Business
Kentucky First Federal Bancorp Releases Fiscal Year Results
Noncash accounting transaction overshadows net income HAZARD, Ky. and FRANKFORT, Ky. and DANVILLE, Ky. and LANCASTER, Ky., Sept. 21, 2020 (GLOBE NEWSWIRE) --
About this update from Kentucky First Federal Bancorp
[{"type":"text","content":"Noncash accounting transaction overshadows net income\nHAZARD, Ky. and FRANKFORT, Ky. and DANVILLE, Ky. and LANCASTER, Ky., Sept. 21, 2020 (GLOBE NEWSWIRE) -- Kentucky First Federal Bancorp (Nasdaq: KFFB), (the “Company”) the holding company for First Federal Savings and Loan Association of Hazard and First Federal Savings Bank of Kentucky, announced that a non-cash $13.6 million goodwill impairment charge led to a reported loss of $13.3 million or $1.61 per common share for the quarter ended June 30, 2020. This compares to net income of $300,000 or $0.04 per common share for the quarter ended June 30, 2019. The Company reported a net loss of $12.5 million or $1.52 per common share for the twelve months ended June 30, 2020, compared to net earnings of $812,000 or $0.10 per common share for the twelve months ended June 30, 2019.\n The Company recorded a goodwill impairment charge, which had no tax impact, of $13.6 million, or $1.64 per common share, during the quarter ended June 30, 2020, which represents 93.5% of goodwill previously reported. Goodwill of $14.5 million was originally recorded in March 2005 when the Company, as part of its initial public offering, purchased Frankfort First Bancorp, Inc., with a portion of the stock and cash proceeds from the offering. The impairment charge represents an accounting transaction which had no impact on cash flows, liquidity, or key capital ratios of the Company or its bank subsidiaries. A prolonged decline in the stock price of the Company exacerbated by the COVID-19 pandemic and related economic impact led to recognition of the impairment pursuant to management’s performance of a goodwill impairment analysis as of June 30, 2020. In conjunction with this determination, management also early adopted ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the required method for estimating the fair value of the Company. Based on this analysis, the estimated fair value of the Company was less than book value, resulting in the $13.6 million goodwill impairment charge. The estimated fair value of the Company was determined based on a combination of methods including discounted cash flows of forecasted earnings and estimated sales price based on recent observable market transactions of similar securities. According to Tony Whit...