UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
10-Q





(Mark
One)





x
            QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE
      ACT OF 1934





For the
quarterly period ended December
31,
2008





OR





 ̈
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
  ACT





For the
transition period from ____________ to _______________





Commission
File Number:0-51176





KENTUCKY FIRST FEDERAL
    BANCORP(Exact
      name of registrant as specified in its charter)





United States of America
                  
                  61-1484858(State
      or other jurisdiction of
                  
                  (I.R.S.
      Employer Identification No.)incorporation
      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
 ̈





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





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


Yes  ̈         No
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 February 9, 2009, the
Corporation had 7,864,648 shares of $.01 par value common stock
outstanding.










INDEX





PagePART
      I -
                                  ITEM
      1
                                  FINANCIAL
      INFORMATIONCondensed
      Consolidated Statements of Financial Condition
                                  3Condensed
      Consolidated Statements of Earnings
                                  4Condensed
      Consolidated Statements of Comprehensive Income
                                  5Condensed
      Consolidated Statements of Cash Flows
                                  6Notes
      to Condensed Consolidated Financial Statements
                                  8ITEM
      2
                                  Management’s
      Discussion and Analysis ofFinancial
      Condition and Results ofOperations
                                  12ITEM
      3
                                  Quantitative
      and Qualitative DisclosuresAbout
      Market Risk
                                  19ITEM
      4T
                                  Controls
      and Procedures
                                  19PART
      II -
                                  OTHER
      INFORMATION
                                  20SIGNATURES
                                  21









PART
I


ITEM 1:
Financial
Information


Kentucky
First Federal Bancorp





CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION





(In
thousands, except per share data)





December 31,
                  
                  
                  June 30,2008
                  
                  
                  2008(Unaudited)ASSETSCash
      and due from banks
                  
                  $
                  1,248
                  
                  
                  $
                  790Interest-bearing
      deposits in other financial institutions
                  
                  
                  3,459
                  
                  
                  
                  15,176Cash
      and cash equivalents
                  
                  
                  4,707
                  
                  
                  
                  15,966Interest-bearing
      deposits
                  
                  
                  100
                  
                  
                  
                  100Available-for-sale
      securities
                  
                  
                  5,553
                  
                  
                  
                  5,480Held-to-maturity
      securities, at amortized cost - approximate  fair value of
      $16,326 and $16,409 at  December 31, and June 30, 2008,
      respectively
                  
                  
                  15,984
                  
                  
                  
                  16,959Loans
      available for sale
                  
                  
                  -
                  
                  
                  
                  86Loans
      receivable
                  
                  
                  191,778
                  
                  
                  
                  182,717Allowance
      for loan losses
                  
                  
                  (681
                  )
                  
                  
                  (666
                  )Real
      estate acquired through foreclosure
                  
                  
                  13
                  
                  
                  
                  21Office
      premises and equipment, net
                  
                  
                  2,863
                  
                  
                  
                  2,727Federal
      Home Loan Bank stock
                  
                  
                  5,641
                  
                  
                  
                  5,566Accrued
      interest receivable
                  
                  
                  670
                  
                  
                  
                  628Bank-owned
      life insurance
                  
                  
                  2,386
                  
                  
                  
                  2,339Goodwill
                  
                  
                  14,507
                  
                  
                  
                  14,507Intangible
      assets, net
                  
                  
                  415
                  
                  
                  
                  480Prepaid
      expenses and other assets
                  
                  
                  217
                  
                  
                  
                  266Prepaid
      federal income taxes
                  
                  
                  741
                  
                  
                  
                  479Total
      assets
                  
                  $
                  244,894
                  
                  
                  $
                  247,655LIABILITIES
      AND SHAREHOLDERS’ EQUITYDeposits
                  
                  $
                  135,917
                  
                  
                  $
                  137,634Advances
      from the Federal Home Loan Bank
                  
                  
                  47,255
                  
                  
                  
                  47,801Advances
      by borrowers for taxes and insurance
                  
                  
                  2
                  
                  
                  
                  331Accrued
      interest payable
                  
                  
                  232
                  
                  
                  
                  245Deferred
      federal income taxes
                  
                  
                  1,646
                  
                  
                  
                  1,234Other
      liabilities
                  
                  
                  555
                  
                  
                  
                  617Total
      liabilities
                  
                  
                  185,607
                  
                  
                  
                  187,862Commitments
      and contingencies
                  
                  
                  -
                  
                  
                  
                  -Shareholders’
      equity
                  
                  
                  -
                  
                  
                  
                  -Preferred
      stock, 500,000 shares authorized, $.01 par value; no shares
      issuedCommon
      stock, 20,000,000 shares authorized $.01 par value; 8,596,064 shares
      issued
                  
                  
                  86
                  
                  
                  
                  86Additional
      paid-in capital
                  
                  
                  36,156
                  
                  
                  
                  35,834Retained
      earnings
                  
                  
                  32,344
                  
                  
                  
                  32,291Shares
      acquired by stock benefit plans
                  
                  
                  (2,642
                  )
                  
                  
                  (2,735
                  )Treasury
      shares at cost, 667,730 and 559,330 shares at December 31 and June 30,
      2008, respectively
                  
                  
                  (6,756
                  )
                  
                  
                  (5,700
                  )Accumulated
      other comprehensive income
                  
                  
                  99
                  
                  
                  
                  17Total
      shareholders’ equity
                  
                  
                  59,287
                  
                  
                  
                  59,793Total
      liabilities and shareholders’ equity
                  
                  $
                  244,894
                  
                  
                  $
                  247,655





See Notes
to Condensed Consolidated Financial Statements.




3




Kentucky
First Federal Bancorp





CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS





(Unaudited)


(In
thousands, except per share data)





Six months ended
                
                
                Three months endedDecember 31,
                
                
                December 31,2008
                
                
                2007
                
                
                2008
                
                
                2007Interest
      incomeLoans
                
                $
                5,555
                
                
                $
                5,204
                
                
                $
                2,776
                
                
                $
                2,639Mortgage-backed
      securities
                
                
                292
                
                
                
                342
                
                
                
                143
                
                
                
                168Investment
      securities
                
                
                135
                
                
                
                986
                
                
                
                67
                
                
                
                481Interest-bearing
      deposits and other
                
                
                207
                
                
                
                205
                
                
                
                72
                
                
                
                105Total
      interest income
                
                
                6,189
                
                
                
                6,737
                
                
                
                3,058
                
                
                
                3,393Interest
      expenseDeposits
                
                
                2,135
                
                
                
                2,523
                
                
                
                1,055
                
                
                
                1,250Borrowings
                
                
                922
                
                
                
                1,584
                
                
                
                442
                
                
                
                797Total
      interest expense
                
                
                3,057
                
                
                
                4,107
                
                
                
                1,497
                
                
                
                2,047Net
      interest income
                
                
                3,132
                
                
                
                2,630
                
                
                
                1,561
                
                
                
                1,346Provision
      for losses on loans
                
                
                15
                
                
                
                -
                
                
                
                -
                
                
                
                -Net
      interest income after provision for losses on loans
                
                
                3,117
                
                
                
                2,630
                
                
                
                1,561
                
                
                
                1,346Other
      operating incomeEarnings
      on bank-owned life insurance
                
                
                47
                
                
                
                43
                
                
                
                29
                
                
                
                22Gain
      on sale of loans
                
                
                18
                
                
                
                -
                
                
                
                6
                
                
                
                -Other
      operating
                
                
                49
                
                
                
                45
                
                
                
                24
                
                
                
                21Total
      other income
                
                
                114
                
                
                
                88
                
                
                
                59
                
                
                
                43General,
      administrative and other expenseEmployee
      compensation and benefits
                
                
                1,412
                
                
                
                1,490
                
                
                
                712
                
                
                
                724Occupancy
      and equipment
                
                
                204
                
                
                
                169
                
                
                
                116
                
                
                
                89Franchise
      taxes
                
                
                87
                
                
                
                78
                
                
                
                47
                
                
                
                39Data
      processing
                
                
                81
                
                
                
                72
                
                
                
                39
                
                
                
                37Other
      operating
                
                
                508
                
                
                
                380
                
                
                
                232
                
                
                
                190Total
      general, administrative and other expense
                
                
                2,292
                
                
                
                2,189
                
                
                
                1,146
                
                
                
                1,079Earnings
      before income taxes
                
                
                939
                
                
                
                529
                
                
                
                474
                
                
                
                310Federal
      income taxesCurrent
                
                
                (66
                )
                
                
                69
                
                
                
                148
                
                
                
                33Deferred
                
                
                370
                
                
                
                97
                
                
                
                3
                
                
                
                66Total
      federal income taxes
                
                
                304
                
                
                
                166
                
                
                
                151
                
                
                
                99NET
      EARNINGS
                
                $
                635
                
                
                $
                363
                
                
                $
                323
                
                
                $
                211EARNINGS
      PER SHAREBasic
                
                $
                0.08
                
                
                $
                0.05
                
                
                $
                0.04
                
                
                $
                0.03Diluted
                
                $
                0.08
                
                
                $
                0.05
                
                
                $
                0.04
                
                
                $
                0.03DIVIDENDS
      PER SHARE
                
                $
                0.20
                
                
                $
                0.20
                
                
                $
                0.10
                
                
                $
                0.10





See Notes
to Condensed Consolidated Financial Statements.




4




Kentucky
First Federal Bancorp





CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME





(Unaudited)


(In
thousands)





Six months ended
                
                
                Three months endedDecember 31,
                
                
                December 31,2008
                
                
                2007
                
                
                2008
                
                
                2007Net
      earnings
                
                $
                635
                
                
                $
                363
                
                
                $
                323
                
                
                $
                211Other
      comprehensive income, net of taxes:Unrealized
      holding gains on securities during the period, net of taxes of $42, $114,
      $46 and $62 during the respective periods
                
                
                82
                
                
                
                222
                
                
                
                90
                
                
                
                121Comprehensive
      income
                
                $
                717
                
                
                $
                585
                
                
                $
                413
                
                
                $
                332Accumulated
      other comprehensive income (loss)
                
                $
                99
                
                
                $
                (65
                )
                
                $
                99
                
                
                $
                (65
                )





See Notes
to Condensed Consolidated Financial Statements.





5




Kentucky
First Federal Bancorp





CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS





For the
six months ended December 31,


(Unaudited)


(In
thousands)




2008
                    
                    
                    2007Cash
      flows from operating activities:Net
      earnings for the period
                    
                    $
                    635
                    
                    
                    $
                    363Adjustments
      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
                    
                    
                    
                    (2
                    )Amortization
      of deferred loan origination fees
                    
                    
                    33
                    
                    
                    
                    (19
                    )Amortization
      of premiums on FHLB advances
                    
                    
                    (255
                    )
                    
                    
                    (265
                    )Amortization
      of core deposit intangibles
                    
                    
                    65
                    
                    
                    
                    65Depreciation
      and amortization
                    
                    
                    76
                    
                    
                    
                    72Amortization
      of stock benefit plans
                    
                    
                    284
                    
                    
                    
                    279Provision
      for losses on loans
                    
                    
                    15
                    
                    
                    
                    -Federal
      Home Loan Bank stock dividends
                    
                    
                    (75
                    )
                    
                    
                    -Bank-owned
      life insurance earnings
                    
                    
                    (47
                    )
                    
                    
                    (43
                    )Mortgage
      loans originated for sale
                    
                    
                    (1,210
                    )
                    
                    
                    (380
                    )Gain
      on sale of loans
                    
                    
                    (18
                    )
                    
                    
                    -Proceeds
      from sale of mortgage loans
                    
                    
                    1,314
                    
                    
                    
                    259Increase
      (decrease) in cash, due to changes in:Accrued
      interest receivable
                    
                    
                    (43
                    )
                    
                    
                    70Prepaid
      expenses and other assets
                    
                    
                    50
                    
                    
                    
                    28Accrued
      interest payable
                    
                    
                    (13
                    )
                    
                    
                    (44
                    )Other
      liabilities
                    
                    
                    69
                    
                    
                    
                    175Federal
      income taxesCurrent
                    
                    
                    (262
                    )
                    
                    
                    (57
                    )Deferred
                    
                    
                    370
                    
                    
                    
                    113Net
      cash provided by operating activities
                    
                    
                    989
                    
                    
                    
                    614Cash
      flows provided by (used in) investing activities:Investment
      securities maturities, prepayments and calls:Held
      to maturity
                    
                    
                    975
                    
                    
                    
                    10,843Available
      for sale
                    
                    
                    50
                    
                    
                    
                    177Proceeds
      from sale of real estate acquired through foreclosure
                    
                    
                    8
                    
                    
                    
                    -Loan
      disbursements
                    
                    
                    (35,589
                    )
                    
                    
                    (28,816
                    )Loan
      principal repayments
                    
                    
                    26,495
                    
                    
                    
                    20,612Purchase
      of office equipment
                    
                    
                    (212
                    )
                    
                    
                    (90
                    )Net
      cash provided by (used in)  investing activities
                    
                    
                    (8,273
                    )
                    
                    
                    2,726Cash
      flows provided by (used in) financing activities:Net
      decrease in deposit accounts
                    
                    
                    (1,717
                    )
                    
                    
                    (2,902
                    )Proceeds
      from Federal Home Loan Bank advances
                    
                    
                    15,800
                    
                    
                    
                    20,100Repayment
      of Federal Home Loan Bank advances
                    
                    
                    (16,091
                    )
                    
                    
                    (18,820
                    )Advances
      by borrowers for taxes and insurance
                    
                    
                    (329
                    )
                    
                    
                    (312
                    )Dividends
      paid on common stock
                    
                    
                    (582
                    )
                    
                    
                    (577
                    )Purchase
      of shares for treasury
                    
                    
                    (1,056
                    )
                    
                    
                    (1,389
                    )Net
      cash used in financing activities
                    
                    
                    (3,975
                    )
                    
                    
                    (3,900
                    )Net
      decrease in cash and cash equivalents
                    
                    
                    (11,259
                    )
                    
                    
                    (560
                    )Cash
      and cash equivalents at beginning of period
                    
                    
                    15,966
                    
                    
                    
                    2,720Cash
      and cash equivalents at end of period
                    
                    $
                    4,707
                    
                    
                    $
                    2,160





See Notes
to Condensed Consolidated Financial Statements.





6




Kentucky
First Federal Bancorp





CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)





For the
six months ended December 31,


(Unaudited)


(In
thousands)





2008
                
                
                2007Supplemental
      disclosure of cash flow information:Cash
      paid during the period for:Federal
      income taxes
                
                $
                205
                
                
                $
                110Interest
      on deposits and borrowings
                
                $
                3,325
                
                
                $
                4,418Transfers
      from loans to real estate acquired through foreclosure,
net
                
                $
                -
                
                
                $
                27





See Notes
to Condensed Consolidated Financial Statements.





7




Kentucky
First Federal Bancorp





NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





Six- and
three-month periods ended December 31, 2008 and 2007





(Unaudited)





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, First Federal Savings Bank
of Frankfort (“First Federal of Frankfort”).  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.





1.  Basis of
Presentation





The
accompanying unaudited condensed consolidated financial statements, which
represent the condensed 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 six- and three-month
periods ended December 31, 2008, are not necessarily indicative of the results
which may be expected for an entire fiscal year.  The condensed
consolidated statement of financial condition as of June 30, 2008 has been
derived from the audited consolidated statement of financial condition as of
that date.  Certain information and note disclosures normally included
in the Company’s annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted.  These condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
included in the Company’s Form 10-K annual report for 2008 filed with the
Securities and Exchange Commission.





2.  Principles of
Consolidation





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





8


Kentucky
First Federal Bancorp





NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





Six- and
three-month periods ended December 31, 2008 and 2007





(Unaudited)




3.  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 282,484 unallocated ESOP shares for the
six- and three-month periods ended December 31, 2008, and 301,262 unallocated
ESOP shares for the six- and three-month periods ended December 31,
2007.


Six months ended December 31,2008
                  
                  
                  2007Weighted-average
      common shares outstanding (basic)
                  
                  
                  7,588,835
                  
                  
                  
                  7,781,376Dilutive
      effect of:Non-vested
      restricted stock awards
                  
                  
                  -
                  
                  
                  
                  -Assumed
      exercise of stock options
                  
                  
                  -
                  
                  
                  
                  -Weighted-average
      common shares outstanding (diluted)
                  
                  
                  7,588,835
                  
                  
                  
                  7,781,376





Three months ended December 31,2008
                  
                  
                  2007Weighted-average
      common shares outstanding (basic)
                  
                  
                  7,561,721
                  
                  
                  
                  7,745,436Dilutive
      effect of:Non-vested
      restricted stock awards
                  
                  
                  -
                  
                  
                  
                  -Assumed
      exercise of stock options
                  
                  
                  -
                  
                  
                  
                  -Weighted-average
      common shares outstanding (diluted)
                  
                  
                  7,561,721
                  
                  
                  
                  7,745,436





There
were 391,000 share-based awards representing non-dilutive shares outstanding for
the six- and three-month periods ended December 31, 2008 compared to 416,900
share-based awards representing non-dilutive shares outstanding for the six- and
three-month periods ended December 31, 2007.





4.  Recent Accounting
Pronouncements




In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (FAS
157).  This Statement defines fair value, establishes a framework for
measuring fair value and expands disclosures about fair value measurements. This
Statement emphasizes that fair value is a market-based measurement and should be
determined based on assumptions that a market participant would use when pricing
an asset or liability. This Statement clarifies that market participant
assumptions should include assumptions about risk as well as the effect of a
restriction on the sale or use of an asset. Additionally, this Statement
establishes a fair value hierarchy that provides the highest priority to quoted
prices in active markets and the lowest priority to unobservable data. This
Statement is effective for fiscal years beginning after November 15, 2007,
or July 1, 2008 for the Company, and interim periods within that year. The
adoption of this Statement did not have a material adverse effect on the
Company’s financial position or results of operations.




9




Kentucky
First Federal Bancorp




NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




Six- and
three-month periods ended December 31, 2008 and 2007




(Unaudited)





4.  Recent Accounting
Pronouncements (continued)





In
December 2007, the FASB issued SFAS No 141 (revised 2007), “Business
Combinations,” which replaces SFAS 141.  This Statement applies to all
transactions or other events in which one entity obtains control of one or more
businesses.  It requires all assets acquired, liabilities assumed and
any noncontrolling interest to be measured at fair value at the acquisition
date.  The Statement requires certain costs such as
acquisition-related costs that were previously recognized as a component of the
purchase price, and expected restructuring costs that were previously recognized
as an assumed liability, to be recognized separately from the acquisition as an
expense when incurred.





FAS
141(R) applies prospectively to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2008 and may not be applied before that
date.  The initial adoption of this statement is not expected to have
a material adverse effect on the Company’s financial position or results of
operations.





Concurrent
with SFAS No. 141 (R), the FASB issued SFAS No. 160, “Noncontrolling Interests
in Condensed consolidated financial Statements, an Amendment of ARB
51.”  SFAS No. 160 amends ARB 51 to establish accounting and reporting
standards for the noncontrolling interest (formeraly known as minority interest)
in a subsidiary and for the deconsolidation of a subsidiary.  A
subsidiary, as defined by SFAS No. 160, includes a variable interest entity that
is consolidated by a primary beneficiary.





A
noncontrolling interest in a subsidiary, previously reported in the statement of
financial position as a liability or in the mezzanine section outside of
permanent equity, will be included within consolidated equity as a separate line
item upon adoption of SFAS No. 160.  Further, consolidated net income
will be reported at amounts that include both the parent (or primary
beneficiary) and the noncontrolling interest with separate disclosure on the
face of the consolidated statement of income of the amounts attributable to the
parent and to the noncontrolling interest.  SFAS No. 160 is effective
for fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008.  The initial adoption of this statement is
not expected to have a material adverse effect on the Company’s financial
position or results of operations.





In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities – Including Amendment of FASB
Statement No. 115.”  This Statement allows companies the choice to
measure many financial instruments and certain other items at fair
value.  The objective is to improve financial reporting by providing
entities with the opportunity to mitigate volatility in reported earnings caused
by measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions.  This Statement is expected to
expand the use of fair value measurement, which is consistent with the Board’s
long-term measurement objectives for accounting for financial
instruments.  This Statement is effective as of the beginning of an
entity’s first fiscal year that begins after November 15, 2007, or July 1, 2008,
as to the Company, and interim periods within that fiscal year.  The
adoption of this statement did not have a material adverse effect on the
Company’s financial position or results of operations.





10





Kentucky
First Federal Bancorp




NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




Six- and
three-month periods ended December 31, 2008 and 2007




(Unaudited)




5.  Commitments




As of
December 31, 2008, loan commitments and unused lines of credit totaled $10.3
million, including $121,000 in undisbursed construction loans, $815,000 in one-
to four-family mortgage loans and $9.4 million in lines of credit secured by
equity in real property.




6.  Disclosures About Fair Value
of Assets and Liabilities




Effective
July 1, 2008, the Company adopted Statement of Financial Accounting Standard No.
157, “Fair Value Measurements” (FAS157).  FAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements.




FAS 157
defines fair value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at
the measurement date.  FAS 157 also establishes a fair value hierarchy
which requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value.  The
standard describes three levels of inputs that may be used to measure fair
value:




Level 1 - Quoted prices
in active markets for identical assets or liabilities.




Level 2- Observable inputs
other than Level 1 prices, such as quoted prices for similar assets or
liabilities; quoted prices in active markets that are not active; or other
inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.




Level 3– Unobservable inputs
that are supported by little or no market activity and that are significant to
the fair value of the assets or liabilities.




Following
is a description of the valuation methodologies used for instruments measured at
fair value, as well as the general classification of such instruments pursuant
to the valuation hierarchy.




Securities




Where
quoted market prices are available in an active market, securities are
classified within Level 1 of the valuation hierarchy.  If quoted
market prices are not available, then fair values are estimated by using pricing
models, quoted prices of securities with similar characteristics or discounted
cash flows.  Level 2 securities include mortgage
products.




The
following table presents the fair value measurements of assets and liabilities
measured at fair value on a recurring basis and the level within the FAS 157
fair value hierarchy in which the fair value measurements fall at December 31,
2008:




Fair Value Measurements Using(in thousands)Quotes Prices
                                                                                                                        in Active
                                                                                                                        Markets for
                                                                                                                      
                                                                                                                      Significant
                                                                                                                        Other
                                                                                                                      
                                                                                                                      SignificantIdentical
                                                                                                                      
                                                                                                                      Observable
                                                                                                                      
                                                                                                                      UnobservableAssets
                                                                                                                      
                                                                                                                      Inputs
                                                                                                                      
                                                                                                                      InputsFair Value
                                                                                                                      
                                                                                                                      
                                                                                                                      
                                                                                                                      (Level 1)
                                                                                                                      
                                                                                                                      (Level 2)
                                                                                                                      
                                                                                                                      (Level 3)Available-for-sale
      securities
                                                                                                                      
                                                                                                                      $   5,553
                                                                                                                      
                                                                                                                      
                                                                                                                      
                                                                                                                      $  
      -
                                                                                                                      
                                                                                                                      $   5,553
                                                                                                                      
                                                                                                                      $  
      -




11




Kentucky
First Federal Bancorp





ITEM
2: 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.





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  and accounting for goodwill to
be critical accounting policies.





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.





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.  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.





12




Kentucky
First Federal Bancorp





MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION


AND
RESULTS OF OPERATIONS (continued)





Critical Accounting Policies
(continued)





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 condensed consolidated
financial results.





The
Company has recorded goodwill and core deposit intangibles as a result of its
acquisition of Frankfort First.  Goodwill represents the excess
purchase price paid over the net book value of the assets acquired in a merger
or acquisition.  Pursuant to SFAS No. 142, “Goodwill and Intangible
Assets,” goodwill is not amortized, but is tested for impairment at the
reporting unit annually or whenever an impairment indicator
arises.  The evaluation involves assigning assets and liabilities to
reporting units and comparing the fair value of each reporting unit to its
carrying value including goodwill.  If the fair value of a reporting
unit exceeds its carrying amount, goodwill is not considered
impaired.  However, if the carrying amount of the reporting unit
exceeds the fair value, goodwill is considered impaired.  The
impairment loss equals the excess of carrying value over fair
value.





Core
deposit intangibles represent the value of long-term deposit relationships and
are amortized over their estimated useful lives.  The Company annually
evaluates these estimated useful lives.  If the Company determines hat
events or circumstances warrant a change in these estimated useful lifes, the
Company will adjust the amortization of the core deposit intangibles, which
could affect future amortization expense.





Discussion of Financial
Condition Changes from June 30, 2008 to December 31, 2008





Assets:  At
December 31, 2008, the Company’s assets totaled $244.9 million, a decrease of
$2.8 million, or 1.1%, from total assets at June 30, 2008.  The
primary reason for the decrease in assets was the reduction in cash and cash
equivalents, most of which was used to fund new loans, although some supplanted
a reduction in deposits.  It is management’s intention to deploy
excess liquidity into mortgage loans to the extent possible.





Cash and cash
equivalents:Cash and cash
equivalents decreased by $11.3 million or 70.5% to $4.7 million at December 31,
2008.  It is the Company’s preference to minimize the level of cash
and cash equivalents and invest liquidity into higher-yielding assets, when
possible.





Loans:  Loans
receivable, net, increased to $191.1 million at December 31, 2008, an increase
of $9.0 million or 5.0%.  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 that it is profitable and
prudent.





13




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, 2008 to December 31, 2008
(continued)





Non-Performing
Loans: At December 31,
2008, the Company had approximately $2.3 million, or 1.2% of net loans, in loans
90 days or more past due, compared to $1.3 million, or 0.7%, of net loans at
June 30, 2008.  The increase in non-performing loans is primarily related
to the economic downturn in general and a weaker real estate market in
particular.  As with most mortgage lenders, the Company has seen an
increase in the number of loans that have become delinquent.  Some of
these delinquencies are caused by lost jobs, while other delinquencies are the
result of illness, divorce or other life happenings.  Heretofore,
delinquencies were easier to resolve with the voluntary sale of the
property.  The current economic environment makes sale of properties
more difficult, and, as a result, makes the resolution of delinquencies more
difficult.  However, while the December 31, 2008 level of
non-performing loans is higher than in past quarters, Management believes that
the Company’s percentage of non-performing loans to net loans is low when
compared to the historical delinquency rates in the industry.





At
December 31, 2008, the Company’s allowance for loan losses of $681,000
represented 29.2% of nonperforming loans and 0.4% of total loans.





The
Company had $2.9 million in loans classified as substandard for regulatory
purposes at December 31, 2008. Classified loans as a percentage of net loans was
1.5% and 0.9% at December 31, 2008 and  June 30, 2008,
respectively.  Substandard assets included 34 single-family home loans
with loan-to-value ratios (percentage of loan balance to the original or an
updated appraisal) ranging from 23% to 104%*; three home equity lines of credit
totaling $34,000 which are second mortgages to the previously-mentioned
single-family, owner-occupied home loans; one loan of $209,000 secured by both
an owner-occupied, single-family home and a single-family rental home with a
loan-to-value ratio of 78%; two loans-a first and second mortgage totaling
$41,000-secured by an owner-occupied duplex with a loan-to-value of 69%; three
loans totaling $175,000 that are secured by single-family rental homes all with
loan-to-value ratios of approximately 80%; and one loan totaling $254,000
secured by three single-family properties and two duplexes with a loan-to-value
ratio of 79%.  At December 31, 2008, the Company had $418,000 in loans
classified as special mention.  This category includes assets which do
not currently expose us to a sufficient degree of risk to warrant
classification, but do possess credit deficiencies or potential weaknesses
deserving our close attention. *Of the substandard assets, two loans
exceeded a 90% loan-to-value ratio, one of which is covered by private mortgage
insurance.





At
December 31, 2008, no loans were classified as doubtful or loss for regulatory
purposes.





Investment and
Mortgage-Backed Securities:  At December 31,
2008, the Company’s investment and mortgage-backed securities had decreased
$902,000 or 4.0% to $21.5 million.  Approximately $8.0 million of the
Company’s investment and agency securities are scheduled to mature within the
next eighteen months.





Liabilities:At December 31, 2008,
the Company’s liabilities totaled $185.6 million, a decrease of $2.3 million, or
1.2%, from total liabilities at June 30, 2008.  The decrease in
liabilities was attributed primarily to a $1.7 million, or 1.2%, decrease in
deposits, which decreased to $135.9 million at December 31,
2008.  Federal Home Loan Bank advances decreased $546,000 or 1.1% to
$47.3 million at December 31, 2008.  At times, the Company has chosen
not to meet market rates if the deposits cannot be invested profitably in
interest-earning assets.  As stated previously, management anticipates
reducing the level of Federal Home Loan Bank advances as lower-yielding
investment securities mature over the next three years.  To some
degree this will depend on the demand for new loans.





14




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, 2008 to December 31, 2008
(continued)





Shareholders’
Equity:  At December 31, 2008, the Company’s shareholders’
equity totaled $59.3 million, a decrease of $506,000 or 0.8% from the June 30,
2008 total.  The decrease in shareholders’ equity is primarily related
to the acquisition of $1.1 million of treasury shares at an average cost of
$9.74 per share and the dividend declarations, which totaled $582,000 for the
six months ended December 31, 2008.





Comparison of Operating
Results for the Six-Month Periods Ended December 31, 2008 and
2007





General





Net
earnings totaled $635,000 for the six months ended December 31, 2008, an
increase of $272,000, or 74.9% from the $363,000 in net earnings for the same
period in 2007.  The increase was primarily attributable to an
increase in net interest income.





Net Interest
Income





Net
interest income increased $502,000 or 19.1% to $3.1 million for the six month
period ended December 31, 2008, compared to the 2007 period, due primarily to
decreased cost of funds.  Interest income decreased by $548,000, or
8.1%, to $6.2 million, while interest expense decreased $1.1 million or 25.6% to
$3.1 million for the six months ended December 31, 2008.  The decrease
in interest income was due primarily to a decline in interest income from
investments, while the decrease in interest expense was attributable to lower
costs for both deposits and advances.





Interest
income from investment securities decreased $851,000 or 86.3% to $135,000 for
the six month period ended December 31, 2008, primarily as a result of a decline
in the average balance in investment securities, which declined $47.1 million or
85.3% to $8.1 million for the six months ended December 31, 2008.  The
decline in the outstanding balance was the result of maturities and calls of the
Company’s investments, rather than the sale of those
securities.  Somewhat offsetting the decline in interest income from
investments was an increase in interest income from loans, which increased
$351,000 or 6.7% to $5.6 million for the six month period just
ended.  The increase in interest income on loans was primarily
attributable to an increase in the average balance of loans outstanding, which
increased $15.9 million or 9.3% to $187.0 million for the six months period
ended December 31, 2008.  The average rate earned by the loan
portfolio declined 15 basis points to 5.94% for the most recent six month period
compared to the prior year.  Interest rates on loans have continued to
decline.  Increased refinancing activity is likely to cause the yield
on loans to continue to decline as well.





Interest
expense on deposits decreased $388,000 or 15.4% to $2.1 million for the six
months ended December 31, 2008, while interest expense on advances decreased
$662,000, or 41.8%, to $922,000 for the 2008 period compared to the prior year
period.  The decrease in interest expense on advances was attributable
primarily to a decrease in the average balance outstanding, while the average
rate paid on such advances also declined period to period.  The
average balance of advances outstanding decreased $23.3 million, or 34.2%, from
$68.2 million for the six months ended December 31, 2007 to $44.9 million for
the six month period ended December 31, 2008.  The average rate paid
on advances declined 54 basis points to 4.11% for the six month period just
ended.  The decrease in interest expense on deposits was due primarily
to a decrease in the average rate paid on deposits, which declined 62 basis
points to 3.11% for the six-month period ended December 31, 2008.  The
average balance of deposits outstanding decreased $2.4 million or 1.7% for the
six month period just ended.  Net interest margin increased by 77
basis points to 2.83% for the six months ended December 31, 2008, compared to
2.06% for the comparable 2007 period.





15




Kentucky
First Federal Bancorp





MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION


AND
RESULTS OF OPERATIONS (continued)





Comparison of Operating
Results for the Six-Month Periods Ended December 31, 2008 and 2007
(continued)





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 of $15,000 during the six
months ended December 31, 2008, while no provision was recorded for the six
months ended December 31, 2007.  Based on management’s analysis of the
loan portfolio, it was determined that the Allowance for Loan and Lease Losses
(“ALLL”) was slightly underfunded and an addition during the six months ended
December 31, 2008 was appropriate.  Management does not believe the
ALLL was underfunded at December 31, 2008.  However, the significant
turmoil in the general mortgage market makes this calculation even more
difficult.   There can be no assurance that the loan loss
allowance will be adequate to absord unidentified losses on loans in the
portfolio, which could adversely affect the Company’s results of
operations.





Other
Income





Other
income totaled $114,000 for the six months ended December 31, 2008, an increase
of $26,000 from the same period in 2007.  The increase is attributable
primarily to gain on sale of loans, which totaled $18,000 for the six month
period just ended.  The Company realized no gain on sale of loans in
the 2007 six month period.





General, Administrative and
Other Expense





General,
administrative and other expense totaled $2.3 million for the six months ended
December 31, 2008, an increase of $103,000, or 4.7%, compared to the same period
in 2007.  The increase was due primarily to an increase of $128,000,
or 33.7%, in other operating expenses, which totaled $508,000 for the six months
ended December 31, 2008.  The increase in other operating expense is
chiefly related to costs associated with the Company’s compliance with Section
404 of the Sarbanes-Oxley Act.





Federal Income
Taxes





The
provision for federal income taxes totaled $304,000 for the six months ended
December 31, 2008, an increase of $138,000, or 83.1%, compared to the same
period in 2007.  The effective tax rates were 32.4% and 31.4% for the
six-month periods ended December 31, 2008 and 2007, respectively.





Comparison of Operating
Results for the Three-Month Periods Ended December 31, 2008 and
2007





General





Net
earnings totaled $323,000 for the three months ended December 31, 2008, an
increase of $112,000, or 53.1% from the $211,000 in net earnings for the same
period in 2007.  The increase was primarily attributable to an
increase in net interest income.





16





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 December 31, 2008 and 2007
(continued)





Net Interest
Income





Net
interest income increased $215,000 or 16.0% to $1.6 million for the three month
period ended December 31, 2008, compared to the 2007 period, due primarily to
decreased cost of funds.  Interest income decreased by $335,000, or
9.9%, to $3.1 million, while interest expense decreased $550,000 or 26.9% to
$1.5 million for the three months ended December 31, 2008.





Interest
income from investment securities decreased $414,000 or 86.1% to $67,000 for the
three month period ended December 31, 2008, primarily as a result of a decline
in the average balance in investment securities, which declined $45.8 million or
85.0% to $8.1 million for the three months ended December 31,
2008.  The decline in the outstanding balance was the result of
maturities and calls of the Company’s investments, rather than the sale of those
securities.  Somewhat offsetting the decline in interest income from
investments was an increase in interest income from loans, which increased
$137,000 or 5.2% to $2.8 million for the three month period just
ended.  The increase in interest income on loans was primarily
attributable to an increase in the average balance of loans outstanding, which
increased $13.2 million or 7.8% to $187.0 million for the three month period
ended December 31, 2008.  The average rate earned by the loan
portfolio declined 13 basis points to 5.94% for the most recent three month
period compared to the prior year.  Interest rates on loans have
continued to decline.  Increased refinancing activity is likely to
cause the yield on loans to continue to decline as well.





Interest
expense on deposits decreased $195,000 or 15.6% to $1.1 million, while interest
expense on advances decreased $355,000, or 44.5%, to $442,000 for the 2008
period compared to the prior year period.  The decrease in interest
expense on advances was attributable primarily to a decrease in the average
balance outstanding, while the average rate paid on such advances also declined
period to period.  The average balance of advances outstanding
decreased $28.3 million, or 39.9%, from $70.9 million for the three months ended
December 31, 2007 to $42.6 million for the three month period ended December 31,
2008.  The average rate paid on advances declined 35 basis points to
4.15% for the three month period just ended.  The decrease in interest
expense on deposits was due primarily to a decrease in the average rate paid on
deposits, which declined 64 basis points to 3.09% for the three-month period
ended December 31, 2008.  The average balance of deposits outstanding
decreased $1.7 million or 1.2% for the three month period just
ended.  Net interest margin increased by 80 basis points to 2.86% for
the three months ended December 31, 2008, compared to 2.06% for the comparable
2007 period.





Provision for Losses on
Loans





The
Company recorded no provision for losses on loans during the three months ended
December 31, 2008 or 2007.  Management does not believe the ALLL was
underfunded at December 31, 2008.  However, the significant turmoil in
the general mortgage market makes this calculation even more
difficult.  There can be no assurance that the loan loss allowance
will be adequate to absorb unidentified losses on loans in the portfolio, which
could adversely affect the Company’s results of operations.





Other
Income





Other
income totaled $59,000 for the three months ended December 31, 2008, an increase
of $16,000 from the same period in 2007.  The increase in the 2008
period is primarily attributable to gain on sale of loans.  Gain on
sale of loans totaled $6,000 for the three month period just ended, while no
gain on sale of loans was realized in the 2007 period.





17




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 December 31, 2008 and 2007
(continued)





General, Administrative and
Other Expense





General,
administrative and other expense totaled $1.1 million for the three months ended
December 31, 2008, an increase of $67,000, or 6.2%, compared to the same period
in 2007.  This increase was due primarily to an increase in other
operating expenses, which totaled $232,000 for the three months ended
December 31, 2008, an increase of $42,000, or 22.1%, from the same period in
2007.  The increase in other operating expense is chiefly related to
costs associated with the Company’s compliance with Section 404 of the
Sarbanes-Oxley Act.





Federal Income
Taxes





The
provision for federal income taxes totaled $151,000 for the three months ended
December 31, 2008, an increase of $52,000, or 52.5%, compared to the same period
in 2007.  The effective tax rates was 31.9% for each of the the
three-month periods ended December 31, 2008 and 2007.





18




Kentucky
First Federal Bancorp





MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION


AND
RESULTS OF OPERATIONS (CONTINUED)





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, 2008.





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 December 31, 2008, 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.





19




Kentucky
First Federal Bancorp





PART
II





ITEM
1.        Legal
Proceedings




Not applicable.





ITEM
1A.     Risk
Factors





The Registrant’s risk factors have not changed from those set forth in the
Annual Report on Form 10-K.





ITEM
2.        Unregistered Sales of Equity
Securities and Use of Proceeds




(c)  The following
table sets forth information regarding Company’s repurchases of its common stock
during the quarter ended December 31, 2008.





Total # ofAverage
                  
                  
                  shares purchased
                  
                  
                  Maximum # of sharesTotal
                  
                  
                  price paid
                  
                  
                  as part of publicly
                  
                  
                  that may yet be# of shares
                  
                  
                  per share
                  
                  
                  announced plans
                  
                  
                  purchased underPeriod
                  
                  purchased
                  
                  
                  (incl commissions)
                  
                  
                  or programs
                  
                  
                  the plans or programsOctober
      1-31, 2008
                  
                  
                  32,500
                  
                  
                  $
                  9.69
                  
                  
                  
                  32,500
                  
                  
                  
                  137,100November
      1-30, 2008
                  
                  
                  10,200
                  
                  
                  $
                  9.78
                  
                  
                  
                  10,200
                  
                  
                  
                  126,900December
      1-31, 2008
                  
                  
                  23,200
                  
                  
                  $
                  9.75
                  
                  
                  
                  23,200
                  
                  
                  
                  103,700





(1) 
On August 17, 2007, the Company announced a program to repurchase up to 150,000
shares of its Common Stock.  This program was terminated on February 13,
2008 when the Company completed the repurchase of substantially all shares
authorized under this program, and announced another program to repurchase up to
150,000 shares of its Common Stock.On October
17, 2008, the Company announced the completion of the stock repurchase program
begun on February 13, 2008 and initiated another program for the repurchase of
up to 150,000 shares of its Common Stock.







ITEM
3.        Defaults Upon Senior
Securities




Not applicable.





ITEM
4T.     Submission of Matters to a
Vote of Security Holders




(a)
            The
      registrant held its Annual Meeting of Shareholders on November 11,
      2008.


(b)
            Not
      applicable


(c)
            Two
      matters were voted upon at the Annual
Meeting:


1)
            Election of two individuals as
directors:





Votes For
                    
                    
                    Votes WithheldWalter
      G. Ecton, Jr.
                    
                    
                    7,415,887
                    
                    
                    
                    65,879Don
      D. Jennings
                    
                    
                    7,428,267
                    
                    
                    
                    53,049





2) Ratification
of BKD, LLP, as the Company’s independent registered public accountants for the
fiscal year ending June 30, 2009:





Votes For
                  
                  Votes Against
                  
                  
                  Abstain7,431,573
                  
                  
                  17,430
                  
                  
                  
                  32,864





There
were no broker nonvotes.





20




Kentucky
First Federal Bancorp





PART II
(continued)




ITEM
5.        Other
Information




None.





ITEM
6.        Exhibits





10.1
              Employment
      Agreement between Kentucky First Federal Bancorp and Tony D. Whitaker, as
      amended* (1)


10.2
              Employment
      Agreement between First Federal Savings and Loan Association of Hazard and
      Tony D. Whitaker, as amended*
(1)


10.3
              Employment
      Agreement between Kentucky First Federal Bancorp and Don D. Jennings, as
      amended* (1)


10.4
              Employment
      Agreement between First Federal Savings Bank of Frankfort and Don D.
      Jennings, as amended* (1)


10.5
              Employment
      Agreement between Kentucky First Federal Bancorp and R. Clay Hulette, as
      amended* (1)


10.6
              Employment
      Agreement between First Federal Savings Bank of Frankfort and R. Clay
      Hulette, as amended* (1)


10.7
              Employment
      Agreement between First Federal Savings Bank of Frankfort and Teresa Kuhl,
      as amended* (1)


10.8
              Amended
      and Restated First Federal Savings and Loan Association of Hazard Change
      in Control Severance Compensation Plan*
(1)


10.9
              Amended
      and Restated First Federal Savings Bank of Frankfort Change in Control
      Severance Compensation Plan*
(1)


10.10
              Amended
      and Restated First Federal Savings and Loan Association Supplemental
      Executive Retirement Plan*
(1)


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


_____________


*  
Management contract or compensation plan or arrangement.


(1)
            Amended
      during the quarter ended December 31, 2008 to comply with Section 409A of
      the Internal Revenue Code of 1986, as amended (the “Code”) and
      the regulations and guidance issued with respect to Section 409A of
      the Code.





21





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 BANCORPDate:
                        February 16, 2009
                        
                        By:
                        /s/Tony D. WhitakerTony
      D. WhitakerChairman
      of the Board and Chief Executive OfficerDate:
                        February 16, 2009
                        
                        By:
                        /s/R. Clay HuletteR.
      Clay HuletteVice
      President and Chief Financial
Officer




22