---

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-Q

|(Mark   One)                                                    
|----------------------------------------------------------------
|                                                                
|x                                                               
|                                                                
|For the quarterly period ended   March 31, 2006                 
|                                                                
|OR                                                              
|                                                                
|o                                                               
|                                                                
|For the transition period from   ____________ to _______________
|                                                                
|Commission File Number: 0-51176                                 

|KENTUCKY   FIRST FEDERAL BANCORP                                                    
|------------------------------------------------------------------------------------
|                                                                                    
|(Exact   name of small business issuer as specified in its charter)                 
|                                                                                    
|United States of America                                                            
|                                                                                    
|(State or   other jurisdiction ofincorporation or organization)                     
|                                                                                    
|479 Main Street, Hazard,   Kentucky  41702                                          
|                                                                                    
|(Address   of principal executive offices)(Zip Code)                                
|                                                                                    
|(606) 436-3860                                                                      
|                                                                                    
|(Registrants   telephone number, including area code)                              
|                                                                                    
|                                                                                    
|                                                                                    
|(Former   name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months or such shorter period that the issuer was required to file such reports and (2) has been subject to such filing requirements for the past ninety days:    Yes
xNo
o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of accelerated filer and larger accelerated filer in Rule 12b-2 of the Exchange Act.  (Check one):

|Large accelerated filer
o | Accelerated filer
o | Non-accelerated filer
x
|------------------------- | ------------------- | -----------------------

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)    Yes
oNo
x

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date:  At May 9, 2006, the latest practicable date, the Corporation had 8,571,990 shares of $.01 par value common stock outstanding.

---



INDEX

|           |                   |                                                                                         | Page
|---------- | ----------------- | --------------------------------------------------------------------------------------- | ----
|           |                   |                                                                                         |     
|PART I -   | ITEM 1            | FINANCIAL INFORMATION                                                                   |     
|           |                   |                                                                                         |     
|           |                   | Statements of Financial Condition                                                       | 3   
|           |                   |                                                                                         |     
|           |                   | Statements of Earnings                                                                  | 4   
|           |                   |                                                                                         |     
|           |                   | Statements of Comprehensive Income                                                      | 5   
|           |                   |                                                                                         |     
|           |                   | Statements of Cash Flows                                                                | 6   
|           |                   |                                                                                         |     
|           |                   | Notes to Financial Statements                                                           | 8   
|           |                   |                                                                                         |     
|           | ITEM 2            | Managements Discussion and Analysis of Financial   Condition and Results of Operations | 11  
|           |                   |                                                                                         |     
|           | ITEM 3            | Quantitative and Qualitative   Disclosures About Market Risk                            | 15  
|           |                   |                                                                                         |     
|           | ITEM 4            | Controls and Procedures                                                                 | 15  
|           |                   |                                                                                        
|PART II -  | OTHER INFORMATION | 16                                                                                     
|           |                  
|SIGNATURES | 17               

2



Kentucky First Federal Bancorp

STATEMENTS OF FINANCIAL CONDITION

(In thousands, except per share data)

|                                                                                                                                                                     |  | March 31,   2006 |         | June 30,   2005 |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------- | --------------- | -
|                                                                                                                                                                     |  |                  |         |                 |  
|                                                                                                                                                                     |  | (Unaudited)      |         |                 |  
|ASSETS                                                                                                                                                               |  |                  |         |                 |  
|Cash and due from banks                                                                                                                                              |  | $                | 1,230   |                 | $
|Interest-bearing deposits in other financial   institutions                                                                                                          |  |                  | 1,075   |                 |  
|                                                                                                                                                                     |  |                  |         |                 |  
|Cash and cash   equivalents                                                                                                                                          |  |                  | 2,305   |                 |  
|Investment securities available for sale - at market                                                                                                                 |  |                  | 12,403  |                 |  
|Investment securities held to maturity, at amortized   cost  approximate fair value of $45,344 and $49,944 at March 31, 2006 and   June 30, 2005, respectively      |  |                  | 46,944  |                 |  
|Mortgage-backed securities available for sale  at   market                                                                                                          |  |                  | 1,281   |                 |  
|Mortgage-backed securities held to maturity, at   amortized cost  approximate fair value of $18,126 and $21,168 at March 31,   2006 and June 30, 2005, respectively |  |                  | 18,924  |                 |  
|Loans receivable - net                                                                                                                                               |  |                  | 153,298 |                 |  
|Real estate acquired through foreclosure                                                                                                                             |  |                  | 51      |                 |  
|Office premises and equipment - at depreciated cost                                                                                                                  |  |                  | 2,896   |                 |  
|Federal Home Loan Bank stock - at cost                                                                                                                               |  |                  | 5,190   |                 |  
|Accrued interest receivable                                                                                                                                          |  |                  | 1,041   |                 |  
|Bank-owned life insurance                                                                                                                                            |  |                  | 2,155   |                 |  
|Goodwill and other intangible assets                                                                                                                                 |  |                  | 15,282  |                 |  
|Prepaid expenses and other assets                                                                                                                                    |  |                  | 280     |                 |  
|Prepaid federal income taxes                                                                                                                                         |  |                  | 184     |                 |  
|                                                                                                                                                                     |  |                  |         |                 |  
|Total assets                                                                                                                                                         |  | $                | 262,234 |                 | $
|                                                                                                                                                                     |  |                  |         |                 |  
|LIABILITIES   AND SHAREHOLDERS EQUITY                                                                                                                               |  |                  |         |                 |  
|Deposits                                                                                                                                                             |  | $                | 143,905 |                 | $
|Advances from the Federal Home Loan Bank                                                                                                                             |  |                  | 51,935  |                 |  
|Advances by borrowers for taxes and insurance                                                                                                                        |  |                  | 205     |                 |  
|Accrued interest payable                                                                                                                                             |  |                  | 240     |                 |  
|Deferred federal income taxes                                                                                                                                        |  |                  | 482     |                 |  
|Other liabilities                                                                                                                                                    |  |                  | 903     |                 |  
|                                                                                                                                                                     |  |                  |         |                 |  
|Total liabilities                                                                                                                                                    |  |                  | 197,670 |                 |  
|Commitments                                                                                                                                                          |  |                  |        |                 |  
|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      |                 |  
|Additional paid-in   capital                                                                                                                                         |  |                  | 36,769  |                 |  
|Retained earnings,   restricted                                                                                                                                      |  |                  | 32,822  |                 |  
|Less shares acquired by   Employee Stock Ownership Plan (ESOP)                                                                                                       |  |                  | (3,192  | )               |  
|Less shares acquired   for Equity Incentive Plan                                                                                                                     |  |                  | (1,443  | )               |  
|Less 6,446 treasury   shares at March 31, 2006                                                                                                                       |  |                  | (71     | )               |  
|Accumulated   comprehensive loss, unrealized losses on securities designated as available   for sale, net of related tax effects                                     |  |                  | (407    | )               |  
|                                                                                                                                                                     |  |                  |         |                 |  
|Total shareholders   equity                                                                                                                                         |  |                  | 64,564  |                 |  
|                                                                                                                                                                     |  |                  |         |                 |  
|Total liabilities and   shareholders equity                                                                                                                         |  | $                | 262,234 |                 | $
|                                                                                                                                                                     |  |                  |         |                 |  

3



Kentucky First Federal Bancorp

STATEMENTS OF EARNINGS

(Unaudited)

(In thousands, except per share data)

|                                                           |  | For the   nine months   ended March 31, |       | For the   three months   ended March 31, |  
|---------------------------------------------------------- |  | --------------------------------------- | ----- | ---------------------------------------- | -
|                                                           |  |                                         |       |                                          |  
|                                                           |  | 2006                                    |       | 2005                                     |  
|                                                           |  |                                         |       |                                          |  
|Interest income                                            |  |                                         |       |                                          |  
|Loans                                                      |  | $                                       | 6,882 |                                          | $
|Mortgage-backed   securities                               |  |                                         | 677   |                                          |  
|Investment securities                                      |  |                                         | 1,574 |                                          |  
|Interest-bearing   deposits and other                      |  |                                         | 438   |                                          |  
|                                                           |  |                                         |       |                                          |  
|Total interest income                                      |  |                                         | 9,571 |                                          |  
|Interest expense                                           |  |                                         |       |                                          |  
|Deposits                                                   |  |                                         | 2,985 |                                          |  
|Borrowings                                                 |  |                                         | 1,620 |                                          |  
|                                                           |  |                                         |       |                                          |  
|Total interest expense                                     |  |                                         | 4,605 |                                          |  
|                                                           |  |                                         |       |                                          |  
|Net interest income                                        |  |                                         | 4,966 |                                          |  
|Provision for losses on loans                              |  |                                         | 32    |                                          |  
|                                                           |  |                                         |       |                                          |  
|Net interest income   after provision for losses on loans  |  |                                         | 4,934 |                                          |  
|Other operating income                                     |  |                                         |       |                                          |  
|Earnings on bank-owned   life insurance                    |  |                                         | 60    |                                          |  
|Gain on sale of loans                                      |  |                                         | 23    |                                          |  
|Gain on sale of real   estate acquired through foreclosure |  |                                         | 5     |                                          |  
|Other operating                                            |  |                                         | 98    |                                          |  
|                                                           |  |                                         |       |                                          |  
|Total other operating   income                             |  |                                         | 186   |                                          |  
|General, administrative and other expense                  |  |                                         |       |                                          |  
|Employee compensation   and benefits                       |  |                                         | 2,215 |                                          |  
|Occupancy and equipment                                    |  |                                         | 281   |                                          |  
|Franchise taxes                                            |  |                                         | 141   |                                          |  
|Data processing                                            |  |                                         | 104   |                                          |  
|Charitable   contributions                                 |  |                                         | 17    |                                          |  
|Other operating                                            |  |                                         | 528   |                                          |  
|                                                           |  |                                         |       |                                          |  
|Total general,   administrative and other expense          |  |                                         | 3,286 |                                          |  
|                                                           |  |                                         |       |                                          |  
|Earnings before income   taxes                             |  |                                         | 1,834 |                                          |  
|Federal income taxes                                       |  |                                         |       |                                          |  
|Current                                                    |  |                                         | 371   |                                          |  
|Deferred                                                   |  |                                         | 199   |                                          |  
|                                                           |  |                                         |       |                                          |  
|Total federal income   taxes                               |  |                                         | 570   |                                          |  
|                                                           |  |                                         |       |                                          |  
|NET EARNINGS                                               |  | $                                       | 1,264 |                                          | $
|                                                           |  |                                         |       |                                          |  
|EARNINGS PER SHARE                                         |  | $                                       | 0.15  |                                          |  
|                                                           |  |                                         |       |                                          |  
|DIVIDENDS PER SHARE                                        |  | $                                       | 0.30  |                                          |  
|                                                           |  |                                         |       |                                          |  

4



Kentucky First Federal Bancorp

STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

|                                                                                                                                                           |  | For the   nine months   ended March 31, |       | For the   three months   ended March 31, |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------- | ----- | ---------------------------------------- | -
|                                                                                                                                                           |  |                                         |       |                                          |  
|                                                                                                                                                           |  | 2006                                    |       | 2005                                     |  
|                                                                                                                                                           |  |                                         |       |                                          |  
|Net earnings                                                                                                                                               |  | $                                       | 1,264 |                                          | $
|Other comprehensive income (loss), net of taxes   (benefits):                                                                                              |  |                                         |       |                                          |  
|Unrealized holding   gains (losses) on securities during the period, net of taxes (benefits) of   $(101), $136, $(14)and $92 during the respective periods |  |                                         | (197  | )                                        |  
|                                                                                                                                                           |  |                                         |       |                                          |  
|Comprehensive income                                                                                                                                       |  | $                                       | 1,067 |                                          | $
|                                                                                                                                                           |  |                                         |       |                                          |  
|Accumulated comprehensive income (loss)                                                                                                                    |  | $                                       | (407  | )                                        | $
|                                                                                                                                                           |  |                                         |       |                                          |  

5



Kentucky First Federal Bancorp

STATEMENTS OF CASH FLOWS

For the nine months ended March 31, (Unaudited) (In thousands)

|                                                                                                      |  | 2006 |         | 2005 |  
|----------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | -
|                                                                                                      |  |      |         |      |  
|Cash flows from operating activities:                                                                 |  |      |         |      |  
|Net earnings for the   period                                                                         |  | $    | 1,264   |      | $
|Adjustments to   reconcile net earnings to net cash provided by operating activities:                 |  |      |         |      |  
|Amortization of   discounts and premiums on loans, investments and mortgage-backed securities    net |  |      | (1      | )    |  
|Amortization of   deferred loan origination fees                                                      |  |      | 2       |      |  
|Amortization of   purchase accounting adjustments-net                                                 |  |      | (296    | )    |  
|Depreciation and   amortization                                                                       |  |      | 131     |      |  
|Amortization of stock   benefit plans                                                                 |  |      | 284     |      |  
|Gain on sale of loans                                                                                 |  |      | (24     | )    |  
|Provision for losses on   loans                                                                       |  |      | 32      |      |  
|Federal Home Loan Bank   stock dividends                                                              |  |      | (209    | )    |  
|Bank-owned life   insurance earnings                                                                  |  |      | (60     | )    |  
|Mortgage loans   originated for sale                                                                  |  |      | (2,175  | )    |  
|Proceeds from sale of   mortgage loans                                                                |  |      | 2,176   |      |  
|Increase (decrease) in   cash, exclusive of acquisition, due to changes in:                           |  |      |         |      |  
|Accrued interest   receivable                                                                         |  |      | (125    | )    |  
|Prepaid expenses and   other assets                                                                   |  |      | (69     | )    |  
|Accrued interest   payable                                                                            |  |      | 63      |      |  
|Other liabilities                                                                                     |  |      | (244    | )    |  
|Federal income taxes                                                                                  |  |      |         |      |  
|Current                                                                                               |  |      | 187     |      |  
|Deferred                                                                                              |  |      | 205     |      |  
|                                                                                                      |  |      |         |      |  
|Net cash provided by   operating activities                                                           |  |      | 1,141   |      |  
|Cash flows from investing activities:                                                                 |  |      |         |      |  
|Purchase of investment   securities                                                                   |  |      | (100    | )    |  
|Maturities of   investment securities                                                                 |  |      | 4,100   |      |  
|Proceeds from sale of   real estate acquired through foreclosure                                      |  |      | 52      |      |  
|Principal repayments on   mortgage-backed securities                                                  |  |      | 2,981   |      |  
|Loan principal   repayments                                                                           |  |      | 22,987  |      |  
|Loan disbursements                                                                                    |  |      | (24,585 | )    |  
|Purchase of office   equipment                                                                        |  |      | (50     | )    |  
|                                                                                                      |  |      |         |      |  
|Net cash provided by   investing activities                                                           |  |      | 5,385   |      |  
|Cash flows from financing activities:                                                                 |  |      |         |      |  
|Net decrease in deposit   accounts                                                                    |  |      | (11,139 | )    |  
|Proceeds from Federal   Home Loan Bank advances                                                       |  |      | 2,500   |      |  
|Repayment of Federal   Home Loan Bank advances                                                        |  |      | (1,138  | )    |  
|Advances by borrowers   for taxes and insurance                                                       |  |      | (127    | )    |  
|Cash proceeds from   issuance of common stock  net                                                   |  |      |        |      |  
|Net cash paid in the   acquisition of Frankfort First Bancorp                                         |  |      |        |      |  
|Dividends paid on   common stock                                                                      |  |      | (1,161  | )    |  
|Purchase of common   stock for Equity Incentive Plan                                                  |  |      | (1,443  | )    |  
|Purchase of common   stock for treasury                                                               |  |      | (71     | )    |  
|                                                                                                      |  |      |         |      |  
|Net cash used in   financing activities                                                               |  |      | (12,579 | )    |  
|                                                                                                      |  |      |         |      |  
|Net decrease in cash and cash equivalents                                                             |  |      | (6,053  | )    |  
|Cash and cash equivalents at beginning of period                                                      |  |      | 8,358   |      |  
|                                                                                                      |  |      |         |      |  
|Cash and cash equivalents at end of period                                                            |  | $    | 2,305   |      | $
|                                                                                                      |  |      |         |      |  

6



Kentucky First Federal Bancorp

STATEMENTS OF CASH FLOWS (CONTINUED)

For the nine months ended March 31, (Unaudited) (In thousands)

|                                                                                               |  | 2006 |       | 2005 |  
|---------------------------------------------------------------------------------------------- |  | ---- | ----- | ---- | -
|                                                                                               |  |      |       |      |  
|Supplemental disclosure of cash flow information:                                              |  |      |       |      |  
|Cash paid during the   period for:                                                             |  |      |       |      |  
|Federal income taxes                                                                           |  | $    | 460   |      | $
|                                                                                               |  |      |       |      |  
|Interest on deposits   and borrowings                                                          |  | $    | 4,542 |      | $
|                                                                                               |  |      |       |      |  
|Supplemental disclosure of noncash investing   activities:                                     |  |      |       |      |  
|Unrealized losses on   securities designated as available for sale, net of related tax effects |  | $    | (197  | )    | $
|                                                                                               |  |      |       |      |  
|Transfers from loans to real estate acquired through   foreclosure                             |  | $    | 51    |      | $
|                                                                                               |  |      |       |      |  
|Net assets acquired and liabilities assumed in   Frankfort First business combination          |  |      |       |      |  
|Cash                                                                                           |  |      |       |      | $
|Investments                                                                                    |  |      |       |      |  
|Loans                                                                                          |  |      |       |      |  
|Other assets                                                                                   |  |      |       |      |  
|                                                                                               |  |      |       |      |  
|Total assets                                                                                   |  |      |       |      |  
|Liabilities assumed                                                                            |  |      |       |      |  
|Deposits                                                                                       |  |      |       |      |  
|Advances                                                                                       |  |      |       |      |  
|Other liabilities                                                                              |  |      |       |      |  
|                                                                                               |  |      |       |      |  
|Total liabilities                                                                              |  |      |       |      |  
|                                                                                               |  |      |       |      |  
|Net assets acquired                                                                            |  |      |       |      | $
|                                                                                               |  |      |       |      |  
|Goodwill and other intangible assets recorded in   business combination                        |  |      |       |      | $
|                                                                                               |  |      |       |      |  

7



Kentucky First Federal Bancorp

NOTES TO FINANCIAL STATEMENTS

For the nine- and three-month periods ended March 31, 2006 and 2005

On March 2, 2005, First Federal Savings and Loan Association of Hazard (First Federal of Hazard or the Association) completed a Plan of Reorganization (the Plan or the Reorganization) pursuant to which the Association reorganized into the mutual holding company form of ownership with the incorporation of a stock holding company, Kentucky First Federal Bancorp (the Company) as parent of the Association.  Coincident with the Reorganization, the Association converted to the stock form of ownership, followed by the issuance of all the Associations outstanding stock to Kentucky First Federal Bancorp.  Completion of the  Plan of Reorganization culminated with Kentucky First Federal Bancorp issuing 4,727,938 common shares, or 55% of its common shares, to First Federal Mutual Holding Company (First Federal MHC), a federally chartered mutual holding company, with 2,127,572 common
shares, or 24.8% of its shares offered for sale at $10.00 per share to the public and a newly formed Employee Stock Ownership Plan (ESOP).  The Company received net cash proceeds of $16.1 million from the public sale of its common shares.  The Companys remaining 1,740,554 common shares were issued as part of the $31.4 million cash and stock consideration paid for 100% of the common shares of Frankfort First Bancorp (Frankfort First) and its wholly-owned subsidiary, Frankfort First Federal Savings Bank (Frankfort First Federal).  The acquisition was accounted for using the purchase method of accounting and resulted in the recordation of goodwill and other intangible assets totaling $15.4 million.  In accordance with the purchase method of accounting, the Companys results of operations and cash flows for the nine- and three-month periods ended March 31, 2005 reflect Frankfort Firsts operating results only from the date of
acquisition.

1.  Basis of Presentation

The accompanying unaudited consolidated financial statements, which represent the consolidated financial condition and results of operations of the Company, were prepared in accordance with the instructions for Form 10-Q and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America.  However, in the opinion of management, all adjustments (consisting of only normal recurring accruals) which are necessary for a fair presentation of the consolidated financial statements have been included.  The results of operations for the nine- and three-month periods ended March 31, 2006, are not necessarily indicative of the results which may be expected for the entire fiscal year.

2.  Principles of Consolidation

The consolidated financial statements include the accounts of the Company, Frankfort First, and its wholly-owned banking subsidiaries, First Federal of Hazard and Frankfort First Federal (collectively hereinafter the Banks).  All intercompany transactions and balances have been eliminated in consolidation.

3.  Critical Accounting Policies

We consider accounting policies involving significant judgments and assumptions by management that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies.  We consider the allowance for loan losses to be a critical accounting policy.

The allowance for loan losses is the estimated amount considered necessary to cover probable incurred credit losses in the loan portfolio at the balance sheet date.  The allowance is established through the provision for losses on loans which is charged against income.  In determining the allowance for loan losses, management makes significant estimates and has identified this accounting policy as one of the most critical for the Company.

8



Kentucky First Federal Bancorp

NOTES TO FINANCIAL STATEMENTS

For the nine- and three-month periods ended March 31, 2006 and 2005

3.  Critical Accounting Policies (continued)

Management of the Banks perform a monthly evaluation of the allowance for loan losses.  Consideration is given to a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial strength of the borrower, results of internal loan reviews, volume and mix of the loan portfolio and other relevant factors.  This evaluation is inherently subjective as it requires material estimates that may be susceptible to change.  Management considers the economic climate in the lending areas to be among the factors most likely to have an impact on the level of the required allowance for loan losses.  However, in view of the fact that the Banks local economies are diverse, without significant dependence on a single industry or employer, the economic climate in the Banks market areas are
considered to be stable, and improving.  Nevertheless, management continues to monitor and evaluate factors which could have an impact on the required level of the allowance.  Nationally, management will watch for issues that may negatively affect a significant percentage of homeowners in the Banks lending areas.  These may include significant increases in unemployment or significant depreciation in home prices.  Management reviews employment statistics periodically when determining the allowance for loan losses and generally finds the unemployment rate in the Banks lending areas to be acceptable in relation to historical trends. Given the aforementioned indicators of economic stability, management does not foresee in the near term, any significant increases in the required allowance for loan losses related to economic factors.  Finally, Company management has no current plans to alter the type of lending offered or collateral accepted by the Banks, but if such
plans change or market conditions result in large concentrations of certain types of loans, such as commercial real estate or high loan-to-value ratio residential loans, management would respond with an increase in the overall allowance for loan losses.

The allowance for loan losses analysis has two components, specific and general allocations.  Specific allocations are made for loans that are determined to be impaired.  Impairment is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses.  The general allocation is determined by segregating the remaining loans by type of loan, risk weighting (if applicable) and payment history.  Historical loss experience, delinquency trends, general economic conditions and geographic and industry concentrations are also analyzed.  This analysis establishes factors that are applied to the loan groups to determine the amount of the general reserve.  Actual loan losses may be significantly more than the allowance established, which could have a material negative effect on the Companys consolidated financial
results.

4.  Earnings Per Share

Basic earnings per share is computed based upon the weighted-average common shares outstanding during the period less shares in the Companys ESOP that are unallocated and not committed to be released.  Weighted average common shares deemed outstanding give effect to 319,152 unallocated ESOP shares for both the nine-and three-month periods ended March 31, 2006.

|                                                       |  | Nine  months   ended   March 31, 2006 |           | Three  months   ended   March 31, 2006 | 
|------------------------------------------------------ |  | ------------------------------------- | --------- | -------------------------------------- | 
|                                                       |  |                                       |           |                                        | 
|Weighted-average common   shares outstanding (basic)   |  |                                       | 8,226,468 |                                        | 
|Dilutive effect of assumed   exercise of stock options |  |                                       | 13,666    |                                        | 
|                                                       |  |                                       |           |                                        | 
|Weighted-average common   shares outstanding (diluted) |  |                                       | 8,240,134 |                                        | 
|                                                       |  |                                       |           |                                        | 

9



Kentucky First Federal Bancorp

NOTES TO FINANCIAL STATEMENTS

For the nine- and three-month periods ended March 31, 2006 and 2005

4.  Earnings Per Share (continued)

Basic and diluted earnings per share for the nine-and three-month periods ended March 31, 2005 are not presented as the Company was not a stock entity for either period.

5.  Recent Accounting Pronouncements

During December 2004, the Financial Accounting Standards Board (the FASB) issued a revision to Statement of Financial Accounting Standards No. 123  (SFAS 123(R)), Share-Based Payment, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, primarily on accounting for transactions in which an entity obtains employee services in share-based transactions.  This Statement requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award, with limited exceptions.  That cost will be recognized over the period during which an employee is required to provide services in exchange for the award  the requisite service period.  No compensation cost is recognized for equity instruments for which employees do not render the requisite
service.  Employee share purchase plans will not result in recognition of compensation cost if certain conditions are met.

Initially, the cost of employee services received in exchange for an award of liability instruments will be measured based on current fair value; the fair value of that award will be remeasured subsequently at each reporting date through the settlement date.  Changes in fair value during the requisite service period will be recognized as compensation cost over that period.  The grant-date fair value of employee share options and similar instruments will be estimated using option-pricing models, adjusted for the unique characteristics of those instruments (unless observable market prices for the same or similar instruments are available).  If an equity award is modified after the grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification.

Excess tax benefits, as defined by SFAS 123(R) will be recognized as an addition to additional paid-in capital.  Cash retained as a result of those excess tax benefits will be presented in the statement of cash flows as financing cash inflows.  The write-off of deferred tax assets relating to unrealized tax benefits associated with recognized compensation cost will be recognized as income tax expense, unless there are excess tax benefits from previous awards remaining in additional paid-in capital to which it can be offset.

SFAS 123(R) requires compensation expense to be recognized beginning the first annual period after December 15, 2005, or July 1, 2006 as to the Company.  On November 15, 2005, at the Annual Meeting of Shareholders, shareholders voted to adopt the Kentucky First Federal Bancorp 2005 Equity Incentive Plan.  The Plan provides for the issuance of up to 421,216 stock options to employees and directors of the Company.  The options are exercisable at the market value of the stock on the date of issuance.  Awards are vested over five years.  Upon the exercise of the stock options, the Company will either issue shares from treasury, issue new shares, or purchase shares on the market.  On December 13, 2005, a total of 347,600 option awards were granted at a weighted-average price of $10.10.  Management estimates the effect of such grants on future statements of earnings to be approximately $20,000 after-tax per quarter and $80,000
after-tax on an annual basis.

10



Kentucky First Federal Bancorp

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Certain statements contained in this report that are not historical facts are forward-looking statements that are subject to certain risks and uncertainties.  When used herein, the terms anticipates, plans, expects, believes, and similar expressions as they relate to Kentucky First Federal Bancorp or its management are intended to identify such forward looking statements.  Kentucky First Federal Bancorps actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements.  Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, general economic conditions, prices for real estate in the Companys market areas, interest rate environment, competitive conditions in the financial services industry, changes in law, governmental policies and regulations, and rapidly changing
technology affecting financial services.

Discussion of Financial Condition Changes from June 30, 2005 to March 31, 2006

Assets:At March 31, 2006, the Companys assets totaled $262.2 million, a decrease of $11.7 million, or 4.3%, from total assets at June 30, 2005.  The primary reason for the decrease in assets was a reduction of $6.1 million, or 72.4%, in cash and cash equivalents, which declined to $2.3 million at March 31, 2006.  Investment securities classified as held to maturity, which decreased $4.0 million or 7.8% to $46.9 million at March 31, 2006, also contributed to the reduction in total assets.  To the extent possible, the Company has sought to redeploy liquidity into mortgage loans.

Cash and cash equivalents:Cash and cash equivalents decreased by $6.1 million or 72.4%.  It is the Companys preference to minimize the level of cash and cash equivalents and invest liquidity into higher-yielding assets, when possible.  The decrease is a part of the overall decrease in assets, discussed more fully under Investment and Mortgage-Backed Securities and Liabilities.

Loans:Loans receivable, net, increased to $153.3 million at March 31, 2006, an increase of $1.6 million or 1.0%.  Management believes that the successful redeployment of the Companys funds from lower-yielding cash, cash equivalents and investment securities to higher-yielding mortgage loans is important for the long-term success of the Company.  The Company will continue to emphasize loan originations to the extent it is profitable and prudent.

Investment and Mortgage-Backed Securities:At March 31, 2006, the Companys investment securities had decreased $7.3 million or 8.4% to $79.6 million.  This decrease was in part due to redeployment of investments and mortgage-backed security proceeds into loans, but was primarily attributable to the coincident decrease in deposits.  Given recent increases in market interest rates, the Company at times has not met market rates if the resulting deposits cannot be invested profitably in interest-earning assets.  As a result, the level of investment and mortgage-backed securities has decreased.  Approximately $43.0 million of the Companys investment and agency securities are scheduled to mature within the next three years and another $8.0 million are scheduled to mature within the next five years.

Non-Performing Assets:At March 31, 2006, the Company had approximately $1.4 million (0.9% of net loans) in loans 90 days or more past due, as compared to $1.7 million at June 30, 2005.  At March 31, 2006, the Companys allowance for loan losses of $724,000 represented 51.2% of nonperforming loans and 0.5% of total loans.

The Company had $1.5 million in loans classified as substandard for regulatory purposes at March 31, 2006. On a percentage basis, classified loans dropped from 1.3% at June 30, 2005 to 1.0% of total loans at March 31, 2006.  Substandard assets included 31 single-family home loans with loan-to-value ratios (percentage of loan balance to the original or an updated appraisal) ranging from 5% to 87%; one home equity line of credit secured by a single-family home which, combined with the first mortgage (which was not delinquent) had a total loan-to-value ratio of 72%; and two single-family homes acquired through foreclosure (with a combined fair value of $51,000).

11



Kentucky First Federal Bancorp

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS (CONTINUED)

Discussion of Financial Condition Changes from June 30, 2005 to March 31, 2006 (continued)

Non-Performing Assets (continued)

At March 31, 2006, no loans were classified as doubtful or loss for regulatory purposes.

Liabilities:At March 31, 2006, the Companys liabilities totaled $197.7 million, a decrease of $10.3 million, or 5.0%, from total liabilities at June 30, 2005.  The decrease in liabilities was attributed primarily to an $11.1 million or 7.2% decrease in deposits, which declined to $143.9 million at March 31, 2006.  Deposits have decreased as market interest rates have increased.  The Company at times has not met market rates if the resulting deposits cannot be invested profitably in interest-earning assets.

Shareholders Equity:At March 31, 2006, the Companys shareholders equity totaled $64.6 million, a decrease of $1.4 million or 2.1% from the June 30, 2005 level.  The primary reason for the decrease in shareholders equity is the acquisition of $1.5 million of shares to fulfill the obligations of the Companys Equity Incentive Plan, which was approved at the Companys Annual Meeting held November 15, 2005.

Comparison of Operating Results for the Nine-Month Periods Ended March 31, 2006 and 2005

General

Net earnings totaled $1.3 million for the nine months ended March 31, 2006, an increase of $231,000, or 22.4% from net earnings for the same period in 2005.  The increase was primarily attributable to a $1.9 million  increase in net interest income, coupled with an increase of $152,000 in other income, partially offset by an increase of $1.8 million in general, administrative and other expense and an increase of $56,000 in the provision for federal income taxes.  The period to period increase in operating levels of income and expense are primarily attributable to the acquisition of Frankfort First.

Net Interest Income

Interest income on loans increased by $4.6 million, or 196.4%, for the nine months ended March 31, 2006, compared to the 2005 period.  This increase was due primarily to a $109.9 million, or 258.2%, increase in the average loan portfolio balance outstanding period to period.  It should be noted, however, that the loans acquired in the Frankfort First transaction were mostly adjustable rate mortgages, which typically bear a lower interest rate than fixed rate mortgages, such as the ones that entirely comprised the First Federal of Hazard portfolio prior to March 1, 2005.  Consequently, there was a 125 basis point decrease in the weighted-average yield, from 7.27% to 6.02% for the 2006 nine-month period.  Due to the vast differences in the volume and type of loans being compared between the two periods, management does not believe it is appropriate to consider this decrease a trend.  Further, changes in the average yield on loans in future
periods will be primarily driven by market forces that cannot be predicted.

Income on other interest-earning assets increased by $41,000, or 1.5%, due primarily to a 214 basis point increase in the weighted-average yield, to 3.82% for the 2006 period, which more than offset a $11.3 million, or 10.8%, decrease in the average balance of the related assets outstanding period to period.  As set forth above, interest income was favorably influenced in the 2006 period by the addition of an average of $98.6 million of interest-earning assets.  Approximately $122.0 million in interest-earning assets were acquired in the Frankfort First transaction.

Interest expense on deposits increased by $1.5 million, or 94.8%, for the nine months ended March 31, 2006, compared to the same period in 2005.  This increase was due primarily to a $42.2 million, or 38.4%, increase in the average balance of deposits outstanding period to period, generally reflecting the assumption of $72.5 million of average deposits in the Frankfort First combination.

12



Kentucky First Federal Bancorp

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS (CONTINUED)

Comparison of Operating Results for the Nine-Month Periods Ended March 31, 2006 and 2005 (continued)

Net Interest Income (continued)

The weighted average cost of deposits was 2.62% for the 2006 period and 1.86% for the 2005 period.  Interest expense on borrowings increased by $1.2 million, or 327.4%, due primarily to the assumption of $42.9 million of average FHLB advances in the Frankfort First combination.  The weighted average cost of borrowings increased 50 basis points to 4.24% for the 2006 period.

As a result of the foregoing changes in interest income and interest expense, net interest income increased by $1.9 million, or 62.3%, to a total of $5.0 million for the nine months ended March 31, 2006.  Net interest margin decreased by 7 basis points to 2.69% for the nine months ended March 31, 2006, compared to the prior year period.

Provision for Losses on Loans

The Company charges a provision for losses on loans to earnings to bring the total allowance for loan losses to a level considered appropriate by management based on historical experience, the volume and type of lending conducted by the Banks, the status of past due principal and interest payments, general economic conditions, particularly as such conditions relate to the Banks market areas, and other factors related to the collectibility of the Banks loan portfolio. The Company recorded a provision for losses on loans totaling $32,000 during the nine months ended March 31, 2006, a decrease of $8,000, or 20.0%, from the comparable nine-month period in 2005.  The 2006 provision was influenced by the reduction in nonperforming loans, offset by growth in the loan portfolio over the period.  There can be no assurance that the loan loss allowance will be adequate to absorb losses on known nonperforming loans or that the allowance will be adequate
to cover losses on nonperforming assets in the future, which could adversely affect the Companys results of operations.

Other Income

Other income totaled $186,000 for the nine months ended March 31, 2006, an increase of $152,000 from the same period in 2005.  The increase in the 2006 period is attributable, among other things, to $60,000 of earnings on bank-owned life insurance and $23,000 in gain on sale of loans.  These activities were not present before the acquisition of Frankfort First.

General, Administrative and Other Expense

General, administrative and other expense totaled $3.3 million for the nine months ended March 31, 2006, an increase of $1.8 million, or 118.2%, compared to the same period in 2005.  This increase was due primarily to effects of the Frankfort First combination and the costs of operating a public company.  Employee compensation and benefits totaled $2.2 million for the nine months ended March 31, 2006, an increase of $1.2 million, or 115.0%, from the same period in 2005.  Such increase was due primarily to $769,000 in expense attributed to Frankfort First Federal combination, $93,000 attributed to expense of the Companys ESOP plan, $166,000 attributable to awards made under the Equity Incentive Plan and normal salary increases.  Generally, other categories of operating expenses also experienced increases associated with the growth in operations due to the acquisition of Frankfort First.

Federal Income Taxes

The provision for federal income taxes totaled $570,000 for the nine months ended March 31, 2006, an increase of $56,000, or 10.9%, compared to the same period in 2005.  This increase was due to an increase in earnings before taxes of $287,000, or 18.6%.  The effective tax rates were 31.1% and 33.2% for the nine-month periods ended March 31, 2006 and 2005, respectively.

13



Kentucky First Federal Bancorp

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS (CONTINUED)

Comparison of Operating Results for the Nine-Month Periods Ended March 31, 2006 and 2005 (continued)

Federal Income Taxes (continued)

The difference between the 31.1% effective tax rate in 2006 and the 34% statutory tax rate is due primarily to tax-exempt earnings on bank-owned life insurance.

Comparison of Operating Results for the Three-Month Periods Ended March 31, 2006 and 2005

General

Net earnings totaled $324,000 for the three months ended March 31, 2006, a decrease of $61,000, or 15.8% from the $385,000 in net earnings for the same period in 2005.  The decrease was primarily attributable to a $499,000 increase in general, administrative and other expense, partially offset by an increase of $349,000 in net interest income, an increase of $41,000 in other income, and a decrease of $44,000 in the provision for federal income taxes.  As previously stated, the period to period increase in levels of operating income and expense are primarily attributable to the acquisition of Frankfort First in March 2005.

Net Interest Income

Interest income on loans increased by $1.2 million, or 101.7%, for the three months ended March 31, 2006, compared to the 2005 period.  This increase was due primarily to an $81.6 million, or 114.1%, increase in the average loan portfolio balance outstanding period to period offset by a 37 basis point decrease in the weighted-average yield, to 6.01% for the 2006 three-month period.  Income on other interest-earning assets decreased by $74,000, or 7.8%, due primarily to a $19.8 million or 18.1% decrease in the average balance of the related assets outstanding period to period despite a 214 basis point increase in the weighted-average yield, to 3.91% for the 2006 period.  As set forth above, interest income was favorably influenced in the 2006 quarter by the addition of an average of $61.9 million of interest-earning assets, primarily a result of the acquisition of Frankfort First.

Interest expense on deposits increased by $445,000, or 75.3%, for the three months ended March 31, 2006, compared to the same period in 2005.  This increase was due primarily to a $17.5 million, or 13.4%, increase in the average balance of deposits outstanding period to period, generally reflecting the assumption of $72.5 million of average deposits in the Frankfort First combination.  The weighted average cost of deposits was 2.80% for 2006 period and 1.81% for the 2005 period.  Interest expense on borrowings increased by $293,000, or 119.6%, due primarily to the assumption of $42.9 million of average FHLB advances in the Frankfort First combination.  The weighted average cost of borrowings increased 122 basis points to 4.14% for the 2006 period.

As a result of the foregoing changes in interest income and interest expense, net interest income increased by $349,000, or 27.8%, to a total of $1.6 million for the three months ended March 31, 2006.  Net interest margin decreased by 13 basis points to 2.64% for the three months ended March 31, 2006, compared to the prior year period.

Provision for Losses on Loans

The Company charges a provision for losses on loans to earnings to bring the total allowance for loan losses to a level considered appropriate by management based on historical experience, the volume and type of lending conducted by the Banks, the status of past due principal and interest payments, general economic conditions, particularly as such conditions relate to the Banks market areas and other factors related to the collectibility of the Banks loan portfolio.

14



Kentucky First Federal Bancorp

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS OF OPERATIONS (CONTINUED)

Comparison of Operating Results for the Three-Month Periods Ended March 31, 2006 and 2005 (continued)

Provision for Losses on Loans (continued)

The Company recorded a provision for losses on loans totaling $8,000 during the three months ended March 31, 2006, a decrease of $4,000, or 33.3%, from the comparable three-month period in 2005.  The 2006 provision was predicated on the factors set forth above.  There can be no assurance that the loan loss allowance will be adequate to absorb losses on known nonperforming loans or that the allowance will be adequate to cover losses on nonperforming assets in the future, which could adversely affect the Companys results of operations.

Other Income

Other income totaled $64,000 for the three months ended March 31, 2006, an increase of $41,000 from the same period in 2005.  The increase in the 2006 period is attributable, among other things, to $20,000 of earnings on bank-owned life insurance.  This activity was not present before the acquisition of Frankfort First.

General, Administrative and Other Expense

General, administrative and other expense totaled $1.2 million for the three months ended March 31, 2006, an increase of $499,000, or 71.2%, compared to the same period in 2005.  This increase was due primarily to effects of the Frankfort First combination and the costs of operating a public company.  Employee compensation and benefits totaled $821,000 for the three months ended March 31, 2006, an increase of $328,000, or 66.5%, from the same period in 2005.  Such increase was due primarily to $100,000 in expense attributed to Frankfort First Federal combination, approximately $51,000 attributed to expense of the Companys ESOP plan, $107,000 attributable to awards made under the Equity Incentive Plan and normal salary increases.  Generally, other categories of operating expenses also experienced increases associated with the growth in operations period to period.

Federal Income Taxes

The provision for federal income taxes totaled $135,000 for the three months ended March 31, 2006, an decrease of $44,000, or 24.6%, compared to the same period in 2005.  The effective tax rates were 29.4% and 31.7% for the three-month periods ended March 31, 2006 and 2005, respectively.

ITEM 3:  Quantitative and Qualitative Disclosures About Market Risk

There has been no material change in the Companys market risk since the disclosure included under the heading Managements Discussion and Analysis of Financial Condition and Results of Operations  Asset and Liability Management in the Companys Form 10-K filed September 28, 2005.

ITEM 4:  Controls and Procedures

The Companys Chief Executive Officer and Chief Financial Officer have evaluated the Companys disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Companys disclosure controls and procedures are effective.  During the quarterly period ended March 31, 2006, there were no changes in the Companys internal control over financial reporting which materially affected, or are reasonably likely to materially affect, the Companys internal controls over financial reporting.

15



Kentucky First Federal Bancorp

PART II

|ITEM 1.  | Legal Proceedings                                            
|-------- | -------------------------------------------------------------
|         |                                                              
|         | Not applicable.                                              
|         |                                                              
|ITEM 1A. | Risk Factors                                                 
|         |                                                              
|         | Not applicable.                                              
|         |                                                              
|ITEM 2.  | Unregistered Sales of Equity Securities and Use of   Proceeds
|         |                                                              
|         | (b)                                                          

| | Period                                                                                                                                                                                     |  | Total   # of shares   purchased |        |  | Average   price paid   per share   (incl commissions) |       | Total # of   shares purchased   as part of publicly   announced plans   or programs |  | Maximum #   of   shares   that may yet be   purchased under   the plans or   programs | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------- | ------ |  | ----------------------------------------------------- | ----- | ----------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------- | 
| |                                                                                                                                                                                            |  |                                 |        |  |                                                       |       |                                                                                     |  |                                                                                      
| | January 1-31, 2006                                                                                                                                                                         |  |                                 | 18,161 |  | $                                                     | 10.85 |                                                                                     |  | 96,961                                                                                | 
| | February 1-28, 2006                                                                                                                                                                        |  |                                 | 32,100 |  | $                                                     | 11.05 |                                                                                     |  | 129,061                                                                               | 
| | March 1-31, 2006                                                                                                                                                                           |  |                                 | 11,885 |  | $                                                     | 11.11 |                                                                                     |  | 140,946                                                                               | 
| |                                                                                                                                                                                            |  |                                 |        |  |                                                       |       |                                                                                     |  |                                                                                       | 
| |                                                                                                                                                                                           
| | On   December 14, 2005, the Company announced a program to repurchase up to   168,486 shares in order to
fund   awards of restricted stock under the Companys 2005 Incentive Equity Plan.

|ITEM 3. | Defaults Upon Senior Securities                    
|------- | ---------------------------------------------------
|        |                                                    
|        | Not applicable.                                    
|        |                                                    
|ITEM 4. | Submission of Matters to a Vote of Security Holders
|        |                                                    
|        | None.                                              
|        |                                                    
|ITEM 5. | Other Information                                  
|        |                                                    
|        | None.                                              
|        |                                                    
|ITEM 6. | Exhibits                                           

| | 31.1 | CEO Certification Pursuant to Section 302 of the   Sarbanes-Oxley Act of 2002
| | ---- | -----------------------------------------------------------------------------
| |      |                                                                              
| | 31.2 | CFO Certification Pursuant to Section 302 of the   Sarbanes-Oxley Act of 2002
| |      |                                                                              
| | 32.1 | CEO Certification Pursuant to Section 906 of the   Sarbanes-Oxley Act of 2002
| |      |                                                                              
| | 32.2 | CFO Certification Pursuant to Section 906 of the   Sarbanes-Oxley Act of 2002

16



Kentucky First Federal Bancorp

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|      |              |  |                               
|----- | ------------ |  | ------------------------------
|      |              |  | KENTUCKY FIRST FEDERAL BANCORP
|      |              |  |                               
|Date: | May 15, 2006 |  | By:                           
|      |              |  |                               
|      |              |  |                               
|      |              |  |                               
|      |              |  |                               
|      |              |  |                               
|Date: | May 15, 2006 |  | By:                           
|      |              |  |                               
|      |              |  |                               
|      |              |  |                               

17