EXHIBIT 99 Frankfort First Bancorp, Inc. For Immediate Release January 20, 2004 Contact: Don Jennings, President, or Clay Hulette, Vice President (502) 223-1638 216 West Main Street P.O. Box 535 Frankfort, KY 40602 FRANKFORT FIRST BANCORP, INC. RELEASES EARNINGS Frankfort First Bancorp, Inc. (Nasdaq: FKKY), the holding company for First Federal Savings Bank of Frankfort, Kentucky, announced net earnings of $217,000 or $0.17 diluted earnings per share for the three month period ended December 31, 2003, compared to $344,000 or $0.27 diluted earnings per share for the three month period ended December 31, 2002. This results in a 37.0% decrease in diluted earnings per share for the quarter ended December 31, 2003. Net earnings for the six month period ended December 31, 2003 were $468,000 or diluted earnings per share of $0.36 compared to net earnings of $718,000 or diluted earnings per share of $0.56 for the six month period ended December 31, 2002, a 35.7% decrease in net earnings, period to period. Net earnings for the current quarter decreased by $127,000 or 36.9% compared to the prior year largely due to a decrease in net interest income. Net interest income decreased by $101,000 or 11.1% for the three month period ended December 31, 2003 compared to the prior year period. Net interest income was affected by historically low market interest rates that continued to have radical effects on the Company's loan portfolio, which included borrowers refinancing for lower rates and downward adjustment of adjustable rate mortgages. During the quarter just ended, these market factors led to a reduction in the average rate earned on the loan portfolio. Over the two preceding fiscal years, these factors also had contributed to a reduction in the Company's loan portfolio, but at December 31, 2003, loans receivable, net had increased $2.9 million or 2.3% to $127.5 million compared to the June 30, 2003 level. Also contributing to the decrease in net earnings for the quarter was an increase of $75,000 or 18.1% in general, administrative and other expense, caused primarily by higher costs associated with the Company's pension plan and other employee benefits. President Don Jennings stated that while margin compression is affecting many financial institutions, the Company's earnings may have been impacted to a greater extent as management has continued to adhere to its longstanding techniques for managing interest rate risk, such as emphasizing investment in adjustable rate mortgages as opposed to purchasing or originating higher-yielding fixed rate investments. While this currently exacerbates the margin compression, such techniques should prove to be beneficial when market interest rates rise. The decrease in net earnings for the six month period ended December 31, 2003 is attributable to the same factors identified for the quarter then ended. Net interest income decreased $283,000 or 15.1% from period to period. General, administrative and other expense increased $76,000 or 9.1% for the six month period ended December 31, 2003 compared to the prior year period. At December 31, 2003, the Company reported its book value per share as $14.06 compared to $14.35 at June 30, 2003. This press release contains statements that are forward-looking, as that term is defined by the Private Securities Litigation Act of 1995 or the Securities and Exchange Commission in its rules, regulations and releases. The Company intends that such forward-looking statements be subject to the safe harbors created thereby. All forward-looking statements are based on current expectation regarding important risk factors including, but not limited to, real estate values and the impact of interest rates on financing. Accordingly, actual results may differ from those expressed in the forward-looking statements, and the making of such statements should not be regarded as a representation by the Company or any other person that results expressed therein will be achieved. First Federal Savings Bank of Frankfort operates three offices in Frankfort, Kentucky. Frankfort First Bancorp, Inc. shares are traded on the Nasdaq National Market under the symbol FKKY. At December 31, 2003 the Company had approximately 1,262,000 shares outstanding. SUMMARY OF FINANCIAL HIGHLIGHTS CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION December 31, June 30, 2003 2003 -------- -------- (In thousands, except per share data) (Unaudited) (Audited) Assets Cash and Cash Equivalents $ 318 $ 2,028 Investment Securities 6,431 7,097 Loans Receivable, net 127,503 124,596 Other Assets 4,603 4,615 -------- -------- Total Assets $138,855 $138,336 ======== ======== Liabilities Deposits $ 74,782 $ 75,622 FHLB Advances 44,936 43,017 Other Liabilities 1,400 1,699 -------- -------- Total Liabilities 121,118 120,338 Shareholders' Equity 17,737 17,998 -------- -------- Total Liabilities and Equity $138,855 $138,336 ======== ======== Book Value Per Share $ 14.06 $ 14.35 ======== ======== CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS Six months ended Three months ended December 31, December 31, 2003 2002 2003 2002 ------ ------ ------ ------ (In thousands, (In thousands, except per except per share data) share data) (Unaudited) (Unaudited) Interest Income $3,896 $4,497 $1,934 $2,196 Interest Expense 2,299 2,617 1,127 1,288 ------ ------ ------ ------ Net Interest Income 1,597 1,880 807 908 Provision for Losses on Loans -- -- -- -- Other Operating Income 25 44 13 24 General, Administrative, and Other Expense 911 835 489 414 ------ ------ ------ ------ Earnings Before Federal Income Taxes 711 1,089 331 518 Federal Income Taxes 243 371 114 174 ------ ------ ------ ------ Net Earnings $ 468 $ 718 $ 217 $ 344 ====== ====== ====== ====== Basic Earnings Per Share $ 0.37 $ 0.58 $ 0.17 $ 0.28 Diluted Earnings Per Share $ 0.36 $ 0.56 $ 0.17 $ 0.27 Dividends Per Share $ 0.56 $ 0.56 $ 0.28 $ 0.28