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 June 30, 2001
[ ] 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
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SFB BANCORP, INC.
------------------------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
Tennessee 62-1683732
--------------------------------------------- ----------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
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 August 2, 2001, there were 582,995 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
---------- --------
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, 2000 and June 30, 2001............3
Consolidated Statements of Comprehensive Income - (Unaudited) for the three and six month
periods ended June 30, 2000 and 2001.......................................................4
Consolidated Statements of Stockholders' Equity - (Unaudited)................................5
Consolidated Statements of Cash Flows - (Unaudited) for the six months
ended June 30, 2000 and 2001...............................................................6
Notes to (Unaudited) Consolidated Financial Statements.....................................7-8
Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations...............................................................9-13
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...................................................15
Signatures..................................................................................16
SFB BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share data)
December 31, June 30,
------------ ---------
Assets 2000 2001
------ --------- ---------
Cash on hand $ 581 $ 902
Interest earning deposits 1,540 5,545
Investment securities:
Held to maturity (market value of $841
in 2000 and $757 in 2001) 870 811
Available for sale 1,621 -
Loans receivable, net 46,814 46,875
Mortgage-backed securities:
Available for sale 1,659 1,521
Premises and equipment, net 957 956
Federal Home Loan Bank stock, at cost 524 542
Accrued interest receivable 355 265
Other assets 47 88
--------- ---------
Total assets $ 54,968 $ 57,505
========= =========
Liabilities and Stockholders' Equity
------------------------------------
Deposits $ 42,252 $ 45,334
Federal Home Loan Bank advances 1,000 --
Advance payments by borrowers for taxes and insurance 222 442
Accrued expenses and other liabilities 128 161
Income taxes:
Current 18 8
Deferred 129 141
--------- ---------
Total liabilities 43,749 46,086
--------- ---------
Stockholders' equity:
Preferred stock ($.10 par value, 1,000,000 shares authorized;
none outstanding) - -
Common stock ($.10 par value, 4,000,000 shares authorized;
767,000 shares issue 588,595 and 582,995 outstanding at
December 31, 2001 and June 30, 2001, respectively) 77 77
Paid-in capital 7,392 7,400
Retained earnings, substantially restricted 6,539 6,702
Treasury stock at cost (178,405 shares at December 31, 2000
and 184,005 at June 30, 2001) (2,245) (2,315)
Accumulated other comprehensive income (57) (39)
Unearned compensation:
Employee stock ownership plan (348) (313)
Restricted stock plan (139) (93)
--------- ---------
Total stockholders' equity 11,219 11,419
--------- ---------
Total liabilities and stockholders' equity $ 54,968 $ 57,505
========= =========
The accompanying notes are an integral part of these
consolidated financial statements.
3
SFB BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Comprehensive Income
(Unaudited)
(in thousands, except per share data)
For Three Months Ended For Six Months Ended
June 30, June 30,
-------------------------- -------------------------
2000 2001 2000 2001
----------- ------------ ---------- -----------
Interest income:
Loans $ 899 $ 960 $ 1,780 $ 1,914
Mortgage-backed securities 25 22 56 48
Investments 50 29 99 64
Interest earning deposits 8 36 12 62
----------- ----------- ----------- -----------
Total interest income 982 1,047 1,947 2,088
----------- ----------- ----------- -----------
Interest expense:
Deposits 488 570 944 1,142
FHLB Advances 8 -- 15 2
----------- ----------- ----------- -----------
Total interest expense 496 570 959 1,144
----------- ----------- ----------- -----------
Net interest income 486 477 988 944
Provision for loan losses 9 9 18 18
----------- ----------- ----------- -----------
Net interest income after provision
for loan losses 477 468 970 926
Non-interest income:
Loan fees and service charges 43 50 94 96
Other 3 2 6 6
----------- ----------- ----------- -----------
Total non-interest income 46 52 100 102
----------- ----------- ----------- -----------
Non-interest expenses:
Compensation 157 170 336 338
Employee benefits 29 33 64 65
Net occupancy expense 33 31 65 62
Deposit insurance premiums 2 2 4 4
Data processing 28 32 60 66
Other 66 70 134 139
----------- ----------- ----------- -----------
Total non-interest expenses 315 338 663 674
----------- ----------- ----------- -----------
Income before income taxes 208 182 407 354
Income tax expense 77 71 150 136
----------- ----------- ----------- -----------
Net income $ 131 $ 111 $ 257 $ 218
Other comprehensive income (loss) (1) 7 (21) 18
----------- ----------- ----------- -----------
Comprehensive income $ 130 $ 118 $ 236 $ 236
=========== ========== =========== ==========
Earnings per share
Basic $ .23 $ .20 $ .43 $ .39
Diluted $ .23 $ .20 $ .43 $ .39
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)
Accumu
lated
Other Unearned
Compre- Compensation
Common Paid-In Retained Treasury hensive --------------------
Stock Capital Income Stock Income for ESOP for RSP Total
-------- -------- -------- -------- -------- -------- -------- --------
Balance at
December 31, 1999 77 7,382 6,165 (1,208) (45) (419) (236) 11,716
Net income - - 485 - - - - 485
Other comprehensive
income - - - - (12) - - (12)
Cash dividends
declared ($.20 share) - - (111) - - - - (111)
Treasury stock
purchased
(90,822 shares) - - - (1,037) - - - (1,037)
Compensation earned - 10 - - - 71 97 178
-------- -------- -------- -------- -------- -------- -------- --------
Balance at
December 31, 2000 77 7,392 6,539 (2,245) (57) (348) (139) 11,219
Net income - - 218 - - - - 218
Other comprehensive
income - - - - 18 - - 18
Cash dividends
declared ($.10 share) - - (55) - - - - (55)
Treasury stock
purchased
(5,600 shares) - - - (70) - - - (70)
Compensation earned - 8 - - - 35 46 89
-------- -------- -------- -------- -------- -------- -------- --------
Balance at
June 30, 2001 $ 77 $ 7,400 $ 6,702 $ (2,315) $ (39) $ (313) $ (93) $ 11,419
======== ======== ======== ======== ======== ======== ======== ========
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)
Six Months Ended
June 30,
-------------------
2000 2001
------- -------
Operating activities:
Net income $ 257 $ 218
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 47 45
Provision for loan losses 18 18
Decrease in reserve for uncollected interest - -
Net increase (decrease) in deferred loan fees 4 (16)
Accretion of discounts on investment securities, net (13) (14)
Amortization of premiums on mortgage-backed securities 5 3
Amortization of unearned compensation 88 89
FHLB stock dividends (17) (18)
(Increase) decrease in other assets 25 (41)
(Increase) decrease in accrued interest receivable (28) 90
Increase in accrued expenses and other liabilities 18 33
Increase in current income taxes 47 (10)
------- -------
Net cash provided by operating activities 451 397
------- -------
Investing activities:
Purchase of investment securities held to maturity - -
Maturities of investment securities held to maturity 69 72
Purchase of investment securities available for sale - (700)
Maturities of investment securities available for sale - 2,325
Principal payments on mortgage-backed securities
available for sale 326 162
Net increase in loans (1,676) (63)
Purchase of premises and equipment (21) (44)
------- -------
Net cash (used) provided by investing activities (1,302) 1,752
------- -------
Financing activities:
Net increase in deposits 228 3,082
Increase in advance payments by borrowers for taxes
and insurance 254 220
Federal Home Loan Bank Advances 100 -
Repayment of Federal Home Loan Bank Advances - (1,000)
Treasury stock purchased (877) (70)
Payment of cash dividend (56) (55)
------- -------
Net cash (used) provided by financing activities (351) 2,177
------- -------
(Decrease) increase in cash and cash equivalents (1,202) 4,326
Cash and cash equivalents at beginning of period 2,162 2,121
------- -------
Cash and cash equivalents at end of period $ 960 $ 6,447
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 954 $ 1,136
Income taxes 29 145
======= =======
Noncash transactions:
Unrealized gains (losses) on securities and mortgage-backed
securities available for sale, net of deferred taxes $ (21) $ 18
The accompanying notes are an integral part of these
consolidated financial statements.
6
SFB BANCORP, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
SFB BANCORP, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
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 six month
period ended June 30, 2001 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, 2000 which are
included in the Form 10-KSB by reference (file no. 0-22587).
2. Earnings Per Share
------------------
Basic earnings per common share ("EPS") for all periods presented is
computed by dividing net income by the weighted average number of common
share outstanding. Diluted earnings per common share is computed by
dividing net income available to common stockholders by the weighted
average number of common shares outstanding and dilutive potential common
shares, which include stock options. Dilutive potential common shares are
calculated using the treasury stock method. Options to purchase 73,630
shares of the Company's common stock were outstanding during the three and
six months ending June 30, 2001, but were not included in the computation
of diluted EPS because their effect would be anti-dilutive.
7
SFB BANCORP, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
Three months ended,
---------------------------------------------------
June 30, 2000 June 30, 2001
--------------------------- -----------------------
Income Shares Income Shares
------ ------ ------ ------
Net Income $131 $111
BASIC EPS
Income available to common stockholders $131 578 $111 551
Per share amount $.23 $.20
Effect of Dilutive Securities $.00 $.00
DILUTIVE EPS
Income available to common stockholders $131 578 $111 551
Per share amount $.23 $.20
Six months ended,
---------------------------------------------------
June 30, 2000 June 30, 2001
--------------------------- -----------------------
Income Shares Income Shares
------ ------ ------ ------
Net Income $257 $218
BASIC EPS
Income available to common stockholders $257 594 $218 551
Per share amount $.43 $.39
Effect of Dilutive Securities $.00 $.00
DILUTIVE EPS
Income available to common stockholders $257 594 $218 551
Per share amount $.43 $.39
3. Asset Quality
-------------
The following table provides information regarding the Bank's nonperforming
loans (i.e., loans which are contractually past due 90 days or more) at
December 31, 2000 and June 30, 2001, respectively. As of the dates
indicated, the Bank had no loans categorized as troubled debt restructuring
within the meaning of SFAS 15.
December 31, June 30,
2000 2001
---- ----
(Dollars in Thousands)
Nonaccrual loans $ 192 $ 177
Repossessed real estate - -
----- -----
Total nonperforming assets $ 192 $ 177
===== =====
Nonperforming loans to net loans 0.41% 0.38%
Nonperforming assets to total assets 0.35% 0.31%
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 which 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 Financial Condition
The Company's total consolidated assets increased by approximately $2.5 million,
or 4.6% from $55.0 million at December 31, 2000, to $57.5 million at June 30,
2001. The increase in assets for 2001 was primarily due to an approximate $4.3
million increase in cash and interest-earning assets. Deposits increased to
$45.3 million at June 30, 2001. The $3.1 million increase in deposits primarily
reflects a $2.4 million increase in certificate of deposits balance.
Total cash and interest-earning deposits increased approximately $4.3 million to
$6.5 million at June 30, 2001. The increase in cash and interest-earning
deposits reflects the $3.1 million increase in deposits and a $1.6 million
decrease in investment securities. The Company anticipates utilizing the cash
and interest-earning deposit balances to fund future loan demand.
Comparison of Results of Operations for the Three and Six Months Ending June 30,
2000 and 2001
Net Income. Net income for the three months ending June 30, 2001, decreased
$20,000, or 15.3%, from $131,000 in 2000, to $111,000 in 2001. Net income
decreased $39,000, or 15.2%, to $218,000 for the six months ending June 30,
2001, from $257,000 in 2000. The decline in net income for the three and six
months ended June 30, 2001 as compared to the same periods in 2000, reflect the
decline in net interest income and the increase in non-interest expenses. For
the current three and six month periods, net interest income continued to be
squeezed due to the continued effect of the higher short-term interest rates
paid on certificates of deposits during the 2000 period. The increase in
non-interest expenses for the current three and six month periods reflected
normal operating expense increases and the increase in compensation expense for
the current three month period.
9
Net Interest Income. Net interest income decreased $9,000, from $486,000 for the
three months ending June 30, 2000, to $477,000 for the three months ending June
30, 2001. Net interest income decreased $44,000, from $988,000 for the six
months ending June 30, 2000, to $944,000 for the six months ending June 30,
2001. The decrease in net interest income for the three month period in 2001,
primarily reflects a 31 basis point decrease in the interest rate spread in 2001
to 2.56%, as compared to the same period in 2000. The net interest margin
decreased 32 basis points from 3.81% in 2000, to 3.49% in 2001. The overall
decrease in net interest income for the six months ending June 30, 2001,
primarily reflects a 36 basis point decrease in the net interest spread in 2001
to 2.55%, combined with a net decrease in average interest-earning assets over
average interest-bearing liabilities of approximately $510,000, as compared to
the same period in 2000. The net interest margin decreased 39 basis points to
3.51% for the six months ending June 30, 2001, compared to 2000.
Interest Income. Interest income increased $65,000, from $982,000 for the three
months ending June 30, 2000, to approximately $1.1 million for the three months
ending June 30, 2001. The increase was attributable to an increase in average
interest-earning assets of approximately $3.8 million, from $51.0 million at
June 30, 2000, to $54.8 million at June 30, 2001, offset by a decrease in the
average yield on interest-earning assets of 6 basis points, from 7.70% for the
three months ending June 30, 2000, to 7.64% for the three months ending June 30,
2001. Interest income increased $141,000, or 7.2%, to approximately $2.1 million
for the six months ending June 30, 2001, as compared to the same period in 2000.
The increase was primarily attributable to a increase average interest-earning
assets of approximately $3.3 million, from $50.7 million at June 30, 2000, to
$54.0 million at June 30, 2001, and a increase in the average yield on
interest-earning assets of 5 basis points, from 7.69% for the three months
ending June 30, 2000, to 7.74% for the three months ending June 30, 2001.
Interest on loans increased $61,000 for the three months ending June 30, 2001,
as compared to the same period in 2000, and $134,000 for the six months ending
June 30, 2001, as compared to the same period in 2000. The increase in interest
on loans for the three months ending June 30, 2001, primarily reflects an
increase of approximately $1.9 million in the average loans outstanding balance
for 2001, compared to 2000, combined with a 17 basis point increase in the
average yield on loans from 7.97% in 2000, to 8.14% in 2001. The increase in
interest on loans for the six months ending June 30, 2001, primarily reflects an
increase of approximately $2.3 million in the average loans outstanding balance
for 2001, compared to 2000, combined with a 18 basis point increase in the
average yield on loans from 7.96% in 2000, to 8.14% in 2001.
Interest on investment securities decreased $21,000 for the three months ending
June 30, 2001, as compared to the same period in 2000, and $35,000 for the six
months ending June 30, 2001, as compared to the same period in 2000. The
decrease in interest on investments for the three months ending June 30, 2001,
primarily reflects a decrease of approximately $1.8 million in the average
investment balance for 2001, compared to 2000, offset by a 75 basis point
increase in the average yield on investments from 5.28% in 2000, to 6.03% in
2001. The decrease in interest on investments for the six months ending June 30,
2001, primarily reflects a decrease of approximately $1.5 million in the average
investment balance for 2001, compared to 2000, offset by a 54 basis point
increase in the average yield on investments from 5.28% in 2000, to 5.82% in
2001.
10
Interest on interest-earning deposits increased $28,000 for the three months
ending June 30, 2001, as compared to the same period in 2000, and $50,000 for
the six months ending June 30, 2001, as compared to the same period in 2000. The
increase in interest on interest-earning deposits for the three months ending
June 30, 2001, primarily reflects an increase in the average balance of
interest-earning deposits of $3.9 million for 2001, compared to 2000. The
increase in interest on interest-earning deposits for the six months ending June
30, 2000, primarily reflects a increase in the average balance of
interest-earning deposits of $2.8 million for 2001, compared to 2000.
Interest on mortgage-backed securities decreased $3,000 for the three months
ending June 30, 2001, as compared to the same period in 2000, and $8,000 for the
six months ending June 30, 2001, as compared to the same period in 2000, as the
portfolio continued to pay down principal and those funds were invested in other
earning assets.
Interest Expense. Interest expense increased $74,000, from $496,000 for the
three months ending June 30, 2000, to $570,000 for the three months ending June
30, 2001. Interest expense increased $185,000, from $959,000 for the six months
ending June 30, 2000, to approximately $1.1 million for the six months ending
June 30, 2001. The increase for the three months ending June 30, 2001, compared
to 2000, was primarily the result of an approximate $3.7 million increase in
average balance of interest-bearing liabilities, combined with a 26 basis point
increase in the average cost of funds in 2001 to 5.09%. The increase in average
balance of interest-bearing liabilities for the three months ending June 30,
2001, as compared to 2000, was primarily due to a $3.6 million increase in the
average balance of certificate of deposits, from approximately $31.3 million in
2000, to $34.9 million in the 2001 quarter. The increase for the six months
ending June 30, 2001, compared to 2000, was primarily the result of an
approximate $3.8 million increase in average balance of interest-bearing
liabilities combined with a 42 basis point increase in the average cost of funds
in 2001 to 5.19%. The increase in average balance of interest-bearing
liabilities for the six months ending June 30, 2001, as compared to 2000, was
primarily due to a $3.5 million increase in the average balance of certificate
of deposits, from approximately $31.9 million in 2000, to $34.4 million in the
2001 quarter.
The increase in interest expense for both the three and six month periods in
2001, compared to 2000, reflects the increase in short-term interest rates
during 2000, which forced the Company to reprice its certificate of deposits at
much higher rates. In the first half of 2001 the Federal Reserve began a rate
reduction cycle. Until the higher priced certificate of deposits are repriced at
lower rates, the Company's cost of funds could remain high as compared to prior
periods. If the Federal Reserve continues to reduce short term interest rates as
currently predicted, the Company does not expect their interest rate margins to
significantly increase in future quarters of 2001.
Provision for Loan Losses. The provision for loan losses was $9,000 three month
period ending June 30, 2000 and 2001, respectively. The provision for loan
losses was $18,000 for the six month period ending June 30, 2000 and 2001,
respectively. The Company's management routinely performs an analysis to
quantify the inherent risk of loss in its portfolio. At June 30, 2001, 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 June 30, 2001,
11
was approximately 205%, and nonperforming assets represented 0.31% of total
consolidated assets. Nonperforming assets were $177,000 at June 30, 2001,
compared to $192,000 at December 31, 2000. Management is not aware of any trends
or events inherent to its loan portfolio that have not been provided for in its
loan loss allowance. However, there 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.
Non-Interest Income. Non-interest income continues to be an additional source of
income for the Company. The income is produced by fees on new loan production
and service fees on other products and services. Total non-interest income
amounted to $52,000 and $102,000 for the three and six months ending June 30,
2001, respectively, and $46,000 and $100,000 for the three and six months ending
June 30, 2000, respectively.
Non-Interest Expense. For the three and six month periods ended June 30, 2001
non-interest expense increased $23,000 and $11,000, respectively, as compared to
the same period in 2000. For the three months ended June 30, 2001, the increase
was primarily the result of a $13,000 increase in compensation expense. The
increase in compensation expense for the three months ended June 30, 2001,
compared to 2000, was attributable to the payment of dividend equivalency rights
("DER") on outstanding stock options. DERs are required to be paid within thirty
(30) days of the payment of cash dividends on Company stock. Generally, DER
payments are made in July, however, those payments were made in June 2001.
Income Taxes. Income tax expense for the three months ending June 30, 2001, was
$71,000, compared to $77,000 for the same period in 2000. Income tax expense for
the six months ending June 30, 2001, was $136,000, compared to $150,000 for the
same period in 2000. The decrease for the three and six month periods was
principally the result of lower pre-tax income. The effective tax rate for both
the three and six months in 2001 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 June 30, 2001 were approximately
$645,000.
At June 30, 2001, 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 June 30, 2001, management was not aware of any current recommendations by the
regulatory authorities which, if implemented, would have such an effect.
The Bank exceeded all of its capital requirements at June 30, 2001. The Bank had
the following capital ratios at June 30, 2001:
12
For Capital Categorized as
Actual Adequacy Purposes "Well Capitalized"(1)
------------------------ ----------------------- ------------------------
Amount Ratio Amount Ratio Amount Ratio
------------ ----------- ----------- ----------- ------------ -----------
As of June 30, 2001:
Total Capital
(To risk weighted assets) $ 10,634 30.5% $ 2,786 8.0% $ 3,482 10.0%
Tier I Capital
(To risk weighted assets) $ 10,271 29.5% $ 1,393 4.0% $ 2,089 6.0%
Tier I Capital
(To total assets) $ 10,271 18.1% $ 1,700 3.0% $ 2,834 5.0%
Tangible Capital
(To total assets) $ 10,271 18.1% $ 850 1.50% $ 2,834 5.0%
(1) As categorized under the Prompt Corrective Action Provisions.
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
June 30, 2000, 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
---------------------------------------------------
The Annual Meeting of Stockholders of the Company ("Meeting") was held
on May 17, 2001. The results of the vote on the matters presented at
the Meeting were as follows:
1. The following individuals were elected as directors, each for a
three-year term:
Vote For Vote Withheld
-------- -------------
John R. Crockett, Jr. 457,469 42,000
Julian T. Caudill 457,469 42,000
2. Ratification of the appointment of Crisp Hughes Evans LLP as the
Company's independent audit firm was approved by stockholders by
the following vote
For 451,169; Against 42,000; Abstain 6,300
Item 5. Other Information
-----------------
None
14
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 * *
* 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.
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.
Date: August 6, 2001 By: /s/ Peter W. Hampton
-------------- -----------------------------------------
Peter W. Hampton
(President and Chief Executive Officer)
Date: August 6, 2001 By: /s/ Bobby Hyatt
-------------- -----------------------------------------
Bobby Hyatt
(Vice President and Finance
Officer)
16