U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------
FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 0-22587
SFB BANCORP, INC.
(Exact name of Registrant as specified in its Charter)
Tennessee 62-1683732
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
632 East Elk Avenue, Elizabethton, Tennessee 37643
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (423) 543-1000
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 for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
|X| Yes |_| No
As of May 13, 2003, there were 570,522 shares of the Registrant's common stock,
par value $0.10 per share, outstanding. The Registrant has no other classes of
common equity outstanding.
Transitional small business disclosure format:
|_| Yes |X| No
1
SFB BANCORP, INC.
AND SUBSIDIARY
Elizabethton, Tennessee
Index
PART I. Page(s)
FINANCIAL INFORMATION
Item 1.
Financial Statements
Consolidated Balance Sheets - (Unaudited) as of December 31, 2002 and March 31, 2003.............3
Consolidated Statements of Comprehensive Income - (Unaudited) for the three
month periods ended March 31, 2002 and 2003 .....................................................4
Consolidated Statements of Stockholders' Equity - (Unaudited)....................................5
Consolidated Statements of Cash Flows - (Unaudited) for the three months
ended March 31, 2002 and 2003..................................................................6
Notes to (Unaudited) Consolidated Financial Statements.........................................7-8
Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................................................9-12
Item 3.
Controls and Procedures.........................................................................13
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings......................................................................14
Item 2. Changes in Securities..................................................................14
Item 3. Defaults Upon Senior Securities........................................................14
Item 4. Submission of Matters to a Vote of Security Holders....................................14
Item 5. Other Information......................................................................14
Item 6. Exhibits and Reports on Form 8-K.......................................................14
Item 7. Signatures.............................................................................15
Certifications...............................................................................16-17
2
SFB BANCORP, INC.
AND SUBSIDIARY
Consolidated Balance Sheets
(in thousands, except share data)
December 31, March 31,
-----------------------------
Assets 2002 2003
---- ----
Cash on hand $ 654 $ 494
Interest earning deposits 4,309 7,150
-------- --------
Cash and cash equivalents 4,963 7,644
Investment securities:
Held to maturity (market value of $612 in 2002 and $597 in 2003) 592 560
Available for sale 2,954 2,775
Loans receivable, net 43,880 42,870
Mortgage-backed securities:
Available for sale 2,396 1,736
Premises and equipment, net 850 835
Federal Home Loan Bank stock, at cost 586 591
Accrued interest receivable 266 267
Other assets 125 155
-------- --------
Total assets $ 56,612 $ 57,433
======== ========
Liabilities and Stockholders' Equity
Deposits:
Non-interest-bearing $ 1,341 $ 1,376
Interest-bearing 42,271 42,897
-------- --------
Total deposits 43,612 44,273
Advance payments by borrowers for taxes and insurance 184 307
Accrued expenses and other liabilities 73 78
Income taxes:
Current 203 146
Deferred 216 210
-------- --------
Total liabilities 44,288 45,014
-------- --------
Stockholders' equity:
Common stock ($.10 par value, 4,000,000 shares authorized;
767,000 shares issued; 578,247 and 570,522 outstanding at
December 31, 2002 and March 31, 2003, respectively) 58 58
Paid-in capital 5,074 4,957
Retained income, substantially restricted 7,388 7,573
Treasury stock at cost (1,300 shares at December 31, 2002) (21) --
Accumulated other comprehensive income 32 22
Unearned compensation:
Employee stock ownership plan (207) (191)
-------- --------
Total stockholders' equity 12,324 12,419
-------- --------
Total liabilities and stockholders' equity $ 56,612 $ 57,433
======== ========
The accompanying notes are an integral part of these
consolidated financial statements.
3
SFB BANCORP, INC. AND SUBSIDIARY
Consolidated Statements Comprehensive Income
(Unaudited)
(in thousands, except per share data)
For Three Months Ended
March 31,
----------------------
2002 2003
---- ----
Interest income:
Loans $ 871 $ 825
Mortgage-backed securities 33 21
Investments 27 37
Interest earning deposits 20 12
----- -----
Total interest income 951 895
----- -----
Interest expense:
Deposits 380 270
----- -----
Total interest expense 380 270
----- -----
Net interest income 571 625
Provision for loan losses 9 9
----- -----
Net interest income after provision
for loan losses 562 616
----- -----
Non-interest income:
Loan fees and service charges 55 45
Other 2 2
----- -----
Total non-interest income 57 47
----- -----
Non-interest expenses:
Compensation 156 169
Employee benefits 35 42
Net occupancy expense 31 37
Deposit insurance premiums 2 2
Data processing 34 34
Other 66 77
----- -----
Total non-interest expenses 324 361
----- -----
Income before income taxes 295 302
Income tax expense 114 117
----- -----
Net income $ 181 $ 185
Other comprehensive loss (16) (10)
----- -----
Comprehensive income $ 165 $ 175
===== =====
Earnings per share:
Basic $ .33 $ .34
Diluted $ .33 $ .34
The accompanying notes are an integral part of these
consolidated financial statements.
4
SFB BANCORP, INC.
AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
(in thousands, except share data)
Accumulated
Other Unearned Compensation
Common Paid-In Retained Treasury Comprehensive ---------------------
Stock Capital Income Stock Income for ESOP for RSP Total
----- ------- ------ ----- ------ -------- ------- -----
Balance at December 31, 2001 58 5,112 6,781 -- (20) (278) (46) 11,607
Net income -- -- 718 -- -- -- -- 718
Other comprehensive income -- -- -- -- 52 -- -- 52
Cash dividends declared
($.20 per share) -- -- (111) -- -- -- -- (111)
Treasury stock purchased
(6,048 shares) -- -- -- (96) -- -- -- (96)
Retirement of treasury stock
(4,748 shares) -- (75) -- 75 -- -- -- --
Compensation earned -- 37 -- -- -- 71 46 154
------- ------- ------- ----- ------ ------- ------ --------
Balance at December 31, 2002 $ 58 $ 5,074 $ 7,388 $ (21) $ 32 $ (207) $ -- $ 12,324
Net income -- -- 185 -- -- -- -- 185
Other comprehensive income -- -- -- -- (10) -- -- (10)
Treasury stock purchased
(6,425 shares) -- -- -- (107) -- -- -- (107)
Retirement of treasury stock
(7,725 shares) -- (128) -- 128 -- -- -- --
Compensation earned -- 11 -- -- -- 16 -- 27
------- ------- ------- ----- ------ ------- ------ --------
Balance at March 31, 2003 $ 58 $ 4,957 $ 7,573 $ -- $ 22 $ (191) $ -- $ 12,419
======= ======= ======= ===== ====== ======= ====== ========
The accompanying notes are an integral part of these
consolidated financial statements.
5
SFB BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Three Months Ended
March 31,
---------------------
2002 2003
---- ----
Operating activities:
Net income $ 181 $ 185
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 23 26
Provision for loan losses 9 9
Net increase (decrease) in deferred loan fees (2) 7
Accretion of discounts on investment securities, net (7) (7)
Amortization of premiums on mortgage-backed securities 1 6
Amortization of unearned compensation 47 27
FHLB stock dividends (6) (5)
Change in operating assets and liabilities:
Other assets 27 (30)
Accrued interest receivable (8) (1)
Accrued expenses and other liabilities 18 5
Current income taxes 85 (57)
------- -------
Net cash provided by operating activities 368 165
------- -------
Investing activities:
Maturities of investment securities held to maturity 37 39
Purchase of investment securities available for sale (901) (379)
Maturities of investment securities available for sale -- 550
Principal payments on mortgage-backed securities
available for sale 209 645
Net (increase) decrease in loans (92) 995
Purchase of premises and equipment (64) (11)
------- -------
Net cash provided (used) by investing activities (811) 1,839
------- -------
Financing activities:
Net increase (decrease) in deposits (428) 661
Increase in advance payments by borrowers for
taxes and insurance 129 123
Proceeds from FHLB Advances -- --
Repayment of FHLB Advances -- --
Treasury stock purchased -- (107)
------- -------
Net cash provided (used) by financing activities (299) 677
------- -------
Increase (decrease) in cash and cash equivalents (742) 2,681
Cash and cash equivalents at beginning of period 6,786 4,963
------- -------
Cash and cash equivalents at end of period $ 6,044 $ 7,644
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 374 $ 265
Income taxes 49 291
======= =======
Noncash transactions:
Unrealized gains (losses) on securities and mortgage-backed
Securities available for sale, net of deferred taxes $ (16) $ (10)
Loan charge off's 15 --
The accompanying notes are an integral part of these
consolidated financial statements.
6
SFB BANCORP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
(Tabular amounts in thousands)
1. Basis of Preparation
The accompanying unaudited consolidated financial statements were prepared
in accordance with instructions for Form 10-QSB and therefore, do not
include all disclosures necessary for a complete presentation of the
consolidated balance sheets, consolidated statements of comprehensive
income, consolidated statements of stockholders' equity, and consolidated
statements of cash flows in conformity with generally accepted accounting
principles. However, all adjustments, which are, in the opinion of
management, necessary for the fair presentation of the interim financial
statements have been included. All such adjustments are of a normal
recurring nature. The statement of comprehensive income for the three
month period ended March 31, 2003 is not necessarily indicative of the
results, which may be expected for the entire year or any other future
interim period.
It is suggested that these consolidated financial statements be read in
conjunction with the audited consolidated financial statements and notes
thereto for the Company for the year ended December 31, 2002 which are
included in the Form 10-KSB by reference (file no. 0-22587).
2. Earnings Per Share
Basic earnings per share represents income available to common
shareholders divided by the weighted average number of common shares
outstanding during the period. Unallocated ESOP shares are not considered
as outstanding for purposes of this calculation. Diluted earnings per
share reflects additional common shares that would have been outstanding
if dilutive potential common shares had been issued, as well as any
adjustment to income that would result from the assumed issuance.
Potential common shares that may be issued by the Company relate solely to
outstanding stock options, and are determined using the treasury stock
method. Diluted earnings per share includes the effect of dilution for
stock options.
For the period ended March 31, 2002 and 2003, net income available to the
common stockholders in both the basic and diluted computations was equal
to net income. For purposes of the diluted earnings per share calculation,
there was no dilutive effect for the stock options for the periods ended
March 31, 2002 and 2003.
Earnings per common share have been computed based on the following:
March 31, March 31,
2002 2003
Net income applicable to common stock $ 181 $ 185
======== ========
Average number of common shares outstanding 549 540
Effect of dilutive options -- --
-------- --------
Average number of common shares outstanding
used to calculate diluted earnings per common
Share 549 540
======== ========
7
3. Asset Quality
The following table sets forth information regarding the Bank's
nonperforming loans (i.e., loans which are contractually past due 90 days
or more) at December 31, 2002 and March 31, 2003, respectively. As of the
dates indicated, the Bank had no loans categorized as troubled debt
restructuring within the meaning of SFAS 15.
December 31, March 31,
2002 2003
---- ----
Nonaccrual loans $ 189 $ 265
Repossessed real estate -- --
------- -------
Total nonperforming assets $ 189 $ 265
======= =======
Nonperforming loans to net loans .43% .62%
Nonperforming assets to total assets .33% .46%
4. Stock Based Compensation
On December 31, 2002, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 148,
Accounting for Stock-Based Compensation - Transition and Disclosure. This
statement amends SFAS No. 123, Accounting for Stock-Based Compensation, to
provide alternative methods of transition for an entity that voluntarily
changes to the fair value based method of accounting for stock-based
employee compensation. It also amends the disclosure provisions of that
Statement to require prominent disclosure about the effects on reported
net income of an entity's accounting policy decisions with respect to
stock-based employee compensation. Finally, this Statement amends APB
Opinion No. 28, Interim Financial Reporting, to require disclosure about
those effects in interim financial statements. We intend to continue to
account for stock-based compensation based on the provisions of APB
Opinion No. 25.
The provisions of SFAS 148 are not applicable if the result of recording
stock-based compensation for the reporting period is not material.
Accordingly, for the current reporting period if the Company had recorded
stock-based compensation the effects would not have been material.
8
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
The Private Securities Litigation Reform Act of 1995 contains safe harbor
provisions regarding forward-looking statements. When used in this discussion,
the words "believes", "anticipates", "contemplates", "expects", and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those projected. Those risks and uncertainties include
changes in interest rates, risk associated with the effect of opening a new
branch, the ability to control costs and expenses, and general economic
conditions.
The following discussion and analysis is intended to assist in understanding the
financial condition and the results of operations of the Company. References to
the "Company" include SFB Bancorp, Inc. and/or the Bank as appropriate.
Comparison of Results of Operations for the Three Months Ended March 31, 2002
and 2003
Net Income. Net income increased $4,000, or 2.2%, for the three months ended
March 31, 2003, to $185,000, compared to $181,000 for the three months ended
March 31, 2002. The increase was primarily the result of an increase in the net
interest margin of $54,000, offset by a $10,000 decrease in non-interest income
and a $37,000 increase in other non-interest expenses for the three month period
in 2003, as compared 2002. Diluted income per share increased $.01, from $.33
for the three month ended March 31, 2002, to $.34 for the three months ended
March 31, 2003.
Net Interest Income. Net interest income increased approximately $54,000, or
9.5%, from $571,000 for the three months ended March 31, 2002, to $625,000 for
the three months ended March 31, 2003. The increase in net interest income for
the three month period in 2003, as compared to the same period in 2002,
primarily reflects a 93 basis point decrease in the Company's average cost of
funds to 2.46% and an approximate $837,000 decrease in average interest-bearing
liabilities. The interest rate spread increased from 3.48% for the three months
ending March 31, 2002, to 4.00% for the three months ending March 31, 2003,
while the net interest margin increased 38 basis points to 4.51% for the three
months ended March 31, 2003.
Interest Income. Total interest income decreased $56,000, or 5.9%, from
approximately $951,000 for the three months ended March 31, 2002, to
approximately $895,000 for the three months ended March 31, 2003. The decrease
in 2003, as compared to 2002, was attributable to a 41 basis point decrease in
the average yield on interest-earning assets, from 6.87% for 2002, to 6.46% for
2003.
Interest on loans decreased $46,000 for the three months ended March 31, 2003,
as compared to the three-month period in 2002. The decrease primarily reflects
an approximate $981,000 decrease in average loans outstanding, combined with a
decrease in the average yield on average loans
9
outstanding of 25 basis points, from 7.87% for 2002, to 7.62% for 2003. Loans
receivable are the largest interest-earning asset held in the Company's
portfolio.
Interest on mortgage-backed securities decreased $12,000 for the three months
ended March 31, 2003, compared to the three-month period in 2002. The decrease
in the interest on mortgage-backed securities was primarily the result of an
decrease of approximately $798,000 in the average invested balance of
mortgage-backed securities for the three months ended March 31, 2003, compared
to the three-month period in 2002, and a 47 basis point decrease in the average
yield to 4.29% for the three months ended March 31, 2003.
Interest on investment securities increased approximately $10,000 for the three
months ended March 31, 2003, as compared to the three-month period in 2002. The
increase in interest on investments primarily reflects a $1.4 million increase
in the average investment balance for the three-month period in 2003, compared
to 2002, offset by a 49 basis point decline in the average yield on investments.
Interest on interest-earning deposits decreased $8,000 for the three months
ended March 31, 2003, compared to the three-month period in 2002. The decrease
in interest on interest-earning deposits primarily reflects a 65 basis point
decline in the average yield on interest-earning deposits for the three months
ended March 31, 2003, compared to the three month period in 2002, offset by an
increase of approximately $348,000 in the average balance of interest-earning
deposits. The Company anticipates utilizing its cash and interest-earning
deposit balances to fund future loan demand.
Interest Expense. Interest expense decreased $110,000, or 28.9%, from $380,000
for the three months ended March 31, 2002, to $270,000 for the three months
ended March 31, 2003. The decrease for the three months ended March 31, 2003 was
primarily the result of a 93 basis point decrease in the average cost of funds,
combined with an approximate $837,000 decrease in average interest-bearing
liabilities. Under the current rate environment the Company has experienced
above normal net interest margins. This is mainly attributable to the Company's
liabilities being more sensitive to short-term re-pricing than its assets. If
the rate environment were to increase our interest expense could rise faster
than our interest income potentially resulting in lower net interest margins.
Provision for Loan Losses. The provision for loan losses for three-month period
ended March 31, 2002 and 2003 was $9,000, respectively. The Company's management
routinely performs an analysis to quantify the inherent risk of loss in its
portfolio. At March 31, 2003, the ratio of the allowance for loan loss was at a
level deemed adequate by management to provide for losses in the loan portfolio.
The ratio of allowance for loan loss to non-performing loans at March 31, 2003,
was 139.9%, and nonperforming assets represented 0.46% of total consolidated
assets. Management is not aware of any trends or events inherent to its loan
portfolio that has not been provided for in its loan loss allowance. There,
however, can be no assurance that future losses will not exceed estimated
amounts or that additional provisions for loan losses will not be required in
future periods.
10
Non-Interest Income. Non-interest income continues to be an additional source of
income for the Company. Fees on new loan production and service fees on other
products and services produce the income. Total non-interest income amounted to
$57,000 and $47,000 for 2002 and 2003, respectively.
Non-Interest Expense. Non-interest expense increased $37,000, from approximately
$324,000 for the three month period ended March 31, 2002, to approximately
$361,000 for the three-month period in 2003. The increase was the result of an
increase of $13,000 in compensation expense, $7,000 employee benefit expense,
$6,000 net occupancy expense and $11,000 other expenses. The increase in
compensation expense for the three-month period in 2003, as compared to 2002,
was primarily due to normal compensatory raises and expenses associated with the
payment of dividend equivalency rights in the first quarter 2003 for the cash
dividend paid in December 2002. The increase in employee benefit expense for the
three-month period in 2003, compared to 2002, was primarily due to expensing the
monthly allocation of the Employee Stock Ownership Plan shares at a higher
average fair value in 2003, as compared to 2002. The increase in net occupancy
and other expenses for the three-months in 2003, compared to 2002, was mainly
attributable to additional occupancy and general operating expenses.
Income Taxes. Income tax expense for the three months ended March 31, 2003,
increased $3,000, to $117,000, compared to the same period in 2002. The increase
was primarily the result of higher pre-tax income. The effective tax rate for
the three months ended March 31, 2002 and 2003 was approximately 39%.
Liquidity and Capital Resources. The Company's primary sources of funds are new
deposits, proceeds from principal and interest payments on loans, and repayments
on mortgage-backed securities. While maturities and scheduled amortization of
loans are a predictable source of funds, deposit flows and mortgage prepayments
are greatly influenced by general interest rates, economic conditions and
competition. The Company's primary investing activity is loan originations. The
Company maintains liquidity levels adequate to fund loan commitments, investment
opportunities, deposit withdrawals and other financial commitments. Obligations
to fund outstanding loan commitments at March 31, 2003 were approximately $1.3
million.
At March 31, 2003, management had no knowledge of any trends, events or
uncertainties that will have or are reasonably likely to have material effects
on the liquidity, capital resources or operations of the Company. Furthermore,
at March 31, 2003, management was not aware of any current recommendations by
the regulatory authorities that, if implemented, would have a material effect.
11
The Bank exceeded all of its capital requirements at March 31, 2003. The Bank
had the following capital ratios at March 31, 2003:
For Capital Categorized as
Actual Adequacy Purposes "Well Capitalized"(1)
------------------------ ----------------------- ------------------------
Amount Ratio Amount Ratio Amount Ratio
------------------------ ----------------------- ------------------------
As of March 31, 2003:
Total Capital
(to risk weighted assets) $ 12,093 37.8% $ 2,562 8.0% $ 3,202 10.0%
Tier I Capital
(to risk weighted assets) $ 11,722 36.6% $ 1,281 4.0% $ 1,921 6.0%
Tier I Capital
(to total assets) $ 11,722 20.6% $ 1,708 3.0% $ 2,847 5.0%
Tangible Capital
(to total assets) $ 11,722 20.6% $ 854 1.5% $ 2,847 5.0%
(1) As categorized under the Prompt Corrective Action Provisions.
12
Item 3.
CONTROLS AND PROCEDURES
a. Within the 90 days prior to the date of this report, we carried out
an evaluation, under the supervision and with the participation of
the Company's management, including the Company's President and
Chief Executive Officer along with Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls
and procedures pursuant to Exchange Act Rule 13a-14. Based upon that
evaluation, the Company's President and Chief Executive Officer
along with the Chief Financial Officer concluded that our disclosure
controls and procedures are effective in timely alerting them to
material information relating to the Company (including its
consolidated subsidiaries) required to be included in our periodic
SEC filings.
b. There have been no significant changes in our internal controls or
in other factors that could significantly affect internal controls
subsequent to the date we carried out this evaluation.
13
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, the Company and its subsidiaries may be a party to
various legal proceedings incident to its or their business. At March
31, 2003, there were no legal proceedings to which the Company or any
subsidiary was a party, or to which of any of their property was
subject, which were expected by management to result in a material loss.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) 3(i) Charter of SFB Bancorp, Inc.*
3(ii) Bylaws of SFB Bancorp, Inc. *
4 Specimen Stock Certificate *
10 Employment Agreement with Peter W. Hampton *
10.1 SFB Bancorp, Inc. 1998 Stock Option Plan **
10.2 Security Federal Bank Restricted Stock Plan **
99.1 Certification of Chief Executive Officer and Chief Financial Officer
under Section 906 of the Sarbanes-Oxley Act of 2002
* Incorporated by reference to the Registration Statement on Form
SB-2, File No. 333-23505.
** Incorporated by reference to the proxy statement for the annual
meeting of stockholders on June 1, 1998, and filed with the SEC on
April 17, 1998 (File No. 0-22587).
(b) Reports on Form 8-K
None.
14
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.
SFB Bancorp, Inc.
Date: May 13, 2003 By /s/ Peter W. Hampton
---------------------------------------
Peter W. Hampton
(President and Chief Executive Officer)
Date: May 13, 2003 By /s/ Bobby Hyatt
---------------------------------------
Bobby Hyatt
(Vice President and Finance Officer)
15
CERTFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF SFB
BANCORP, INC.
PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002
I, Peter W. Hampton, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of SFB Bancorp, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 13, 2003 By /s/ Peter W. Hampton
---------------------------------------
Peter W. Hampton
(President and Chief Executive Officer)
16
CERTFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF SFB
BANCORP, INC.
PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002
I, Bobby Hyatt, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of SFB Bancorp, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 13, 2003 By /s/ Bobby Hyatt
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Bobby Hyatt
(Vice President and Finance Officer)
17
Exhibit 99.1 CERTFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL
OFFICER OF SFB BANCORP, INC.