SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for use of the Commission
Only (as permitted by Rule 14a 6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to ss. 240.14a-12
SFB Bancorp, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[SFB Bancorp, Inc. Letterhead]
April 15, 2002
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of SFB Bancorp, Inc.
(the "Company"), I cordially invite you to attend the Annual Meeting of
Stockholders to be held at the offices of the Company, 632 East Elk Avenue,
Elizabethton, Tennessee, on May 16, 2002, at 2:00 p.m. The attached Notice of
Annual Meeting and Proxy Statement describe the formal business to be transacted
at the Annual Meeting. During the Annual Meeting, I will report on the
operations of the Company. Directors and officers of the Company, as well as a
representative of Crisp Hughes Evans LLP, certified public accountants, will be
present to respond to questions that you may have.
You will be asked to elect two directors and to ratify the appointment
of Crisp Hughes Evans LLP, the Company's independent accountants for the fiscal
year 2002. The Board of Directors has unanimously approved each of these
proposals and recommends that you vote FOR them.
Your vote is important, regardless of the number of shares you own and
regardless of whether you plan to attend the Annual Meeting. I encourage you to
read the enclosed proxy statement carefully and sign and return your enclosed
proxy card as promptly as possible because a failure to do so could cause a
delay in the Annual Meeting and additional expense to the Company. A
postage-paid return envelope is provided for your convenience. This will not
prevent you from voting in person, but it will assure that your vote will be
counted if you are unable to attend the Annual Meeting. If you do decide to
attend the Annual Meeting and feel for whatever reason that you want to change
your vote at that time, you will be able to do so. However, if you are a
stockholder whose shares are not registered in your own name, you will need
additional documentation from your record holder to vote personally at the
meeting. If you are planning to attend the Annual Meeting, please let us know by
marking the appropriate box on the proxy card.
Sincerely,
/s/Peter W. Hampton
---------------------------------------------
Peter W. Hampton
President
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SFB BANCORP, INC.
632 EAST ELK AVENUE
ELIZABETHTON, TENNESSEE 37643
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 16, 2002
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of SFB Bancorp, Inc. (the "Company"), will be held at the offices of the
Company, 632 East Elk Avenue, Elizabethton, Tennessee, on May 16, 2002, at 2:00
p.m. for the following purposes:
1. To elect two directors of the Company; and
2. To ratify the appointment of Crisp Hughes Evans LLP, as independent
accountants of the Company for the fiscal year ending December 31, 2002;
all as set forth in this Proxy Statement accompanying this Notice, and to
transact such other business as may properly come before the Meeting and any
adjournments. The Board of Directors is not aware of any other business to come
before the Meeting. Stockholders of record at the close of business on March 29,
2002 are the stockholders entitled to vote at the Meeting and any adjournments
thereof.
A copy of the Company's Annual Report for the year ended December 31,
2001 is enclosed.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU
OWN. WE ENCOURAGE YOU TO VOTE BY PROXY SO THAT YOUR SHARES WILL BE REPRESENTED
AND VOTED AT THE MEETING EVEN IF YOU CANNOT ATTEND. ALL STOCKHOLDERS OF RECORD
CAN VOTE BY WRITTEN PROXY CARD. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES
ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER TO VOTE PERSONALLY AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Peter W. Hampton, Jr.
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Peter W. Hampton, Jr.
Secretary
Elizabethton, Tennessee
April 15, 2002
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
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PROXY STATEMENT
OF
SFB BANCORP, INC.
632 EAST ELK AVENUE
ELIZABETHTON, TENNESSEE 37643
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ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 16, 2002
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This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of SFB Bancorp, Inc. (the "Company") to be
used at the Annual Meeting of Stockholders of the Company which will be held at
the offices of the Company, 632 East Elk Avenue, Elizabethton, Tennessee, on May
16, 2002, 2:00 p.m. local time (the "Meeting"). The accompanying Notice of
Annual Meeting of Stockholders and this Proxy Statement are being first mailed
to stockholders on or about April 15, 2002.
All properly executed written proxies that are delivered pursuant to
this proxy statement will be voted on all matters that properly come before the
Meeting for a vote. If your signed proxy specifies instructions with respect to
matters being voted upon, your shares will be voted in accordance with your
instructions. If no instructions are specified in your signed proxy card, your
shares will be voted (a) FOR the election of directors named in Proposal 1, (b)
FOR Proposal 2 (ratification of independent accountants), and (c) in the
discretion of the proxy holders, as to any other matters that may properly come
before the Meeting (including any adjournment). Your proxy may be revoked at any
time prior to being voted by: (i) filing with the secretary of the Company
(Peter W. Hampton, Jr., at 632 East Elk Avenue, Elizabethton, Tennessee 37643)
written notice of such revocation, (ii) submitting a duly executed proxy card
bearing a later date, or (iii) attending the Meeting and giving the Secretary
notice of your intention to vote in person.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Stockholders of record as of the close of business on March 29, 2002
(the "Record Date"), are entitled to one vote for each share of common stock of
the Company (the "Common Stock") then held. As of the Record Date, the Company
had 582,995 shares of Common Stock issued and outstanding.
The charter of the Company ("Charter") provides that in no event shall
any record owner of any outstanding Common Stock which is beneficially owned,
directly or indirectly, by a person who beneficially owns in excess of 10% of
the then outstanding shares of Common Stock (the "Limit") be entitled or
permitted to any vote with respect to the shares held in excess of the Limit.
Beneficial ownership is determined pursuant to the definition in the Charter and
includes shares beneficially owned by such person or any of his or her
affiliates (as such terms are defined in the Charter), or which such person or
any of his or her affiliates has the right to acquire upon the exercise of
conversion rights or options and shares as to which such person or any of his or
her affiliates or associates have or share investment or voting power, but
neither any employee stock ownership or similar plan of the Company or any
subsidiary, nor any trustee with respect thereto or any affiliate of such
trustee (solely by reason of such capacity of such trustee), shall be deemed,
for purposes of the Charter, to beneficially own any Common Stock held under any
such plan.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) is necessary to constitute a quorum at the
Meeting. In the event there are not sufficient votes for a quorum or to ratify
any proposals at the time of the Meeting, the Meeting may be adjourned in order
to permit the further solicitation of proxies.
3
As to the election of directors, as set forth in Proposal 1, the proxy
being provided by the Board enables a stockholder to vote for the election of
the nominees proposed by the Board, or to withhold authority to vote for the
nominees being proposed. Directors are elected by a plurality of votes of the
shares present in person or represented by proxy at a meeting and entitled to
vote in the election of directors.
As to the ratification of independent accountants as set forth in
Proposal 2, by checking the appropriate box, a stockholder may: vote "FOR" the
item, (ii) vote "AGAINST" the item, or (iii) vote to "ABSTAIN" on such item.
Unless otherwise required by law, Proposal 2 and any other matters shall be
determined by a majority of votes cast affirmatively or negatively without
regard to (a) Broker Non-Votes or (b) proxies marked "ABSTAIN" as to that
matter.
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PRINCIPAL HOLDERS
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Persons and groups owning in excess of 5% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"). The following
table sets forth, as of the Record Date, persons or groups who own more than 5%
of the Common Stock and the ownership of all executive officers and directors of
the Company as a group. Other than as noted below, management knows of no person
or group that owns more than 5% of the outstanding shares of Common Stock at
that date.
Percent of Shares of
Amount and Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding (%)
------------------------------------ -------------------- ---------------
Security Federal Bank
Employee Stock Ownership Plan ("ESOP")
632 East Elk Avenue
Elizabethton, Tennessee 37643 60,542 (1) 10.4
Peter W. Hampton
632 East Elk Avenue
Elizabethton, Tennessee 37643 53,891 (2) 9.0
Peter W. Hampton, Jr.
630 East Elk Avenue 32,450 (2) 5.4
Elizabethton, Tennessee 37643
Malta Hedge Fund II, L.P.
Malta Hedge Fund, L.P.
Malta Partners II, L.P.
Malta Partners, L.P.
Sandler O'Neill Asset Management LLC
SOAM Holdings, LLC
Mr. Terry Maltese
780 Third Avenue, 30th Floor
New York, New York 10017 42,000 (3) 7.2
Mr. Jeffrey L. Gendell
Tontine Management, L.L.C.
Tontine Financial Partners, L.P.
31 West 52nd Street, 17th Floor
New York, New York 10019 47,900 (4) 8.2
4
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(1) The ESOP purchased such shares for the exclusive benefit of plan
participants with funds borrowed from the Company. These shares are
held in a suspense account and will be allocated among ESOP
participants annually on the basis of compensation as the ESOP debt is
repaid. The Board of Directors has appointed a committee consisting of
non-employee directors Donald W. Tetrick, John R. Crockett, Jr. and
Julian T. Caudill to serve as the ESOP administrative committee ("ESOP
Committee") and to serve as the ESOP trustees ("ESOP Trustee"). The
ESOP Committee or the Board instructs the ESOP Trustee regarding
investment of ESOP plan assets. The ESOP Trustee must vote all shares
allocated to participant accounts under the ESOP as directed by
participants. Unallocated shares and shares for which no timely voting
direction is received, will be voted by the ESOP Trustee as directed by
the ESOP Committee. As of the Record Date, approximately 35,037 shares
have been allocated under the ESOP to participant accounts.
(2) See "Proposal I - Election of Directors."
(3) The information as to Malta Hedge Fund, L.P. ("MHF), Malta Partners II,
L.P. ("MP II"), Malta Partners, L.P. ("MPLP"), Sandler O'Neill Asset
Management, LLC ("Sandler O'Neill"), SOAM Holdings, LLC ("SOAM"), Malta
Offshore LTD ("MO") and Terry Maltese ("Maltese") is derived from an
amended Schedule 13D, dated September 1, 2000, which states that as of
August 24, 2000, MHF, MP II, MPLP, Sandler O'Neill, SOAM, MO and
Maltese had shared voting and shared dispositive power with respect to
3,300 shares, 19,300 shares, 6,200 shares, 42,000 shares, 39,300
shares, 2,700 shares, and 42,000 shares respectively. The amended
Schedule 13D also states that HF II, MHF, MP II, and MHLP, each have
the power to dispose of and to vote the stock beneficially owned by it,
which power may be exercised by its general partner, Holdings. Holdings
is a party to owned by Holdings and SOAM. Holdings, SOAM and Maltese
disclaims direct ownership of the Common Stock. A management agreement
with SOAM pursuant to which SOAM shares the power to dispose of and to
vote the shares of Common Stock beneficially owned by Holdings. Mr.
Maltese, as President and Managing member of Holdings and SOAM, shares
the power to dispose of and to vote the shares of Common Stock
beneficially
(4) The information as to Jeffrey L. Gendell, Tontine Management, L.L.C.,
Tontine Financial Partners, L.P., (the "Reporting Group") is derived
from a Schedule 13D filed on January 31, 2002, filed by the Reporting
Group, which states that as of December 31, 2001, that the Reporting
Group each had shared voting and shared dispositive power with respect
to 47,900 shares.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's directors, executive officers, and beneficial owners of
more than 10% of the Company's Common Stock, to file reports of ownership and
changes in ownership of their equity securities of the Company with the
Securities and Exchange Commission and to furnish the Company with copies of
such reports. To the best of the Company's knowledge, except for Messrs. Hampton
and Hampton, Jr., all of the filings by the Company's directors and executive
officers were made on a timely basis during the 2001 fiscal year. Mr. Peter W.
Hampton failed to file a timely From 4 for one transaction and Mr. Peter W.
Hampton, Jr., failed to file a timely Form 4 for two transactions, due to an
administrative oversight. The Company is not aware of any other persons who have
failed to file on a timely basis any required report.
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PROPOSAL 1 - ELECTION OF DIRECTORS
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Election of Directors
The Charter requires that directors be divided into three classes, as
nearly equal in number as possible, each class to serve for a three year period,
with approximately one-third of the directors elected each year. The Board of
Directors currently consists of six members, each of whom also serves as a
director of Security Federal Bank (the "Bank"). Two directors will be elected at
the Meeting to serve for a three-year term or until his successor has been
elected and qualified.
Michael L. McKinney and Peter W. Hampton (the "Nominees") have been
nominated by the Board of Directors to serve for a term of three years. All
Nominees are currently members of the Board of Directors. The persons named as
proxies in the enclosed proxy card intend to vote for the election of the
Nominees, unless the proxy card is marked to indicate that such authorization is
expressly withheld. Should any of the Nominees withdraw or be unable to serve
(which
5
the Board of Directors does not expect) or should any other vacancy occur in the
Board of Directors, it is the intention of the persons named in the enclosed
proxy card to vote for the election of such person as may be recommended to the
Board of Directors by the Nominating Committee of the Board. If there is no
substitute nominee, the size of the Board of Directors may be reduced.
The following table sets forth information with respect to the
nominees, their name, age, the year they first became a director of the Company
or the Bank, the expiration date of their current term as a director, and the
number and percentage of shares of the Common Stock beneficially owned.
Beneficial ownership of executive officers and directors of the Company, as a
group, is also set forth under this caption.
Shares of
Common Stock
Year First Beneficially
Elected or Current Term Owned as of Percent
Name and Title Age (1) Appointed (2) to Expire March 29, 2002 (3) Owned %
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BOARD NOMINEES FOR TERM TO EXPIRE IN 2004
Michael L. McKinney
Director 43 1999 2001 500 --(5)
Peter W. Hampton
President and Director 81 1963 2001 53,891(4) 9.0
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DIRECTORS CONTINUING IN OFFICE
Peter W. Hampton, Jr.
Secretary, Treasurer and Director 51 1994 2002 32,450(4) 5.4
Donald W. Tetrick
Director 86 1963 2002 9,537(4) 1.6
Julian T. Caudill
Vice President and Director 83 1963 2003 11,442(4) 1.9
John R. Crockett, Jr.
Director 81 1963 2003 6,542(4) 1.1
All directors and executive officers
of the Company as a group (6 persons) 114,362(3)(4) 18.2
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(1) At December 31, 2001.
(2) Refers to the year the individual first became a director of the Company or
the Bank.
(3) The share amounts listed include shares of Common Stock that the following
persons have the right to acquire within 60 days of the Record Date: Peter
W. Hampton, 17,181, Peter W. Hampton, Jr. 15,954, Julian T. Caudill 4,602,
John R. Crockett, Jr. 4,602, and Donald W. Tetrick 4,602.
(4) Excludes (except for Messrs. Hampton and Hampton, Jr.) 60,542 shares of
Common Stock under the ESOP and 5,677 unallocated Restricted Stock Plan
("RSP") shares for which such individual serves as a member of the ESOP
Committee, ESOP trust and RSP trust. For Messrs. Hampton and Hampton, Jr,
respectively, excludes 3,837 and 4,205 unallocated RSP shares. The Messrs.
Hamptons are not members of the ESOP Committee or ESOP Trust. The
individuals either serving as members of the ESOP Committee, ESOP trust or
RSP trust, disclaim beneficial ownership to such shares.
(5) Less than 1.0% of Common Stock outstanding.
6
Biographical Information
Set forth below is certain information with respect to the directors,
including director nominees and executive officers of the Company. Except as
noted, all directors of the Bank in March 1997 became directors of the Company
at that time. Executive Officers receive compensation from the Bank. See "--
Director and Executive Officer Compensation." All directors and executive
officers have held their present positions for five years unless otherwise
stated.
Julian T. Caudill has been a member of the Board of Directors of the
Bank since 1963 and a Vice President of the Company and Bank since 1999. Mr.
Caudill is a retired pharmacist. He is a member of the Elizabethton Rotary Club
and the American Cancer Society.
John R. Crockett, Jr. has been a member of the Board of Directors of
the Bank since 1963. Mr. Crockett is a retired realtor.
Peter W. Hampton has been the President and a member of the Board of
Directors of the Bank since 1963. Mr. Hampton is a member of the
Elizabethton/Carter County Economic Development Commission and the Carter County
Chamber of Commerce. Mr. Hampton is the father of Peter W. Hampton, Jr.
Peter W. Hampton, Jr. has been a member of the Board of Directors of
the Bank since 1994 and has served as Vice Chairman of the Board of the Bank
since December 1996. Since 1977, Mr. Hampton has been an attorney in the law
firm of Hampton & Street and has been employed as our General Counsel since
1994. Mr. Hampton, Jr. is the son of Peter W. Hampton.
Michael L. McKinney was appointed to the Board of the Directors of the
Bank and the Company on March 17, 1999. Since 1983, Mr. McKinney has been a
self-employed general contractor in Elizabethton, Tennessee.
Donald W. Tetrick has been Chairman of the Bank's Board of Directors
since 1963. Mr. Tetrick is a member of the Elizabethton Kiwanis Club,
Elizabethton/Carter County Chamber of Commerce and a member of the Board of
Directors of First United Methodist Church. Mr. Tetrick is also a retired
funeral home director.
Executive Officer Who Is Not A Director
Bobby K.S. Hyatt, 33, has been the Finance Officer of the Company since
1997 and is also Vice President of the Company and Bank. Prior to that he was an
accountant with the firm of T. Alan Walls, C.P.A., P.C. and prior to that he was
employed by the Bank. He received his certified public accountant designation in
1993. Mr. Hyatt is a member of the Elizabethton Kiwanis Club and is active in
the Elizabethton/Carter County Chamber of Commerce and American Heart
Association.
Meetings and Committees of the Board of Directors
The Board of Directors conducts its business through meetings of the
Board and through activities of its committees. During the year ended December
31, 2001, the Board of Directors held a total of 13 meetings. No director
attended fewer than 75% of the total meetings of the Board of Directors and
committees on which such director served during the year ended December 31,
2001. In addition to other committees, as of December 31, 2001, the Board had a
Nominating Committee, Compensation and Benefits Committee, and an Audit
Committee.
7
The Nominating Committee consists of the Board of Directors of the
Company. Nominations to the Board of Directors made by stockholders must be made
in writing to the Secretary and received by the Company not less than 60 days
prior to the anniversary date of the immediately preceding annual meeting of
stockholders of the Company. Notice to the Company of such nominations must
include certain information required pursuant to the Company's bylaws. The
Nominating Committee, which is not a standing committee, met once during the
2001 fiscal year.
The Compensation and Benefits Committee is comprised of the entire
Board of Directors. This standing committee establishes the Bank's salary
budget, director and committee member fees, and employee benefits provided by
the Bank for approval by the Board of Directors. The Committee met five times
during the 2001 fiscal year.
The Audit Committee is comprised of Directors Tetrick, Crockett, Jr.
and Caudill. This standing committee is responsible for developing and
maintaining the Company's audit program. The Committee also meets with the
Company's independent accountants, Crisp Hughes Evans LLP; to discuss the
results of the annual audit and any related matters.
The Company's Common Stock is not traded on an exchange or on Nasdaq
and accordingly, this committee is not required to have a written audit charter.
The committee met seven times during the fiscal year ended December 31, 2001.
Audit Committee Report
Review of Audited Financial Statements with Management.
The Audit Committee reviewed and discussed the audited financial
statements with the management of the Company.
Review of Financial Statements and Other Matters with Independent
Accountants.
The Audit Committee discussed with the independent accountants the
matters required to be discussed by the Statement on Auditing Standards No. 61
(Codification of Statements on Auditing Standards, AU Section 380), as may be
modified or supplemented. The Audit Committee has received the written
disclosures and the letter from the independent accountants required by
Independence Standards Board Standard No. 1 (Independence Standards Board No. 1,
Independence Discussions with Audit Committees), as may be modified or
supplemented, and has discussed with the independent accountant the independent
accountant's independence.
Recommendation that Financial Statements be Included in Annual Report.
Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-KSB for year
ended December 31, 2001, for filing with the Securities and Exchange Commission.
Audit Committee:
Donald W. Tetrick, Chairman
John R. Crockett, Jr.
Julian T. Caudill
8
Audit Fees
The aggregate fees billed by Crisp Hughes Evans LLP for professional
services rendered for the audit of the Company's consolidated annual financial
statements for the 2001 fiscal year and the reviews of the financial statements
included in the Company's quarterly reports on Forms 10-QSB were approximately
$25,000.
Financial Information Systems Design and Implementation Fees
For the 2001 fiscal year, Crisp Hughes Evans LLP did not render to the
Company or its consolidated subsidiary any professional services for financial
information systems design and implementation. Accordingly, there were no fees
billed for fiscal 2001 by Crisp Hughes Evans LLP to the Company or its
consolidated subsidiary.
All Other Fees
The aggregate fees billed by Crisp Hughes Evans LLP to the Company and
its consolidated subsidiary for all other services other than those covered
under "Audit Fees" for the 2001 fiscal year were approximately $3,300.
The Audit Committee considered whether the provision of the non-audit
services listed under "All Other Fees" above was compatible with maintaining
Crisp Hughes Evans LLP's independence.
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
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Director Compensation
Each of the directors is paid a monthly fee of $600. Additionally, each
director is also a member of the Executive/Loan Committee and receives a fee of
$35 per meeting attended. Total aggregate fees paid to the directors for the
year ended December 31, 2001 were $51,305.
Under the 1998 Stock Option Plan, each non-employee director was
granted, effective June 1, 1998 (the "effective date of grant"), options to
purchase 5,752 shares of Common Stock. Messrs. Hampton and Hampton, Jr. received
options to purchase 21,476 and 19,942 shares of Common Stock, respectively. The
exercise price of the options was the fair market value of the Company's Common
Stock on the date of grant. Of the options granted, 20% were exercisable on the
effective date of grant and the remaining options are exercisable at the rate
20% per year commencing from the effective date of grant. The options granted to
each director shall become immediately exercisable in the event of death,
disability or retirement of a director, change in control of the Company or
Bank. Dividend equivalent rights are paid on all options.
Under the RSP, each non-employee director was awarded, effective June
1, 1998 (the "effective date of grant"), 2,301 shares of Common Stock. Messrs.
Hampton and Hampton, Jr. were awarded 9,204 and 7,363 shares of Common Stock,
respectively. All directors will earn shares awarded to them at the rate of 20%
per year, commencing from the effective date of grant. Awards of restricted
stock to each director shall be immediately non-forfeitable in the event of
death, disability or retirement of a director, or change in control of the
Company or Bank. In accordance with the RSP, dividends are paid on shares
awarded or held in the RSP.
9
Executive Officer Compensation
The Company has no full time employees, but relies on the employees of
the Bank for the limited services required by the Company. The Bank pays all
compensation paid to officers and employees.
Summary Compensation Table. The following table sets forth the cash and non-cash
compensation awarded to or earned by the chief executive officer. No other
executive officer of either the Bank or the Company had a salary and bonus that
exceeded $100,000 for services rendered for the years presented.
Long-Term
Compensation
Annual Compensation Awards
------------------- ------------
#Securities
Restricted Underlying
Name and Fiscal Other Annual Stock Options/ All Other
Principal Position Year Salary ($) Bonus ($) Compensation ($) Award (s) SARs Compensation ($)(2)
------------------ ---- ---------- --------- ---------------- --------- ---- -------------------
Peter W. Hampton 2001 81,200 19,800 10,846 -- -- 21,439
President 2000 81,200 20,000 10,597 -- -- 21,095
1999 80,000 22,000 10,597 -- -- 12,830
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(1) Consists of director and committee fees of $8,915, and
$1,931 for health, life and disability insurance premiums
paid on behalf of the named executive officer in 2001;
consist of $8,880 director and committee fees and $1,717
health, life and disability insurance premiums in 2000 and
1999.
(2) Includes the value of 1,288 shares (value at $10 per share)
allocated under the ESOP, with an aggregate market value of
$15,984 at December 31, 2001. Also includes for the fiscal
year ended, $4,295 of dividend equivalent rights paid on
stock options and $1,160 of accrued earnings on
non-forfeitable RSP shares.
Stock Awards. The following table sets forth information with respect
to previously awarded stock options to purchase the Common Stock
granted in 1998 to Mr. Hampton and held by him as of December 31,
2001. The Company has not granted to Mr. Hampton any stock
appreciation rights.
Aggregated Option/SAR Exercises in Last Fiscal Year, and FY-End Option/SAR Values
----------------------------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Shares Acquired Value Options at FY-End (#) at FY-End (#)
Name on Exercise (#) Realized ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable (1)
----------------------------- --------------------- ----------------- ------------------------------ -----------------------------
Peter W. Hampton 0 0 17,181 / 4,295 $ 0 / $0
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(1) Based upon an exercise price of $16.69 per share and estimated price of
$12.41 at December 31, 2001.
Employment Agreement. The Bank entered into an employment agreement
with Peter W. Hampton, President of the Bank ("Agreement"). The Agreement has a
term of three years and may be terminated by the Bank for "just cause" as
defined in the Agreement. If the Bank terminates Mr. Hampton without just cause,
10
Mr. Hampton will be entitled to a continuation of his salary from the date of
termination through the remaining term of the Agreement. The Agreement contains
a provision stating that in the event of the termination of employment in
connection with a change in control of the Bank, Mr. Hampton will be paid a lump
sum amount equal to 2.99 times his five year average annual taxable
compensation. If such payments had been made under the Agreement as of December
31, 2001, such payments would have equaled approximately $304,000. The Agreement
may be renewed annually by the Bank's Board of Directors upon a determination of
satisfactory performance within the Board's sole discretion. If Mr. Hampton
shall become disabled during the term of the Agreement, he shall continue to
receive payment of 100% of the base salary for a period of 12 months and 60% of
such base salary for the remaining term of such Agreement. Such payments shall
be reduced by any other benefit payments made under other disability programs in
effect for the Bank's employees.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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The Bank, like many financial institutions, has followed a policy of
granting various types of loans to officers, directors, and employees. The loans
have been made in the ordinary course of business and on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with the Bank's other customers, and do not involve
more than the normal risk of collectibility, or present other unfavorable
features.
Peter W. Hampton, Jr. performs certain legal work for the Bank. Fees
paid to Mr. Hampton, Jr. by the Bank's borrowers, for services performed on the
Bank's behalf, were approximately $54,500 for the year ended December 31, 2001.
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PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
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Crisp Hughes Evans LLP, was the Company's independent public accountant
for the 2001 fiscal year. The Board of Directors of the Company presently
intends to renew the Company's arrangement with Crisp Hughes Evans LLP to be its
accountants for the fiscal year ended December 31, 2002, subject to ratification
by the Company's stockholders. A representative of Crisp Hughes Evans LLP is
expected to be present at the meeting to respond to stockholders' questions and
will have the opportunity to make a statement if the representative so desires.
Ratification of the appointment of the accountants requires the approval of a
majority of the votes cast by the stockholders of the Company at the Meeting.
The Board of Directors recommends that stockholders vote "FOR" the ratification
of the appointment of Crisp Hughes Evans LLP, as the Company's accountants for
the fiscal year ending December 31, 2002.
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STOCKHOLDER PROPOSALS
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In order to be considered for inclusion in the Company's proxy
statement for the annual meeting of stockholders to be held in 2003 all
stockholder proposals must be submitted to the Secretary at the Company's
office, 632 East Elk Avenue, Elizabethton, Tennessee 37643, on or before
December 15, 2002. Under the Articles of Incorporation, in order to be
considered for possible action by stockholders at the 2002 annual meeting of
stockholders, stockholder nominations for director and stockholder proposals not
included in the Company's proxy statement must be submitted to the Secretary of
the Company, at the address set forth above, no later than March 15, 2003.
11
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MISCELLANEOUS
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The cost of soliciting proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers, and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
The Board of Directors does not know of any other matters that are
likely to be brought before the Meeting. If any other matters, not now known,
properly come before the Meeting or any adjournments, the persons named in the
enclosed proxy card, or their substitutes, will vote the proxy in accordance
with their judgment on such matters.
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FORM 10-KSB
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A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL
YEAR ENDED DECEMBER 31, 2001 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS
OF THE RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY, SFB BANCORP, INC., 632
EAST ELK AVENUE, ELIZABETHTON, TENNESSEE 37643.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Peter W. Hampton, Jr.
----------------------------------
Peter W. Hampton, Jr.
Secretary
Elizabethton, Tennessee
April 15, 2002
12
APPENDIX
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SFB BANCORP, INC.
632 EAST ELK AVENUE
ELIZABETHTON, TENNESSEE 37643
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ANNUAL MEETING OF STOCKHOLDERS
MAY 16, 2002
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The undersigned hereby appoints the Board of Directors of SFB Bancorp,
Inc. (the "Company"), or its designee, with full powers of substitution, to act
as attorneys and proxies for the undersigned, to vote all shares of Common Stock
of the Company which the undersigned is entitled to vote at the Annual Meeting
of Stockholders (the "Meeting"), to be held at the offices of the Company, 632
East Elk Avenue, Elizabethton, Tennessee, on May 16, 2002, at 2:00 p.m. and at
any and all adjournments thereof, in the following manner:
FOR WITHHELD
--- --------
1. To elect as directors the nominees [_] [_]
listed below (except as marked to the
contrary below):
Michael L. McKinney
Peter W. Hampton
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below)
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FOR AGAINST ABSTAIN
--- ------- -------
2. To ratify the appointment of [_] [_] [_]
Crisp Hughes Evans LLP as independent
accountants of SFB Bancorp, Inc. for the
fiscal year ending December 31, 2002.
The Board of Directors recommends a vote "FOR" the above listed
propositions.
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THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS SIGNED PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED.
IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY
THOSE NAMED IN THIS SIGNED PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME,
THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE
MEETING.
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting, or
at any adjournments thereof, and after notification to the Secretary of the
Company at the Meeting of the Stockholder's decision to terminate this Proxy,
the power of said attorneys and proxies shall be deemed terminated and of no
further force and effect. The undersigned may also revoke this Proxy by filing a
subsequently dated Proxy or by written notification to the Secretary of the
Company of his or her decision to terminate this Proxy.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders, a Proxy
Statement dated April 15, 2002 and the Annual Report.
Please check the box if you are planning to attend he meeting. [_]
Dated: , 2002
----------------------
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PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
----------------------------- ------------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this Proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
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PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
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