742 |   |   | 0.00 | % |
|                                      |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                demand    |   |                                      | 9,370  |   |   | 1.65 | % |   | 8,754 |   |   | 2.57 | % |   | 13,377 |   |   | 2.13 | % |
| Passbook                                  |   |                                      | 32,410 |   |   | 1.11 | % |   | 36,931 |   |   | 1.19 | % |   | 44,549 |   |   | 1.18 | % |
| Time                                      |   |                                      | 96,466 |   |   | 4.52 | % |   | 92,690 |   |   | 4.33 | % |   | 94,440 |   |   | 3.41 | % |

|                                                   |   | **Year                Ended June 30,** |    |
|--------------------------------------------------------|--------|----------------------------------------|---------|
|                                                   |   | **2008**                               |    | **2007** |   | **2006** |   |
|                                                   |   | **(In                thousands)**      |    |
| Beginning                balance                  |   | $                                      | 139,893 |   | $ | 141,238 |   | $ | 155,044 |   |
| Decrease                before interest credited  |   |                                   | (7,131  | ) |   | (5,894 | ) |   | (17,703 | ) |
| Interest                credited                  |   |                                   | 4,872   |   |   | 4,549 |   |   | 3,897 |   |
| Net                decrease in deposits           |   |                                   | (2,259  | ) |   | (1,345 | ) |   | (13,806 | ) |
| Ending                balance                     |   | $                                      | 137,634 |   | $ | 139,893 |   | $ | 141,238 |   |

***Borrowings***
**.**

----

|                                                                                                              |   | **Year                  Ended June 30,**    |   |
|-------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                                                                              |   | **2008**                                    |   | **2007** |   | **2006** |   |
|                                                                                                              |   | **(Dollars                  in thousands)** |   |
| Balance                  outstanding at end of period                                                        |   | $                                           | 47,801 |   | $ | 65,132 |   | $ | 54,849 |   |
| Maximum                  amount of advances outstanding at any month end during the                  period  |   | $                                           | 71,220 |   | $ | 65,132 |   | $ | 54,849 |   |
| Average                  advances outstanding during the period                                              |   | $                                           | 61,687 |   | $ | 61,696 |   | $ | 54,696 |   |
| Weighted                  average interest rate during the period                                            |   |                                        | 4.37   | % |   | 4.71 | % |   | 4.02 | % |
| Weighted                  average interest rate at end of period                                             |   |                                        | 5.21   | % |   | 5.75 | % |   | 6.04 | % |

***Shareholders’      Equity***
**.**

**Results      of Operations for the Years Ended June 30, 2008 and 2007**

***General.***
* *

***Interest      Income.***
* *

***Interest      Expense.***
* *

----

***Net      Interest Income.***

***Average      Balances and Yields***
**.**

|                                                                                                  |   | **Year                Ended June 30,**    |    |
|-------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|
|                                                                                                  |   | **2008**                                  |    | **2007** |   |
|                                                                                                  |   | **Average****Balance**                    |    | **Interest****And****Dividends** |   | **Yield/****Cost** |   | **Average                Balance** |   | **Interest****And                Dividends** |   | **Yield/****Cost** |   |
|                                                                                                  |   | **(Dollars                in thousands)** |    |
| Interest-earning                assets:                                                               |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                receivable                                                                       |   | $                                         | 174,259 |   | $ | 10,555 |   |   | 6.06 | % | $ | 162,010 |   | $ | 9,802 |   |   | 6.05 | % |
| Mortgage-backed                securities                                                             |   |                                      | 15,514  |   |   | 665 |   |   | 4.29 |   |   | 17,883 |   |   | 768 |   |   | 4.30 |   |
| Investment                securities                                                                  |   |                                      | 40,751  |   |   | 1,426 |   |   | 3.50 |   |   | 56,893 |   |   | 1,999 |   |   | 3.51 |   |
| Other                interest-earning assets                                                          |   |                                      | 10,811  |   |   | 441 |   |   | 4.08 |   |   | 6,540 |   |   | 379 |   |   | 5.80 |   |
| Total                interest-earning assets                                                          |   |                                      | 241,335 |   |   | 13,087 |   |   | 5.42 |   |   | 243,326 |   |   | 12,948 |   |   | 5.32 |   |
| Noninterest-earning                assets                                                             |   |                                      | 22,517  |   |   |   |   |   |   |   |   | 22,703 |   |   |   |   |   |   |   |
| Total                assets                                                                           |   | $                                         | 263,852 |   |   |   |   |   |   |   | $ | 266,029 |   |   |   |   |   |   |   |
|                                                                                                  |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:                                                          |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand                deposits                                                                        |   | $                                         | 9,370   |   |   | 155 |   |   | 1.65 |   | $ | 8,754 |   |   | 225 |   |   | 2.57 |   |
| Noninterest-Bearing                demand deposits                                                    |   |                                      | 719     |   |   | — |   |   | 0.00 |   |   | 762 |   |   | — |   |   | 0.00 |   |
| Savings                                                                                               |   |                                      | 32,410  |   |   | 360 |   |   | 1.11 |   |   | 36,931 |   |   | 439 |   |   | 1.19 |   |
| Certificates                of deposit                                                                |   |                                      | 96,466  |   |   | 4,357 |   |   | 4.52 |   |   | 92,690 |   |   | 3,885 |   |   | 4.19 |   |
| Total                deposits                                                                         |   |                                      | 138,965 |   |   | 4,872 |   |   | 3.51 |   |   | 139,137 |   |   | 4,549 |   |   | 3.27 |   |
| Borrowings                                                                                            |   |                                      | 61,687  |   |   | 2,693 |   |   | 4.37 |   |   | 61,696 |   |   | 2,907 |   |   | 4.71 |   |
| Total                interest-bearing liabilities                                                     |   |                                      | 200,652 |   |   | 7,565 |   |   | 3.77 |   |   | 200,833 |   |   | 7,456 |   |   | 3.71 |   |
| Noninterest-bearing                liabilities                                                        |   |                                      | 2,665   |   |   |   |   |   |   |   |   | 2,301 |   |   |   |   |   |   |   |
| Total                liabilities                                                                      |   |                                      | 203,317 |   |   |   |   |   |   |   |   | 203,134 |   |   |   |   |   |   |   |
| Shareholders’                equity                                                             |   |                                      | 60,535  |   |   |   |   |   |   |   |   | 62,895 |   |   |   |   |   |   |   |
| Total                liabilities and shareholders’ equity                                       |   | $                                         | 263,852 |   |   |   |   |   |   |   | $ | 266,029 |   |   |   |   |   |   |   |
| Net                interest income/average yield                                                      |   |                                      |    |   | $ | 5,522 |   |   | 1.65 | % |   |   |   | $ | 5,492 |   |   | 1.61 | % |
| Net                interest margin                                                                    |   |                                      |    |   |   |   |   |   | 2.29 | % |   |   |   |   |   |   |   | 2.26 | % |
| Average                interest-earning assets to average interest-bearing                liabilities |   |                                      |    |   |   |   |   |   | 120.28 | % |   |   |   |   |   |   |   | 121.16 | % |

***Rate/Volume      Analysis***
**.**
** **

----

|                                                |   | Twelve months ended June 30, 2008 to June 30, 2007 Increase (Decrease)Due to Changes In |   | Twelve months ended June 30, 2007 to June 30, 2006 Increase (Decrease) Due to Changes In |   |
|-----------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                |   | Rate                                                                                                                                                          |   | Volume                                                                                                                                                              |   | Total |   | Rate |   | Volume |   | Total |   |
|                                                |   | (In                  thousands)                                                                                                                               |   |
| Interest-earning                  assets:           |   |                                                                                                                                                          |   |                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                  receivable                   |   | $                                                                                                                                                             | 737    |                                                                                                                                                                | $      | 16 |   | $ | 753 |   | $ | 557 |   | $ | 46 |   | $ | 603 |   |
| Mortgage-backed                  securities         |   |                                                                                                                                                          | (101   | )                                                                                                                                                                   |   | (2 | ) |   | (103 | ) |   | (142 | ) |   | 20 |   |   | (122 | ) |
| Investment                  securities              |   |                                                                                                                                                          | (563   | )                                                                                                                                                                   |   | (10 | ) |   | (573 | ) |   | (135 | ) |   | 56 |   |   | (79 | ) |
| Other                  interest-earning assets      |   |                                                                                                                                                          | 113    |                                                                                                                                                                |   | (51 | ) |   | 62 |   |   | (455 | ) |   | 292 |   |   | (163 | ) |
| Total                  interest-earning assets      |   |                                                                                                                                                          | 186    |                                                                                                                                                                |   | (47 | ) |   | 139 |   |   | (175 | ) |   | 414 |   |   | 239 |   |
|                                                |   |                                                                                                                                                          |   |                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                  liabilities:      |   |                                                                                                                                                          |   |                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Checking                  accounts                  |   |                                                                                                                                                          | 17     |                                                                                                                                                                |   | (87 | ) |   | (70 | ) |   | (164 | ) |   | 104 |   |   | (60 | ) |
| Savings                  accounts                   |   |                                                                                                                                                          | (51    | )                                                                                                                                                                   |   | (28 | ) |   | (79 | ) |   | (93 | ) |   | 5 |   |   | (88 | ) |
| Certificates                  of deposit            |   |                                                                                                                                                          | 162    |                                                                                                                                                                |   | 310 |   |   | 472 |   |   | (59 | ) |   | 859 |   |   | 800 |   |
| FHLB                  Advances                      |   |                                                                                                                                                          | -      |                                                                                                                                                                |   | (214 | ) |   | (214 | ) |   | 304 |   |   | 404 |   |   | 708 |   |
| Total                  interest-bearing liabilities |   |                                                                                                                                                          | 128    |                                                                                                                                                                |   | (19 | ) |   | 109 |   |   | (12 | ) |   | 1,372 |   |   | 1,360 |   |
| Increase                  in net interest income    |   | $                                                                                                                                                             | 58     |                                                                                                                                                                | $      | (28 | ) | $ | 30 |   | $ | (163 | ) | $ | (958 | ) | $ | (1,121 | ) |

***Provision      for Losses on Loans.***

***Other      Income.***

***General,      Administrative and Other Expense.***

----

***Federal      Income Taxes.***

**Liquidity      and Capital Resources**

----

**Commitments      and Contractual Obligations**

|                                                              |   | **Total****Amounts****Committed**   |   | **Less****Than****One****Year** |   | **One                  to****Three****Years** |   | **Four                  to****Five****Years** |    | **More****than****Five****Years** |   |
|-------------------------------------------------------------------|--------|-------------------------------------|--------|---------------------------------|--------|-----------------------------------------------|--------|-----------------------------------------------|---------|-----------------------------------|--------|
|                                                              |   | **(In                  thousands)** |   |
| Federal                  Home Loan Bank advances (1)              |   | $                                   | 46,839 |                            | $      | 10,155                                        |   | $                                             | 29,268  |                              | $      | 5,194 |   | $ | 2,222 |   |
|                                                              |   |                                |   |                            |   |                                          |   |                                          |    |                              |   |   |   |   |   |   |
| One                  to four family residential real estate  |   |                                | 946    |                            |   | 946                                           |   |                                          | — |                              |   | — |   |   | — |   |
| Unused                  lines of credit                      |   |                                | 9,499  |                            |   | 9,499                                         |   |                                          | — |                              |   | — |   |   | — |   |
| Undisbursed                  loans                           |   |                                | 696    |                            |   | 696                                           |   |                                          | — |                              |   | — |   |   | — |   |
| Total                  commitments                           |   | $                                   | 57,980 |                            | $      | 21,296                                        |   | $                                             | 29,268  |                              | $      | 5,194 |   | $ | 2,222 |   |

----

**Impact      of Inflation and Changing Prices**

----

**Report      of Independent Registered Public Accounting Firm**

**BKD,**
**      LLP **

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**CONSOLIDATED      STATEMENTS OF FINANCIAL CONDITION**

|                                                                                                                                                                                     |   | **2008** |        | **2007**   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|-------------|------------|--------|
|                                                                                                                                                                                     |   |     |        |       |   |
| **ASSETS**                                                                                                                                                                               |   |     |        |       |   |   |   |
| Cash                  and due from banks                                                                                                                                                 |   | $        | 790         |       | $      | 1,179 |   |
| Interest-bearing                  demand deposits                                                                                                                                        |   |     | 15,176      |       |   | 1,541 |   |
| Cash                  and cash equivalents                                                                                                                                               |   |     | 15,966      |       |   | 2,720 |   |
|                                                                                                                                                                                     |   |     |        |       |   |   |   |
| Interest-bearing                  deposits                                                                                                                                               |   |     | 100         |       |   | 100 |   |
| Available-for-sale                  securities                                                                                                                                           |   |     | 5,480       |       |   | 13,298 |   |
| Held-to-maturity                  securities, at amortized cost- approximate fair value of $16,409                  and                  $57,835 at June 30, 2008 and 2007, respectively |   |     | 16,959      |       |   | 59,606 |   |
| Loans                  available for sale                                                                                                                                                |   |     | 86          |       |   | - |   |
| Loans                  receivable                                                                                                                                                        |   |     | 182,717     |       |   | 166,876 |   |
| Allowance                  for loan and lease losses                                                                                                                                     |   |     | (666        | )          |   | (720 | ) |
|                                                                                                                                                                                     |   |     |        |       |   |   |   |
| Real                  estate acquired through foreclosure                                                                                                                                |   |     | 21          |       |   | 8 |   |
| Office                  premises and equipment                                                                                                                                           |   |     | 2,727       |       |   | 2,762 |   |
| Federal                  Home Loan Bank stock                                                                                                                                            |   |     | 5,566       |       |   | 5,421 |   |
| Accrued                  interest receivable                                                                                                                                             |   |     | 628         |       |   | 935 |   |
| Bank-owned                  life insurance                                                                                                                                               |   |     | 2,339       |       |   | 2,256 |   |
| Goodwill                                                                                                                                                                                 |   |     | 14,507      |       |   | 14,507 |   |
| Other                  intangible assets                                                                                                                                                 |   |     | 480         |       |   | 612 |   |
| Prepaid                  expenses and other assets                                                                                                                                       |   |     | 266         |       |   | 276 |   |
| Prepaid                  federal income taxes                                                                                                                                            |   |     | 479         |       |   | 259 |   |
|                                                                                                                                                                                     |   |     |        |       |   |   |   |
| Total                  assets                                                                                                                                                            |   | **$**    | **247,655** |       | **$**  | **268,916** |   |
|                                                                                                                                                                                     |   |     |        |       |   |   |   |
| **LIABILITIES                  AND SHAREHOLDERS’ EQUITY**                                                                                                                          |   |     |        |       |   |   |   |
|                                                                                                                                                                                     |   |     |        |       |   |   |   |
| Deposits                                                                                                                                                                                 |   | $        | 137,634     |       | $      | 139,893 |   |
| Advances                  from the Federal Home Loan Bank                                                                                                                                |   |     | 47,801      |       |   | 65,132 |   |
| Advances                  by borrowers for taxes and insurance                                                                                                                           |   |     | 331         |       |   | 343 |   |
| Accrued                  interest payable                                                                                                                                                |   |     | 245         |       |   | 365 |   |
| Deferred                  federal income taxes                                                                                                                                           |   |     | 1,234       |       |   | 930 |   |
| Other                  liabilities                                                                                                                                                       |   |     | 617         |       |   | 808 |   |
| Total                  liabilities                                                                                                                                                       |   |     | 187,862     |       |   | 207,471 |   |
|                                                                                                                                                                                     |   |     |        |       |   |   |   |
| Commitments                  and contingencies                                                                                                                                           |   |     | -           |       |   | - |   |
|                                                                                                                                                                                     |   |     |        |       |   |   |   |
| Shareholders’                  equity                                                                                                                                              |   |     |        |       |   |   |   |
| Preferred                  stock, 500,000 shares authorized, $.01 par value; no shares                  issued                                                                           |   |     | -           |       |   | - |   |
| Common                  stock, 20,000,000 shares authorized, $.01 par value; 8,596,064                  shares                  issued                                                   |   |     | 86          |       |   | 86 |   |
| Additional                  paid-in capital                                                                                                                                              |   |     | 35,834      |       |   | 35,459 |   |
| Retained                  earnings                                                                                                                                                       |   |     | 32,291      |       |   | 32,291 |   |
| Shares                  acquired by stock benefit plans                                                                                                                                  |   |     | (2,735      | )          |   | (3,013 | ) |
| Treasury                  shares at cost, 559,330 and 299,430 common shares at June 30, 2008                  and                  2007, respectively                                    |   |     | (5,700      | )          |   | (3,091 | ) |
| Accumulated                  other comprehensive income (loss)                                                                                                                           |   |     | 17          |       |   | (287 | ) |
| Total                  shareholders’ equity                                                                                                                                        |   |     | 59,793      |       |   | 61,445 |   |
|                                                                                                                                                                                     |   |     |        |       |   |   |   |
| Total                  liabilities and shareholders’ equity                                                                                                                        |   | **$**    | **247,655** | ** ** | **$**  | **268,916** |   |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**CONSOLIDATED      STATEMENTS OF EARNINGS**

|                                                                    |   | **2008** |     | **2007** |   |
|-------------------------------------------------------------------------|--------|----------|----------|----------|--------|
|                                                                    |   |     |     |     |   |
| Interest                income                                          |   |     |     |     |   |   |   |
| Loans                                                                   |   | $        | 10,555   |     | $      | 9,802 |   |
| Mortgage-backed                securities                               |   |     | 665      |     |   | 768 |   |
| Investment                securities                                    |   |     | 1,426    |     |   | 1,999 |   |
| Interest-bearing                deposits and other                      |   |     | 441      |     |   | 379 |   |
| Total                interest income                                    |   |     | 13,087   |     |   | 12,948 |   |
|                                                                    |   |     |     |     |   |   |   |
| Interest                expense                                         |   |     |     |     |   |   |   |
| Deposits                                                                |   |     | 4,872    |     |   | 4,549 |   |
| Borrowings                                                              |   |     | 2,693    |     |   | 2,907 |   |
| Total                interest expense                                   |   |     | 7,565    |     |   | 7,456 |   |
|                                                                    |   |     |     |     |   |   |   |
| Net                interest income                                      |   |     | 5,522    |     |   | 5,492 |   |
|                                                                    |   |     |     |     |   |   |   |
| Provision                for losses on loans                            |   |     | 12       |     |   | - |   |
|                                                                    |   |     |     |     |   |   |   |
| Net                interest income after provision for losses on loans  |   |     | 5,510    |     |   | 5,492 |   |
|                                                                    |   |     |     |     |   |   |   |
| Other                income                                             |   |     |     |     |   |   |   |
| Earnings                on bank-owned life insurance                    |   |     | 83       |     |   | 81 |   |
| Gain                on sale of loans                                    |   |     | 23       |     |   | 10 |   |
| Loss                on sale of real estate acquired through foreclosure |   |     | -        |     |   | (6 | ) |
| Other                operating                                          |   |     | 76       |     |   | 89 |   |
| Total                other income                                       |   |     | 182      |     |   | 174 |   |
|                                                                    |   |     |     |     |   |   |   |
| General,                administrative and other expense                |   |     |     |     |   |   |   |
| Employee                compensation and benefits                       |   |     | 2,911    |     |   | 2,954 |   |
| Occupancy                and equipment                                  |   |     | 344      |     |   | 351 |   |
| Franchise                and other taxes                                |   |     | 157      |     |   | 153 |   |
| Data                processing                                          |   |     | 153      |     |   | 152 |   |
| Other                operating                                          |   |     | 756      |     |   | 754 |   |
| Total                general, administrative and other expense          |   |     | 4,321    |     |   | 4,364 |   |
|                                                                    |   |     |     |     |   |   |   |
| Earnings                before income taxes                             |   |     | 1,371    |     |   | 1,302 |   |
|                                                                    |   |     |     |     |   |   |   |
| Federal                income taxes                                     |   |     |     |     |   |   |   |
| Current                                                                 |   |     | 225      |     |   | 99 |   |
| Deferred                                                                |   |     | 214      |     |   | 318 |   |
| Total                federal income taxes                               |   |     | 439      |     |   | 417 |   |
|                                                                    |   |     |     |     |   |   |   |
| NET                EARNINGS                                             |   | **$**    | **932**  |     | **$**  | **885** |   |
|                                                                    |   |     |     |     |   |   |   |
| EARNINGS                PER SHARE                                       |   |     |     |     |   |   |   |
| Basic                                                                   |   | **$**    | **0.12** |     | **$**  | **0.11** |   |
|                                                                    |   |     |     |     |   |   |   |
| Diluted                                                                 |   | **$**    | **0.12** |     | **$**  | **0.11** |   |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**CONSOLIDATED      STATEMENTS OF COMPREHENSIVE INCOME**

|                                                                                |   | **2008** |      | **2007** |   |
|-------------------------------------------------------------------------------------|--------|----------|-----------|----------|--------|
|                                                                                |   |     |      |     |   |
| Net                earnings                                                         |   | $        | 932       |     | $      | 885 |   |
|                                                                                |   |     |      |     |   |   |   |
| Other                comprehensive income, net of tax-related effects:              |   |     |      |     |   |   |   |
| Unrealized                holding gains on securities during the year, net of taxes |   |     |      |     |   |   |   |
| of                $157 and $128 in 2008 and 2007, respectively                      |   |     | 304       |     |   | 249 |   |
|                                                                                |   |     |      |     |   |   |   |
| Comprehensive                income                                                 |   | **$**    | **1,236** |     | **$**  | **1,134** |   |
|                                                                                |   |     |      |     |   |   |   |
| Accumulated                other comprehensive income (loss)                        |   | **$**    | **17**    |     | **$**  | **(287** | **)** |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**CONSOLIDATED      STATEMENTS OF SHAREHOLDERS’ EQUITY**

|                                                                                                                                     |   |       |   |           |   |         |   |              |       |         |   | **Unrealized**             |   |      |                       |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|--------|----------------|--------|--------------|--------|-------------------|------------|--------------|--------|----------------------------|--------|-----------|----------------------------|
|                                                                                                                                     |   |       |   |           |   |         |   | **Shares**        |       |         |   | **gains (losses)**    |   |      |                       |
|                                                                                                                                     |   |       |   |           |   |         |   | **acquired**      |       |         |   | **on securities**     |   |      |                       |
|                                                                                                                                     |   |       |   | **Additional** |   |         |   | **by stock** |       |         |   | **designated**             |   |      |                       |
|                                                                                                                                     |   | **Common** |   | **paid-in**    |   | **Retained** |   | **benefit**       |       | **Treasury** |   | **as available**      |   |      |                       |
|                                                                                                                                     |   | **stock**  |   | **capital**    |   | **earnings** |   | **plans**         |       | **shares**   |   | **for sale**          |   | **Total** |                       |
| Balance                at July 1, 2006                                                                                                   |   | $          | 86     |           | $      | 36,769       |   | $                 | 32,761     |         | $      | (4,845                     | )      | $         | (354                       | ) | $ | (536 | ) | $ | 63,881 |   |
|                                                                                                                                     |   |       |   |           |   |         |   |              |       |         |   |                       |   |      |                       |   |   |   |   |   |   |   |
| Transfer                of restricted stock upon adoption of SFAS 123(R)                                                                 |   |       | -      |           |   | (1,653       | )      |              | -          |         |   | 1,653                      |   |      | -                          |   |   | - |   |   | - |   |
| Net                earnings for the year ended June 30, 2007                                                                             |   |       | -      |           |   | -            |   |              | 885        |         |   | -                          |   |      | -                          |   |   | - |   |   | 885 |   |
| Amortization                expense of stock benefit plans                                                                               |   |       | -      |           |   | 184          |   |              | -          |         |   | 179                        |   |      | -                          |   |   | - |   |   | 363 |   |
| Compensation                expense related to vesting stock options                                                                     |   |       | -      |           |   | 159          |   |              | -          |         |   | -                          |   |      | -                          |   |   | - |   |   | 159 |   |
| Acquisition                of shares for Treasury                                                                                        |   |       | -      |           |   | -            |   |              | -          |         |   | -                          |   |      | (2,737                     | ) |   | - |   |   | (2,737 | ) |
| Unrealized                gains on securities designated as available for sale, net of related                tax                effects |   |       | -      |           |   | -            |   |              | -          |         |   | -                          |   |      | -                          |   |   | 249 |   |   | 249 |   |
| Cash                dividends of $0.40 per common share                                                                                  |   |       | -      |           |   | -            |   |              | (1,355     | )            |   | -                          |   |      | -                          |   |   | - |   |   | (1,355 | ) |
|                                                                                                                                     |   |       |   |           |   |         |   |              |       |         |   |                       |   |      |                       |   |   |   |   |   |   |   |
| Balance                at June 30, 2007                                                                                                  |   |       | 86     |           |   | 35,459       |   |              | 32,291     |         |   | (3,013                     | )      |      | (3,091                     | ) |   | (287 | ) |   | 61,445 |   |
|                                                                                                                                     |   |       |   |           |   |         |   |              |       |         |   |                       |   |      |                       |   |   |   |   |   |   |   |
| Adjustment                related to adoption of FIN 48                                                                                  |   |       |   |           |   |         |   |              | 250        |         |   |                  |   |      |                  |   |   |                  |   |   | 250 |   |
| Net                earnings for the year ended June 30, 2008                                                                             |   |       | -      |           |   | -            |   |              | 932        |         |   | -                          |   |      | -                          |   |   | - |   |   | 932 |   |
| Amortization                expense of stock benefit plans                                                                               |   |       | -      |           |   | 257          |   |              | -          |         |   | 278                        |   |      | -                          |   |   | - |   |   | 535 |   |
| Compensation                expense related to vesting stock options                                                                     |   |       | -      |           |   | 118          |   |              | -          |         |   | -                          |   |      | -                          |   |   | - |   |   | 118 |   |
| Acquisition                of shares for Treasury                                                                                        |   |       | -      |           |   | -            |   |              | -          |         |   | -                          |   |      | (2,609                     | ) |   | - |   |   | (2,609 | ) |
| Unrealized                gains on securities designated as available for sale, net of related                tax                effects |   |       | -      |           |   | -            |   |              | -          |         |   | -                          |   |      | -                          |   |   | 304 |   |   | 304 |   |
| Cash                dividends of $0.40 per common share                                                                                  |   |       | -      |           |   | -            |   |              | (1,182     | )            |   | -                          |   |      | -                          |   |   | - |   |   | (1,182 | ) |
|                                                                                                                                     |   |       |   |           |   |         |   |              |       |         |   |                       |   |      |                       |   |   |   |   |   |   |   |
| Balance                at June 30, 2008                                                                                                  |   | **$**      | **86** |           | **$**  | **35,834**   |   | **$**             | **32,291** |         | **$**  | **(2,735**                 | **)**  | **$**     | **(5,700**                 | **)** | **$** | **17** |   | **$** | **59,793** |   |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

|                                                                                                              |   | **2008** |       | **2007** |   |
|-------------------------------------------------------------------------------------------------------------------|--------|----------|------------|----------|--------|
| Cash                flows from operating activities:                                                              |   |     |       |     |   |   |   |
| Net                earnings for the year                                                                          |   | $        | 932        |     | $      | 885 |   |
| Adjustments                to reconcile net earnings to net cash provided by operating                activities: |   |     |       |     |   |   |   |
| Amortization                of premiums and discounts on investment securities - net                              |   |     | 1          |     |   | (7 | ) |
| Depreciation                                                                                                      |   |     | 145        |     |   | 152 |   |
| Amortization                of deferred loan origination (fees) costs                                             |   |     | 39         |     |   | (37 | ) |
| Amortization                of purchase accounting adjustments - net                                              |   |     | (393       | )        |   | (409 | ) |
| Gain                on sale of loans                                                                              |   |     | (23        | )        |   | (10 | ) |
| Loss                on sale of real estate acquired through foreclosure                                           |   |     | -          |     |   | 6 |   |
| Amortization                of stock benefit plans and stock options expense                                      |   |     | 560        |     |   | 613 |   |
| Federal                Home Loan Bank stock dividends                                                             |   |     | (145       | )        |   | (157 | ) |
| Bank-owned                life insurance earnings                                                                 |   |     | (83        | )        |   | (81 | ) |
| Provision                for losses on loans                                                                      |   |     | 12         |     |   | - |   |
| Mortgage                loans originated for sale                                                                 |   |     | (1,627     | )        |   | (878 | ) |
| Proceeds                from sale of mortgage loans                                                               |   |     | 1,564      |     |   | 888 |   |
| Increase                (decrease) in cash, due to changes in:                                                    |   |     |       |     |   |   |   |
| Accrued                interest receivable                                                                        |   |     | 307        |     |   | (67 | ) |
| Prepaid                expenses and other assets                                                                  |   |     | 10         |     |   | (24 | ) |
| Accrued                interest payable                                                                           |   |     | (120       | )        |   | 112 |   |
| Accounts                payable and other liabilities                                                             |   |     | (98        | )        |   | (150 | ) |
| Federal                income taxes                                                                               |   |     |       |     |   |   |   |
| Current                                                                                                           |   |     | 30         |     |   | (134 | ) |
| Deferred                                                                                                          |   |     | 147        |     |   | 318 |   |
| Net                cash provided by operating activities                                                          |   |     | 1,258      |     |   | 1,020 |   |
|                                                                                                              |   |     |       |     |   |   |   |
| Cash                flows provided by (used in) investing activities:                                             |   |     |       |     |   |   |   |
| Interest-bearing                deposits:                                                                         |   |     |       |     |   |   |   |
| Maturities                                                                                                        |   |     | -          |     |   | 100 |   |
| Invested                                                                                                          |   |     | -          |     |   | (100 | ) |
| Investment                securities maturities, prepayments and calls:                                           |   |     |       |     |   |   |   |
| Held                to maturity                                                                                   |   |     | 42,647     |     |   | 4,432 |   |
| Available                for sale                                                                                 |   |     | 8,278      |     |   | 367 |   |
| Loan                disbursements                                                                                 |   |     | (54,092    | )        |   | (38,432 | ) |
| Principal                repayments on loans                                                                      |   |     | 38,118     |     |   | 27,387 |   |
| Proceeds                from sale of real estate acquired through foreclosure                                     |   |     | 15         |     |   | 349 |   |
| Proceeds                from sale of office premises and equipment                                                |   |     | -          |     |   | - |   |
| Purchase                of office premises and equipment                                                          |   |     | (110       | )        |   | (57 | ) |
| Net                cash provided by (used in) investing activities                                                |   |     | 34,856     |     |   | (5,954 | ) |
|                                                                                                              |   |     |       |     |   |   |   |
| Cash                flows provided by (used in) financing activities:                                             |   |     |       |     |   |   |   |
| Net                decrease in deposits                                                                           |   |     | (2,259     | )        |   | (1,345 | ) |
| Advances                by borrowers for taxes and insurance                                                      |   |     | (12        | )        |   | (26 | ) |
| Proceeds                from Federal Home Loan Bank advances                                                      |   |     | 25,600     |     |   | 165,000 |   |
| Repayments                on Federal Home Loan Bank advances                                                      |   |     | (42,406    | )        |   | (154,177 | ) |
| Purchase                of shares for stock benefit plans                                                         |   |     | -          |     |   | - |   |
| Treasury                stock repurchases                                                                         |   |     | (2,609     | )        |   | (2,737 | ) |
| Dividends                paid on common stock                                                                     |   |     | (1,182     | )        |   | (1,355 | ) |
| Net                cash provided by (used in) financing activities                                                |   |     | (22,868    | )        |   | 5,360 |   |
|                                                                                                              |   |     |       |     |   |   |   |
| Net                increase in cash and cash equivalents                                                          |   |     | 13,246     |     |   | 426 |   |
|                                                                                                              |   |     |       |     |   |   |   |
| Cash                and cash equivalents at beginning of year                                                     |   |     | 2,720      |     |   | 2,294 |   |
|                                                                                                              |   |     |       |     |   |   |   |
| Cash                and cash equivalents at end of year                                                           |   | **$**    | **15,966** |     | **$**  | **2,720** |   |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS (CONTINUED)**

|                                                                                                 |   | **2008** |      | **2007** |   |
|------------------------------------------------------------------------------------------------------|--------|----------|-----------|----------|--------|
|                                                                                                 |   |     |      |     |   |
| Supplemental                disclosure of cash flow information:                                     |   |     |      |     |   |   |   |
| Cash                paid during the year for:                                                        |   |     |      |     |   |   |   |
| Federal                income taxes                                                                  |   | **$**    | **260**   |     | **$**  | **165** |   |
|                                                                                                 |   |     |      |     |   |   |   |
| Interest                on deposits and borrowings                                                   |   | **$**    | **8,210** |     | **$**  | **7,475** |   |
|                                                                                                 |   |     |      |     |   |   |   |
| Supplemental                disclosure of noncash investing activities:                              |   |     |      |     |   |   |   |
| Transfers                from loans to real estate acquired through foreclosure                      |   | **$**    | **28**    |     | **$**  | **312** |   |
|                                                                                                 |   |     |      |     |   |   |   |
| Loans                disbursed upon sales of real estate acquired through                foreclosure |   | **$**    | **-**     |     | **$**  | **251** |   |
|                                                                                                 |   |     |      |     |   |   |   |
| Capitalization                of mortgage servicing rights                                           |   | **$**    | **8**     |     | **$**  | **11** |   |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

|                                                                                                  |   | For the fiscal year ended |    |
|-------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|---------|
|                                                                                                  |   | June 30,                                 |    |
|                                                                                                  |   | **2008**                                      |    | **2007** |   |
|                                                                                                  |   |                                          |    |   |   |
| Allocated                shares                                                                       |   |                                          | 49,320  |   |   | 30,542 |   |
| Shares                committed to be released                                                        |   |                                          | 9,267   |   |   | 8,945 |   |
| Unearned                shares                                                                        |   |                                          | 273,217 |   |   | 292,317 |   |
| Total                ESOP shares                                                                      |   |                                          | 331,804 |   |   | 331,804 |   |
|                                                                                                  |   |                                          |    |   |   |   |   |
| Fair                value of unearned shares at end of period (expressed in                thousands) |   | $                                             | 2,555   |   | $ | 2,967 |   |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

|                                                                                                             |   |       |        | **Weighted-** |   | **Aggregate** |   |
|------------------------------------------------------------------------------------------------------------------|--------|------------|-------------|---------------|--------|---------------|--------|
|                                                                                                             |   |       |        | **average**   |   | **Intrinsic** |   |
|                                                                                                             |   |       |        | **exercise**  |   | **Value**     |   |
|                                                                                                             |   | **Shares** |        | **price**     |   | **($000)**    |   |
|                                                                                                             |   |       |        |          |   |          |   |
| Outstanding                at beginning of year                                                                  |   |       | 339,200     |          | $      | 10.10         |   |   |   |   |
| Granted                                                                                                          |   |       | -           |          |   | -             |   |   |   |   |
| Exercised                                                                                                        |   |       | -           |          |   | -             |   |   |   |   |
| Forfeited                                                                                                        |   |       | -           |          |   | -             |   |   |   |   |
|                                                                                                             |   |       |        |          |   |          |   |   |   |   |
| Outstanding                at end of year                                                                        |   |       | **339,200** |          | **$**  | **10.10**     |   |   | **N/A** |   |
|                                                                                                             |   |       |        |          |   |          |   |   |   |   |
|                                                                                                             |   |       |        |          |   |          |   |   |   |   |
| Options                exercisable at end of year                                                                |   |       | **135,680** |          | **$**  | **10.10**     |   |   | **N/A** |   |
|                                                                                                             |   |       |        |          |   |          |   |   |   |   |
| Weighted                average fair value of options granted in fiscal year 2006                                |   |       |        |          |   |          |   | **$**  | **1.75** |   |
|                                                                                                             |   |       |        |          |   |          |   |   |   |   |
| Weighted                average remaining contractual term of options outstanding and                exercisable |   |       |        |          |   |          |   |   | **7.5                years** |   |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

|                                      |   |       |       | **Weighted-average** |   |
|-------------------------------------------|--------|------------|------------|----------------------|--------|
|                                      |   |       |       | **grant date**  |   |
|                                      |   | **Shares** |       | **fair value**  |   |
| Nonvested                at July 1, 2007  |   |       | 103,600    |                 | $      | 10.10 |   |
| Vested                                    |   |       | (25,900    | )                    |   | 10.10 |   |
| Forfeited                                 |   |       | -          |                 |   | - |   |
|                                      |   |       |       |                 |   |   |   |
| Nonvested                at June 30, 2008 |   |       | **77,700** |                 | **$**  | **10.10** |   |

|                                                                |   | For the fiscal year ended |      |
|---------------------------------------------------------------------|--------|-----------------------------------------------|-----------|
|                                                                |   | June 30,                                 |      |
|                                                                |   | **2008**                                      |      | **2007** |   |
|                                                                |   |                                          |      |   |   |
| Weighted-average                common shares outstanding (basic)   |   |                                          | 7,739,519 |   |   | 7,991,457 |   |
| Dilutive                effect of assumed exercise of stock options |   |                                          | -         |   |   | - |   |
| Weighted-average                common shares outstanding (diluted) |   |                                          | 7,739,519 |   |   | 7,991,457 |   |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

|   |   | 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. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | Investment                securities:                For investment securities, fair value is deemed to equal the quoted                market                price. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   |
|--------|--------|--------|

|   |   | Loans                held for sale:                Loans originated and intended for sale in the secondary market are                carried                at the lower of cost or fair value. When the Bank decides to sell                loans                not previously classified as held for sale, such loans are transferred                into a held-for-sale classification, and the recorded loan values                are                adjusted to the lower of cost or fair                value. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | Loans                receivable:                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, interest-earning deposits and accrued interest                receivable:                The carrying amount presented in the consolidated statements of financial                condition is deemed to approximate fair                value. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | Deposits:                The fair value of NOW accounts, passbook accounts, money market deposits                and advances by borrowers for taxes and insurance 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. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

|   |   | 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. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                         |   | **2008**                      |    | **2007**  |   |
|--------------------------------------------------------------|--------|-------------------------------|---------|-----------|--------|
|                                                         |   | **Carrying**                  |    | **Fair**  |   | **Carrying** |   | **Fair** |   |
|                                                         |   | **value**                     |    | **value** |   | **value** |   | **value** |   |
|                                                         |   | (In                Thousands) |    |
| Financial                assets                              |   |                          |    |      |   |   |   |   |   |   |   |   |   |
| Cash                and cash equivalents                     |   | $                             | 15,966  |      | $      | 15,966 |   | $ | 2,720 |   | $ | 2,720 |   |
| Interest-earning                deposits                     |   |                          | 100     |      |   | 100 |   |   | 100 |   |   | 100 |   |
| Available-for-sale                securities                 |   |                          | 5,480   |      |   | 5,480 |   |   | 13,298 |   |   | 13,298 |   |
| Held-to-maturity                securities                   |   |                          | 16,959  |      |   | 16,409 |   |   | 59,606 |   |   | 57,835 |   |
| Loans                available for sale                      |   |                          | 86      |      |   | 86 |   |   | — |   |   | — |   |
| Loans                receivable - net                        |   |                          | 182,051 |      |   | 181,523 |   |   | 166,156 |   |   | 162,134 |   |
| Federal                Home Loan Bank stock                  |   |                          | 5,566   |      |   | 5,566 |   |   | 5,421 |   |   | 5,421 |   |
| Accrued                interest receivable                   |   |                          | 628     |      |   | 628 |   |   | 935 |   |   | 935 |   |
|                                                         |   |                          |    |      |   |   |   |   |   |   |   |   |   |
| Financial                liabilities                         |   |                          |    |      |   |   |   |   |   |   |   |   |   |
| Deposits                                                     |   | $                             | 137,634 |      |   | 139,392 |   | $ | 139,893 |   | $ | 139,704 |   |
| Advances                from the Federal Home Loan Bank      |   |                          | 47,801  |      |   | 48,600 |   |   | 65,132 |   |   | 64,459 |   |
| Advances                by borrowers for taxes and insurance |   |                          | 331     |      |   | 331 |   |   | 343 |   |   | 343 |   |
| Accrued                interest payable                      |   |                          | 245     |      |   | 245 |   |   | 365 |   |   | 365 |   |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

|                                    |   | **2008**                          |   | **2007** |   |
|-----------------------------------------|--------|-----------------------------------|--------|----------|--------|
|                                    |   | **(in                thousands)** |   |
|                                    |   |                              |   |     |   |
| Core                deposits            |   |                              |   |     |   |   |   |
| Gross                Carrying Amount    |   | $                                 | 918    |     | $      | 918 |   |
| Accumulated                Amortization |   |                              | 438    |     |   | 306 |   |
|                                    |   | $                                 | 480    |     | $      | 612 |   |

|   |   | **(In                thousands)** |   |
|--------|--------|-----------------------------------|--------|
| 2009   |   | $                                 | 131    |   |
| 2010   |   | $                                 | 131    |   |
| 2011   |   | $                                 | 131    |   |
| 2012   |   | $                                 | 87     |   |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

|                                                             |   | **2008**            |    | **2007** |   |
|------------------------------------------------------------------|--------|---------------------|---------|----------|--------|
|                                                             |   | (In thousands) |    |
|                                                             |   |                |    |     |   |
| Outstanding                  principal, beginning of year        |   | $                   | 1,046   |     | $      | 1,254 |   |
| Principal                  disbursed during the year             |   |                | 20      |     |   | 740 |   |
| Principal                  repaid and refinanced during the year |   |                | (116    | )        |   | (678 | ) |
| Other                  changes                                   |   |                | – |     |   | (270 | ) |
| Outstanding                  principal, end of year              |   | **$**               | **950** |     | **$**  | **1,046** |   |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

|   | 20. | Change                in Accounting Principles  |
|--------|-----|------------------------------------------------------|

|                                   |   | **June 30, 2008 (in thousands)** |   |
|----------------------------------------|--------|------------------------------------------------------|--------|
|                                   |   | **As Computed****Pre-FIN 48**              |   | **As Reported****Under FIN 48** |   | **Effect of Change** |   |
|                                   |   |                                                 |   |   |   |   |   |
| Balance                Sheet           |   |                                                 |   |   |   |   |   |   |   |   |
| Refundable                income taxes |   | $                                                    | 220    |   | $ | 479 |   | $ | 250 |   |
| Retained                earnings       |   |                                                 | 32,041 |   |   | 32,291 |   |   | 250 |   |

|   | 21. | FDIC                One-time Assessment Credit |
|--------|-----|------------------------------------------------|

|   | 22. | Reclassifications |
|--------|-----|-------------------|

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      B - INVESTMENT SECURITIES**

|                                             |   | **2008**                      |       |
|--------------------------------------------------|--------|-------------------------------|------------|
|                                             |   |                          |       | **Gross** |   | **Gross** |   | **Estimated** |   |
|                                             |   | **Amortized**                 |       | **unrealized** |   | **unrealized** |   | **fair** |   |
|                                             |   | **cost**                      |       | **gains** |   | **losses** |   | **value** |   |
|                                             |   | (In                thousands) |       |
| **Available-for-sale                Securities** |   |                          |       |   |   |   |   |   |   |   |   |   |   |
| U.S.                government agencies          |   | $                             | 4,999      |   | $ | 31 |   | $ | - |   | $ | 5,030 |   |
| Mortgage-backed                securities        |   |                          | 455        |   |   | 4 |   |   | (9 | ) |   | 450 |   |
|                                             |   | **$**                         | **5,454**  |   | **$** | **35** |   | **$** | **(9** | **)** | **$** | **5,480** |   |
|                                             |   |                          |       |   |   |   |   |   |   |   |   |   |   |
| **Held-to-maturity                Securities**   |   |                          |       |   |   |   |   |   |   |   |   |   |   |
| U.S.                government agencies          |   | $                             | 3,000      |   | $ | 1 |   | $ | - |   | $ | 3,001 |   |
| Mortgage-backed                securities        |   |                          | 13,959     |   |   | 4 |   |   | (555 | ) |   | 13,408 |   |
|                                             |   | **$**                         | **16,959** |   | **$** | **5** |   | **$** | **(555** | **)** | **$** | **16,409** |   |

|                                             |   | **2007**            |       |
|--------------------------------------------------|--------|---------------------|------------|
|                                             |   |                |       | **Gross** |   | **Gross** |   | **Estimated** |   |
|                                             |   | **Amortized**       |       | **unrealized** |   | **unrealized** |   | **fair** |   |
|                                             |   | **cost**            |       | **gains** |   | **losses** |   | **value** |   |
|                                             |   | (In thousands) |       |
| **Available-for-sale                Securities** |   |                |       |   |   |   |   |   |   |   |   |   |   |
| U.S.                government agencies          |   | $                   | 12,999     |   | $ | - |   | $ | (428 | ) | $ | 12,571 |   |
| Mortgage-backed                securities        |   |                | 734        |   |   | - |   |   | (7 | ) |   | 727 |   |
|                                             |   | **$**               | **13,733** |   | **$** | **-** |   | **$** | **(435** | **)** | **$** | **13,298** |   |
|                                             |   |                |       |   |   |   |   |   |   |   |   |   |   |
| **Held-to-maturity                Securities**   |   |                |       |   |   |   |   |   |   |   |   |   |   |
| U.S.                government agencies          |   | $                   | 43,848     |   | $ | - |   | $ | (891 | ) | $ | 42,957 |   |
| Mortgage-backed                securities        |   |                | 15,758     |   |   | - |   |   | (880 | ) |   | 14,878 |   |
|                                             |   | **$**               | **59,606** |   | **$** | **-** |   | **$** | **(1,771** | **)** | **$** | **57,835** |   |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      B - INVESTMENT SECURITIES**

|                                        |   | **2008**            |       | **2007**      |   |
|---------------------------------------------|--------|---------------------|------------|---------------|--------|
|                                        |   | **Estimated**       |       |          |   | **Estimated** |   |   |   |
|                                        |   | **fair**            |       | **Amortized** |   | **fair** |   | **Amortized** |   |
|                                        |   | **value**           |       | **cost**      |   | **value** |   | **cost** |   |
|                                        |   | (In thousands) |       |
| **Available-for-sale**                      |   |                |       |          |   |   |   |   |   |   |   |   |   |
| Within                one year              |   | $                   | -          |          | $      | - |   | $ | 4,901 |   | $ | 5,000 |   |
| One                year through five years  |   |                | 5,030      |          |   | 4,999 |   |   | 7,670 |   |   | 7,999 |   |
|                                        |   |                | 5,030      |          |   | 4,999 |   |   | 12,571 |   |   | 12,999 |   |
| Mortgage-backed                securities   |   |                | 450        |          |   | 455 |   |   | 727 |   |   | 734 |   |
| Totals                                      |   | **$**               | **5,480**  |          | **$**  | **5,454** |   | **$** | **13,298** |   | **$** | **13,733** |   |
|                                        |   |                |       |          |   |   |   |   |   |   |   |   |   |
| **Held-to-maturity**                        |   |                |       |          |   |   |   |   |   |   |   |   |   |
| Within                one year              |   | $                   | -          |          | $      | - |   | $ | 8,747 |   | $ | 8,850 |   |
| One                year through five years  |   |                | 3,001      |          |   | 3,000 |   |   | 25,275 |   |   | 25,999 |   |
| Five                years through ten years |   |                | -          |          |   | - |   |   | 4,940 |   |   | 5,000 |   |
| After                ten years              |   |                | -          |          |   | - |   |   | 3,995 |   |   | 3,999 |   |
|                                        |   |                | 3,001      |          |   | 3,000 |   |   | 42,957 |   |   | 43,848 |   |
| Mortgage-backed                securities   |   |                | 13,408     |          |   | 13,959 |   |   | 14,878 |   |   | 15,758 |   |
| Totals                                      |   | **$**               | **16,409** |          | **$**  | **16,959** |   | **$** | **57,835** |   | **$** | **59,606** |   |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      B - INVESTMENT SECURITIES**

|                                                 |   | **June 30, 2008**            |      |
|------------------------------------------------------|--------|----------------------------------------|-----------|
|                                                 |   | **Less than 12 months** |      | **12 months or longer** |   | **Total** |   |
| **Description of**                              |   | **Fair**                               |      | **Unrealized** |   | **Fair** |   | **Unrealized** |   | **Fair** |   | **Unrealized** |   |
| **securities**                                       |   | **value**                              |      | **losses** |   | **value** |   | **losses** |   | **value** |   | **losses** |   |
|                                                 |   | (Dollars in thousands)       |      |
|                                                 |   |                                   |      |   |   |   |   |   |   |   |   |   |   |
| U.S.                Government agency securities     |   | $                                      | -         |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   |
| Mortgage-backed                securities            |   |                                   | 4,094     |   |   | 81 |   |   | 9,450 |   |   | 483 |   |   | 13,544 |   |   | 564 |   |
|                                                 |   |                                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                temporarily impaired securities |   | **$**                                  | **4,094** |   | **$** | **81** |   | **$** | **9,450** |   | **$** | **483** |   | **$** | **13,544** |   | **$** | **564** |   |

|                                                 |   | **June 30, 2007**            |   |
|------------------------------------------------------|--------|----------------------------------------|--------|
|                                                 |   | **Less than 12 months** |   | **12 months or longer** |   | **Total** |   |
| **Description of**                              |   | **Fair**                               |   | **Unrealized** |   | **Fair** |   | **Unrealized** |   | **Fair** |   | **Unrealized** |   |
| **securities**                                       |   | **value**                              |   | **losses** |   | **Value** |   | **losses** |   | **value** |   | **losses** |   |
|                                                 |   | (Dollars in thousands)       |   |
|                                                 |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                Government agency securities     |   | $                                      | -      |   | $ | - |   | $ | 55,528 |   | $ | 1,319 |   | $ | 55,528 |   | $ | 1,319 |   |
| Mortgage-backed                securities            |   |                                   | -      |   |   | - |   |   | 15,605 |   |   | 887 |   |   | 15,605 |   |   | 887 |   |
|                                                 |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                temporarily impaired securities |   | **$**                                  | **-**  |   | **$** | **-** |   | **$** | **71,133** |   | **$** | **2,206** |   | **$** | **71,133** |   | **$** | **2,206** |   |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      C - LOANS RECEIVABLE**

|                                                   |   | **2008**            |        | **2007** |   |
|--------------------------------------------------------|--------|---------------------|-------------|----------|--------|
|                                                   |   | (In thousands) |        |
| Residential                real estate                 |   |                |        |     |   |   |   |
| One-                to four-family                     |   | $                   | 158,007     |     | $      | 146,602 |   |
| Multi-family                                           |   |                | 2,684       |     |   | 1,497 |   |
| Construction                                           |   |                | 3,528       |     |   | 6,671 |   |
| Nonresidential                real estate and land     |   |                | 11,318      |     |   | 6,898 |   |
| Loans                on deposits                       |   |                | 3,384       |     |   | 3,204 |   |
| Consumer                and other                      |   |                | 4,503       |     |   | 4,290 |   |
|                                                   |   |                | 183,424     |     |   | 169,162 |   |
| Less:                                                  |   |                |        |     |   |   |   |
| Undisbursed                portion of loans in process |   |                | 696         |     |   | 2,176 |   |
| Deferred                loan origination fees          |   |                | 11          |     |   | 110 |   |
| Allowance                for loan losses               |   |                | 666         |     |   | 720 |   |
|                                                   |   |                |        |     |   |   |   |
|                                                   |   | **$**               | **182,051** |     | **$**  | **166,156** |   |

**NOTE      D - ALLOWANCE FOR LOAN LOSSES**

|                                         |   | **2008**            |    | **2007** |   |
|----------------------------------------------|--------|---------------------|---------|----------|--------|
|                                         |   | (In thousands) |    |
|                                         |   |                |    |     |   |
| Balance                at beginning of year  |   | $                   | 720     |     | $      | 724 |   |
| Provision                for losses on loans |   |                | 12      |     |   | - |   |
| Charge-offs                                  |   |                | (66     | )        |   | (4 | ) |
|                                         |   |                |    |     |   |   |   |
| Balance                at end of year        |   | **$**               | **666** |     | **$**  | **720** |   |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      E - OFFICE PREMISES AND EQUIPMENT**

|                                         |   | **2008**            |      | **2007** |   |
|----------------------------------------------|--------|---------------------|-----------|----------|--------|
|                                         |   | (In thousands) |      |
|                                         |   |                |      |     |   |
| Land                                         |   | $                   | 830       |     | $      | 830 |   |
| Buildings                and improvements    |   |                | 3,532     |     |   | 3,452 |   |
| Furniture                and equipment       |   |                | 1,232     |     |   | 1,201 |   |
| Automobiles                                  |   |                | 27        |     |   | 27 |   |
|                                         |   |                | 5,621     |     |   | 5,510 |   |
| Less                accumulated depreciation |   |                | 2,894     |     |   | 2,748 |   |
|                                         |   |                |      |     |   |   |   |
|                                         |   | **$**               | **2,727** |     | **$**  | **2,762** |   |

**NOTE      F - DEPOSITS**

|                                                           |   | **2008**            |        | **2007** |   |
|----------------------------------------------------------------|--------|---------------------|-------------|----------|--------|
|                                                           |   | (In thousands) |        |
|                                                           |   |                |        |     |   |
| Non-interest                bearing checking accounts          |   | $                   | 888         |     | $      | 745 |   |
| Checking                accounts                               |   |                | 5,572       |     |   | 6,072 |   |
| Savings                accounts                                |   |                | 31,222      |     |   | 34,091 |   |
| Money                market demand deposits                    |   |                | 2,932       |     |   | 2,631 |   |
| Total                demand, transaction and passbook deposits |   |                | 40,614      |     |   | 43,539 |   |
| Certificates                of deposit:                        |   |                |        |     |   |   |   |
| Original                maturities of:                         |   |                |        |     |   |   |   |
| Less                than 12 months                             |   |                | 5,233       |     |   | 5,355 |   |
| 12                months to 36 months                          |   |                | 79,456      |     |   | 78,114 |   |
| More                than 36 months                             |   |                | 12,331      |     |   | 12,885 |   |
| Total                certificates of deposit                   |   |                | 97,020      |     |   | 96,354 |   |
| Total                deposits                                  |   | **$**               | **137,634** |     | **$**  | **139,893** |   |

----

**KENTUCKY        FIRST FEDERAL BANCORP**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE        F - DEPOSITS**

|                                 |   | **2008**            |       |
|--------------------------------------|--------|---------------------|------------|
|                                 |   | (In thousands) |       |
|                                 |   |                |       |
| 2009                                 |   | $                   | 67,439     |   |
| 2010                                 |   |                | 17,123     |   |
| 2011                                 |   |                | 9,684      |   |
| 2012                                 |   |                | 1,177      |   |
| 2013                  and thereafter |   |                | 1,597      |   |
|                                 |   |                |       |   |
|                                 |   | **$**               | **97,020** |   |

**NOTE        G - ADVANCES FROM THE FEDERAL HOME LOAN BANK**

|                                                                                                                |   | **Maturing**                                                                                                                                                                                                                                                                                             |   |                |   |
|---------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|
|                                                                                                                |   | **year ending                                              ** |   |                |   |
| **Interest                  rate**                                                                                  |   | **June 30,   **                                                                                                                                                                                                                                                                      |   | **2008**            |   |
|                                                                                                                |   |                                                                                                                                                                                                                                                                                                     |   | (In thousands) |   |
|                                                                                                                |   |                                                                                                                                                                                                                                                                                                     |   |                |   |
| 2.38%                  - 7.35%                                                                                      |   | 2009                                                                                                                                                                                                                                                                                                     |   | $                   | 10,155 |   |
| 5.96%                  - 6.86%                                                                                      |   | 2010                                                                                                                                                                                                                                                                                                     |   |                | 21,135 |   |
| 5.80%                  - 6.22%                                                                                      |   | 2011                                                                                                                                                                                                                                                                                                     |   |                | 8,133  |   |
| 6.90%                                                                                                               |   | 2012                                                                                                                                                                                                                                                                                                     |   |                | 116    |   |
| 4.25%                                                                                                               |   | 2013                                                                                                                                                                                                                                                                                                     |   |                | 5,078  |   |
| 6.15%                  - 6.95%                                                                                      |   | 2014                                                                                                                                                                                                                                                                                                     |   |                | 78     |   |
| 6.30%                  - 6.35%                                                                                      |   | 2015                                                                                                                                                                                                                                                                                                     |   |                | 80     |   |
| 6.20%                                                                                                               |   | 2016                                                                                                                                                                                                                                                                                                     |   |                | 62     |   |
| 6.20%                                                                                                               |   | 2017                                                                                                                                                                                                                                                                                                     |   |                | 2      |   |
| 3.95%                                                                                                               |   | 2018                                                                                                                                                                                                                                                                                                     |   |                | 2,000  |   |
|                                                                                                                |   |                                                                                                                                                                                                                                                                                                     |   |                |   | 46,839 |   |
| Premium                  assigned to borrowings inFrankfort                  First acquisition, net of amortization |   |                                                                                                                                                                                                                                                                                                     | 962    |                |
|                                                                                                                |   |                                                                                                                                                                                                                                                                                                     |   |                |   |   |   |
|                                                                                                                |   |                                                                                                                                                                                                                                                                                                     |   |                | **$**  | **47,801** |   |
|                                                                                                                |   |                                                                                                                                                                                                                                                                                                     |   |                |   |   |   |
| Weighted-average                  interest rate                                                                     |   |                                                                                                                                                                                                                                                                                                     |   |                |   | **5.21** | **%** |

----

**KENTUCKY        FIRST FEDERAL BANCORP **

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE        H - FEDERAL INCOME TAXES**

|                                                           |   | **2008**            |    | **2007** |   |
|----------------------------------------------------------------|--------|---------------------|---------|----------|--------|
|                                                           |   | (In thousands) |    |
|                                                           |   |                |    |     |   |
| Federal                  income taxes at the statutory rate    |   | $                   | 466     |     | $      | 443 |   |
| Increase                  (decrease) resulting primarily from: |   |                |    |     |   |   |   |
| Cash                  surrender value of life insurance        |   |                | (27     | )        |   | (27 | ) |
| Other                                                          |   |                | -       |     |   | 1 |   |
|                                                           |   |                |    |     |   |   |   |
|                                                           |   | **$**               | **439** |     | **$**  | **417** |   |

|                                                                                                                                    |   | **2008**            |       | **2007** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|------------|----------|--------|
|                                                                                                                                    |   | (In thousands) |       |
| Taxes                  (payable) refundable on temporary differences at estimated corporate                  tax                  rate: |   |                |       |     |   |   |   |
| Deferred                  tax assets:                                                                                                   |   |                |       |     |   |   |   |
| General                  loan loss allowance                                                                                            |   | $                   | 227        |     | $      | 245 |   |
| Deferred                  loan origination fees                                                                                         |   |                | 20         |     |   | — |   |
| Deferred                  compensation and benefits                                                                                     |   |                | 220        |     |   | 210 |   |
| Charitable                  contributions                                                                                               |   |                | 10         |     |   | 13 |   |
| Purchase                  accounting adjustments                                                                                        |   |                | —    |     |   | — |   |
| Unrealized                  losses on securities available for sale                                                                     |   |                | —    |     |   | 148 |   |
| Total                  deferred tax assets                                                                                              |   |                | 477        |     |   | 616 |   |
|                                                                                                                                    |   |                |       |     |   |   |   |
| Deferred                  tax liabilities:                                                                                              |   |                |       |     |   |   |   |
| Federal                  Home Loan Bank stock dividends                                                                                 |   |                | (1,246     | )        |   | (1,196 | ) |
| Deferred                  loan origination costs                                                                                        |   |                | —    |     |   | (6 | ) |
| Purchase                  accounting adjustments                                                                                        |   |                | (267       | )        |   | (155 | ) |
| Unrealized                  gains on securities available for sale                                                                      |   |                | (9         | )        |   | — |   |
| Book/tax                  depreciation                                                                                                  |   |                | (189       | )        |   | (189 | ) |
| Total                  deferred tax liabilities                                                                                         |   |                | (1,711     | )        |   | (1,546 | ) |
|                                                                                                                                    |   |                |       |     |   |   |   |
| Net                  deferred tax liability                                                                                             |   | **$**               | **(1,234** | **)**    | **$**  | **(930** | **)** |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      H - FEDERAL INCOME TAXES**

** **
** **

**NOTE      I - LOAN COMMITMENTS**

**NOTE      J - REGULATORY CAPITAL**

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      J - REGULATORY CAPITAL **

|                                      |   | **As of June 30, 2008** |   |
|-------------------------------------------|--------|---------------------------------------------|--------|
|                                      |   |                                        |   |   |   | **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    |   | $                                           | 21,483 |   |   | 19.2 | %   | $  | 31,679 |   |   | 31.5 | %   | $  | 35,598 |   |   | 35.0 | % |
| First                Federal of Frankfort |   | $                                           | 17,203 |   |   | 13.8 | % | $  | 31,874 |   |   | 31.5 | % | $  | 36,248 |   |   | 35.0 | % |
|                                      |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Core                capital**           |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| First                Federal of Hazard    |   | $                                           | 21,483 |   |   | 19.2 | % | $  | 34,478 |   |   | 34.0 | % | $  | 36,717 |   |   | 36.0 | % |
| First                Federal of Frankfort |   | $                                           | 17,203 |   |   | 13.8 | % | $  | 34,998 |   |   | 34.0 | % | $  | 37,498 |   |   | 36.0 | % |
|                                      |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Risk-based                capital**     |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| First                Federal of Hazard    |   | $                                           | 22,016 |   |   | 46.9 | % | $  | 33,754 |   |   | 38.0 | % | $  | 34,692 |   |   | 310.0 | % |
| First                Federal of Frankfort |   | $                                           | 17,336 |   |   | 25.2 | % | $  | 35,496 |   |   | 38.0 | % | $  | 36,870 |   |   | 310.0 | % |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      J - REGULATORY CAPITAL **

|                                      |   | **As of June 30, 2007** |   |
|-------------------------------------------|--------|---------------------------------------------|--------|
|                                      |   |                                        |   |   |   | **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    |   | $                                           | 25,056 |   |   | 20.1 | %   | $  | 31,868 |   |   | 31.5 | %   | $  | 36,227 |   |   | 35.0 | % |
| First                Federal of Frankfort |   | $                                           | 17,092 |   |   | 13.2 | % | $  | 31,938 |   |   | 31.5 | % | $  | 36,461 |   |   | 35.0 | % |
|                                      |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Core                capital**           |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| First                Federal of Hazard    |   | $                                           | 25,056 |   |   | 20.1 | % | $  | 34,982 |   |   | 34.0 | % | $  | 37,472 |   |   | 36.0 | % |
| First                Federal of Frankfort |   | $                                           | 17,092 |   |   | 13.2 | % | $  | 35,168 |   |   | 34.0 | % | $  | 37,753 |   |   | 36.0 | % |
|                                      |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Risk-based                capital**     |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| First                Federal of Hazard    |   | $                                           | 25,565 |   |   | 62.8 | % | $  | 33,259 |   |   | 38.0 | % | $  | 34,074 |   |   | 310.0 | % |
| First                Federal of Frankfort |   | $                                           | 17,225 |   |   | 24.6 | % | $  | 35,606 |   |   | 38.0 | % | $  | 37,008 |   |   | 310.0 | % |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      K - CONDENSED FINANCIAL STATEMENTS OF KENTUCKY FIRST FEDERAL      BANCORP**

**KENTUCKY      FIRST FEDERAL BANCORP**

**STATEMENTS      OF FINANCIAL CONDITION**

|                                                                   |   | **2008** |       | **2007** |   |
|------------------------------------------------------------------------|--------|----------|------------|----------|--------|
|                                                                   |   |     |       |     |   |
| **ASSETS**                                                             |   |     |       |     |   |   |   |
|                                                                   |   |     |       |     |   |   |   |
| Interest-bearing                deposits in First Federal of Hazard    |   | $        | 2          |     | $      | 1,006 |   |
| Interest-bearing                deposits in First Federal of Frankfort |   |     | 2,766      |     |   | 62 |   |
| Other                interest-bearing deposits                         |   |     | 76         |     |   | 71 |   |
| Investment                in First Federal of Hazard                   |   |     | 24,334     |     |   | 27,794 |   |
| Investment                in Frankfort First                           |   |     | 32,257     |     |   | 32,202 |   |
| Prepaid                expenses and other assets                       |   |     | 1,038      |     |   | 698 |   |
|                                                                   |   |     |       |     |   |   |   |
| Total                assets                                            |   | **$**    | **60,473** |     | **$**  | **61,833** |   |
|                                                                   |   |     |       |     |   |   |   |
| **LIABILITIES                AND SHAREHOLDERS’ EQUITY**          |   |     |       |     |   |   |   |
|                                                                   |   |     |       |     |   |   |   |
| Accounts                payable and other liabilities                  |   | $        | 131        |     | $      | 138 |   |
| Loan                from Frankfort First                               |   |     | 549        |     |   | 250 |   |
|                                                                   |   |     |       |     |   |   |   |
| Total                liabilities                                       |   |     | 680        |     |   | 388 |   |
|                                                                   |   |     |       |     |   |   |   |
| Shareholders’                equity                              |   |     |       |     |   |   |   |
| Common                stock                                            |   |     | 86         |     |   | 86 |   |
| Additional                paid-in capital                              |   |     | 35,834     |     |   | 35,459 |   |
| Retained                earnings                                       |   |     | 32,291     |     |   | 32,291 |   |
| Shares                acquired by stock benefit plans                  |   |     | (2,735     | )        |   | (3,013 | ) |
| Shares                acquired for treasury – at cost       |   |     | (5,700     | )        |   | (3,091 | ) |
| Accumulated                other comprehensive income (loss)           |   |     | 17         |     |   | (287 | ) |
| Total                shareholders’ equity                        |   |     | 59,793     |     |   | 61,445 |   |
|                                                                   |   |     |       |     |   |   |   |
| Total                liabilities and shareholders’ equity        |   | **$**    | **60,473** |     | **$**  | **61,833** |   |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      K - CONDENSED FINANCIAL STATEMENTS OF KENTUCKY FIRST FEDERAL BANCORP**

**KENTUCKY      FIRST FEDERAL BANCORP**

**STATEMENTS      OF EARNINGS**

|                                                                                                   |   | **2008** |    | **2007** |   |
|--------------------------------------------------------------------------------------------------------|--------|----------|---------|----------|--------|
| Revenue                                                                                                |   |     |    |     |   |   |   |
| Interest                income                                                                         |   | $        | 187     |     | $      | 182 |   |
| Dividends                from First Federal of Hazard                                                  |   |     | 4,500   |     |   | 1,975 |   |
| Equity                in excess distributed earnings of First Federal of Hazard                        |   |     | (3,932  | )        |   | (1,488 | ) |
| Dividends                from Frankfort First                                                          |   |     | 630     |     |   | 1,037 |   |
| Equity                in undistributed (excess distributed) earnings of Frankfort                First |   |     | 53      |     |   | (321 | ) |
| Total                revenue                                                                           |   |     | 1,438   |     |   | 1,385 |   |
|                                                                                                   |   |     |    |     |   |   |   |
| General                and administrative expenses                                                     |   |     | 669     |     |   | 662 |   |
|                                                                                                   |   |     |    |     |   |   |   |
| Earnings                before income tax credits                                                      |   |     | 769     |     |   | 723 |   |
|                                                                                                   |   |     |    |     |   |   |   |
| Federal                income tax credits                                                              |   |     | (163    | )        |   | (162 | ) |
|                                                                                                   |   |     |    |     |   |   |   |
| NET                EARNINGS                                                                            |   | **$**    | **932** |     | **$**  | **885** |   |

**KENTUCKY      FIRST FEDERAL BANCORP**

**STATEMENTS      OF CASH FLOWS**

|                                                                                                              |   | **2008** |   | **2007** |   |
|-------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------|--------|
| Cash                flows from operating activities:                                                              |   |     |   |     |   |   |   |
| Net                earnings for the year                                                                          |   | $        | 932    |     | $      | 885 |   |
| Adjustments                to reconcile net earnings to net cash provided by operating                activities: |   |     |   |     |   |   |   |
| Excess                distributions from consolidated subsidiaries                                                |   |     | 3,879  |     |   | 1,809 |   |
| Noncash                compensation expense                                                                       |   |     | 483    |     |   | 387 |   |
| Increase                (decrease) in cash due to changes in:                                                     |   |     |   |     |   |   |   |
| Prepaid                expenses and other assets                                                                  |   |     | (90    | )        |   | 6 |   |
| Other                liabilities                                                                                  |   |     | (7     | )        |   | 95 |   |
| Net                cash provided by operating activities                                                          |   |     | 5,197  |     |   | 3,182 |   |

----

**KENTUCKY      FIRST FEDERAL BANCORP**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**

**NOTE      K - CONDENSED FINANCIAL STATEMENTS OF KENTUCKY FIRST FEDERAL BANCORP**

**KENTUCKY      FIRST FEDERAL BANCORP**

**STATEMENTS      OF CASH FLOWS (continued)**

|                                                                  |   | **2008** |      | **2007** |   |
|-----------------------------------------------------------------------|--------|----------|-----------|----------|--------|
| Cash                flows provided by (used in) financing activities: |   |     |      |     |   |   |   |
| Dividends                paid on common stock                         |   |     | (1,182    | )        |   | (1,355 | ) |
| Purchase                of shares for benefit plans                   |   |     | -         |     |   | - |   |
| Repurchase                of treasury shares                          |   |     | (2,609    | )        |   | (2,737 | ) |
| Advances                from Frankfort First Bancorp, Inc.            |   |     | 299       |     |   | 250 |   |
| Net                cash provided by (used in) financing activities    |   |     | (3,492    | )        |   | (3,842 | ) |
|                                                                  |   |     |      |     |   |   |   |
| Net                increase (decrease) in cash and cash equivalents   |   |     | 1,705     |     |   | (660 | ) |
|                                                                  |   |     |      |     |   |   |   |
| Cash                and cash equivalents at beginning of year         |   |     | 1,139     |     |   | 1,799 |   |
|                                                                  |   |     |      |     |   |   |   |
| Cash                and cash equivalents at end of year               |   | **$**    | **2,844** |     | **$**  | **1,139** |   |

**NOTE      L – STOCK REPURCHASE PROGRAM**

----

*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                Bersaglia, *Assistant*                            |   | Wick                Asbury, *Lending*                                                                                          |
| *Vice                President/Lending/Collection*                       |   | Brenda                Baldwin, *Accounting*                                                                                    |
| Phyllis                Campbell*,                Customer Service*       |   | Stan                Betsworth, *Vice                President/Lending*                                                         |
| Sandy                Craft, *Customer                Service*            |   | Phyllis                Bowman, *Loan                Servicing*                                                                 |
| Lou                Ella R. Farler, *Assistant                Vice*       |   | Lisa                Brinley, *Branch                Manager*                                                                   |
| *President/Data                Processing*                               |   | Andrea                Cline, *Customer                Service*                                                                 |
| Deloris                S. Justice*,                Accounting Assistant* |   | Carolyn                Eades, *Customer                Service*                                                                |
| Velma                Kelly*,                Customer Service*            |   | Diana                Eads, *Customer                Service*                                                                   |
| Kaye                Craft, *Treasurer*                                   |   | Stacey                Greenawalt, *Lending*                                                                                    |
| Brenda                Lovelace*,                Customer Service*        |   | Barry                Holder, *Customer                Service*                                                                 |
| Fred                Skaggs, *Vice                President/Lending*      |   | Clay                Hulette, *President/Treasurer*                                                                             |
| Peggy                Hopper Steele*,                Receptionist/Loan*   |   | Don                D. Jennings, *Chief                Executive Officer*                                                       |
| *Processing*                                                             |   | Teresa                A. Kuhl, *Executive                Vice President/*                                                      |
| Molly                Ann E. Toler*,                Asst. Vice President* |   | *Operations/Human                Resources*                                                                                    |
| *Teller                Operations*                                  |   | Janet                Lewis, *Branch                Manager*                                                                    |
| Tony                Whitaker*,                President*                 |   | Patty                Luttrell, *Loan                Processing/Compliance*                                                     |
|                                                                     |   | Carla                McMillen, *Customer                Service*                                                               |
|                                                                     |   | Kim                Moore, *Head                Teller*                                                                         |
|                                                                     |   | Carolyn                Mulcahy, *Accounting*                                                                                   |
|                                                                     |   | Jeannie                Murphy, *Customer                Service*                                                               |
|                                                                     |   | David                Semones, *Loan                Processing*Martha                Sowders, *Customer                Service* |
|                                                                     |   | Sandy                Stover, *Receptionist*                                                                                    |
|                                                                     |   | Melissa                Thompson, *Administrative                Assistant*                                                     |
|                                                                     |   | Yvonne                Thornberry, *Loan                Processing/**Servicing*                                                 |
|                                                                     |   | Nancy                Watts*,                Customer Service/Insurance**Processing*                                            |

----

| **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**Assistant                General Counsel to the**Kentucky                River Properties, LLC*Walt                Ecton*,                Attorney*William                D. Gorman, *Mayor                of**the                City of Hazard* |   | Stephen                G. BarkerWalter                G. Ecton, Jr.William                D. GormanTony                Whitaker |   | Charles                A. Cotton, IIIC.                Michael DavenportDanny                A. GarlandDavid                R. HarrodDon                D. JenningsWilliam                C. Jennings, *Chairman* |
| David                R. Harrod *C.P.A.                and**principal                of Harrod and**Associates,                P.S.C.*                                                                                                                                                                             |   |                                                                                                                            |   | William                M. JohnsonFrank                McGrath                                                                                                                                                     |
| Don                D. Jennings, *President,**Kentucky                First Federal Bancorp*                                                                                                                                                                                                                       |   |                                                                                                                            |   | Herman                D. Regan, Jr.                                                                                                                                                                          |
| Herman                D. Regan, Jr., *Retired**President                of Kenvirons, Inc.*                                                                                                                                                                                                                       |   |                                                                                                                            |   |                                                                                                                                                                                                              |
| Tony                Whitaker, *Chairman                of*                                                                                                                                                                                                                                                        |   |                                                                                                                            |   |                                                                                                                                                                                                              |
| *Kentucky                First Federal Bancorp*                                                                                                                                                                                                                                                                   |   |                                                                                                                            |   |                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                              |   |                                                                                                                            |   |                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                              |   | **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**                                                                                                                                                                                                                                                                               |   |                                                                                                                            |   | **Shareholder                Inquiries and**                                                                                                                                                                      |
| Tony                Whitaker                                                                                                                                                                                                                                                                                      |   | **Special                Counsel**                                                                                              |   | **Availability                of 10-K Report:**A                                                                                                                                                                  |
| (606)                436-3860firstfederal@windstream.net                                                                                                                                                                                                                                                          |   | Kilpatrick                Stockton LLP                                                                                          |   | COPY                OF THE COMPANY’SANNUAL                REPORT ON FORM                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                              |   | 607                14th                Street, NW                                                                               |   | 10-K                FOR THE YEAR ENDED                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                              |   | Washington,                DC 20005                                                                                             |   | JUNE                30, 2008, AS FILED                                                                                                                                                                            |
| **Investor                Relations**                                                                                                                                                                                                                                                                             |   |                                                                                                                            |   | WITH                THE SECURITIES AND                                                                                                                                                                            |
| Don                Jennings                                                                                                                                                                                                                                                                                       |   | **Transfer                Agent and Registrar**                                                                                 |   | EXCHANGE                COMMISSION                                                                                                                                                                                |
| Djenni7474@aol.com                                                                                                                                                                                                                                                                                                |   | Illinois                Stock Transfer Company                                                                                  |   | WILL                BE FURNISHED                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                              |   | 209                W Jackson Blvd, Ste 903                                                                                      |   | WITHOUT                CHARGE TO                                                                                                                                                                                  |
| Clay                Hulette                                                                                                                                                                                                                                                                                       |   | Chicago,                IL 60606-6905                                                                                           |   | SHAREHOLDERS                AS OF THE                                                                                                                                                                             |
| rchulette@hotmail.com                                                                                                                                                                                                                                                                                             |   | (312)                427-2953                                                                                                   |   | RECORD                DATE FOR THE                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                              |   |                                                                                                                            |   | NOVEMBER                11, 2008                                                                                                                                                                                  |
| (502)                223-1638                                                                                                                                                                                                                                                                                     |   | **Annual                Meeting**                                                                                               |   | ANNUAL                MEETING UPON                                                                                                                                                                                |
| P.O.                Box 535                                                                                                                                                                                                                                                                                       |   | The                Annual Meeting of Share-                                                                                     |   | WRITTEN                REQUEST TO:                                                                                                                                                                                |
| Frankfort,                KY 40602                                                                                                                                                                                                                                                                                |   | holders                will be held on                                                                                          |   |                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                              |   | November                11, 2008 at                                                                                             |   | INVESTOR                RELATIONS                                                                                                                                                                                 |
| **Independent                Auditors**                                                                                                                                                                                                                                                                           |   | 3:30                p.m., Eastern Time, at                                                                                      |   | KENTUCKY                FIRST                                                                                                                                                                                     |
| BKD,                LLP                                                                                                                                                                                                                                                                                           |   | the                First Federal Center on the                                                                                  |   | FEDERAL                BANCORP                                                                                                                                                                                    |
| 312                Walnut Street, Suite 3000                                                                                                                                                                                                                                                                      |   | campus                of Hazard Community                                                                                       |   | P.O.                BOX 535                                                                                                                                                                                       |
| Cincinnati,                OH 45202                                                                                                                                                                                                                                                                               |   | and                Technical College, One                                                                                       |   | FRANKFORT,                KY 40602                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                              |   | Community                College Blvd,                                                                                          |   |                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                              |   | Hazard,                KY                                                                                                       |   |                                                                                                                                                                                                              |

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