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, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 333-23505
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SFB BANCORP, INC
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(Exact name of Registrant as specified in its Charter)
Tennessee Applied for
- -------------------------------------------- -------------------------------
State or other jurisdiction of incorporation (I.R.S. Employer Identification
or organization) Number)
632 East Elk Avenue Elizabethton, Tennessee 37643
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (423) 543-3518
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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 20, 1997, there were no 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
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1
<PAGE>
SFB BANCORP, INC.
AND SUBSIDIARY
Elizabethton, Tennessee
Index
PART I. Page(s)
- ------- -------
FINANCIAL INFORMATION
Item 1.
Financial Statements....................................................3
PART II.
- --------
OTHER INFORMATION
Item 1. Legal Proceedings..............................................4
Item 2. Changes in Securities..........................................4
Item 3. Defaults Upon Senior Securities................................4
Item 4. Submission of Matters to a Vote of Security Holders............4
Item 5. Other Information..............................................4
Item 6. Exhibits and Reports on Form 8-K...............................4
Signatures..............................................................5
2
<PAGE>
PART I - NOT APPLICABLE
The information as required by Part 1 of the Form 10-QSB has been omitted
because the conversion from the mutual to stock form of ownership (the
"Conversion"), as described in the Form SB -2 (file no. 333-23505), has not yet
occurred. It is anticipated that the Conversion will be completed on or about
June 1, 1997.
3
<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None
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
--------------------------------
99 Financial Statements of Security Federal Savings Bank
No reports on Form 8-K were filed during the quarter ended March 31,
1997.
4
<PAGE>
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 20, 1997 By /s/ Peter W. Hampton
-------------------------- --------------------
Peter W. Hampton
(President)
Date: May 20, 1997 By /s/ Bobby Hyatt
-------------------------- ---------------
Bobby Hyatt
(Principal Accounting Officer)
5
Exhibit 99
<PAGE>
SECURITY FEDERAL SAVINGS BANK
AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
December 31, March 31
1996 1997
---- ----
<S> <C> <C>
Cash and due from banks $ 396 $ 544
Interest-earning deposits 1,018 1,057
Investment securities:
Held to maturity (market value of $613
in 1996 and $594 in 1997) 715 720
Available for sale (amortized cost of $599
in 1996 and $599 in 1997) 597 594
Loans receivable, net 36,808 37,222
Mortgage-backed securities:
Available for sale (amortized cost of $5,941 in
1996 and $5,783 in 1997) 5,768 5,592
Premises and equipment, net 533 527
Real estate 60 -
Federal Home Loan Bank stock 394 401
Interest receivable 257 255
Other 33 167
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Total assets $ 46,579 $ 47,079
=============== ===============
Liabilities and Equity
----------------------
Deposits $ 40,765 $ 41,691
Federal Home Loan Bank advances 800 -
Advance payments by borrowers for taxes and insurance 202 345
Accrued expenses and other liabilities 122 148
Income taxes payable:
Current 13 84
Deferred 1 -
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Total liabilities 41,903 42,268
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Commitments and contingencies
Equity:
Retained income, substantially restricted 4,784 4,929
Unrealized losses on securities available for sale,
net of income taxes (108) (118)
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Total equity 4,676 4,811
--------------- ---------------
Total liabilities and equity $ 46,579 $ 47,079
=============== ===============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
SECURITY FEDERAL SAVINGS BANK
AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
For Three Months Ended
March 31,
-----------------------------------------
1996 1997
---- ----
<S> <C> <C>
Interest income:
Loans $ 699 $ 779
Mortgage-backed securities 101 83
Investments 22 24
Interest earning deposits 25 9
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Total interest income 847 895
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Interest expense:
Deposits 508 491
Federal Home Loan Bank advances - 3
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Total interest expense 508 494
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Net interest income 339 401
Provision for loan losses 8 -
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Net interest income after provision
for loan losses 331 401
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Noninterest income:
Loan fees and service charges 41 35
Other 5 5
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Total noninterest income 46 40
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Noninterest expenses:
Compensation 102 118
Employee benefits 13 16
Net occupancy expense 20 16
Deposit insurance premiums 23 2
Data processing 18 19
Other 46 46
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Total noninterest expenses 222 217
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Income before income taxes 155 224
Income tax expense 53 79
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Net income $ 102 $ 145
=============== ===============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
SECURITY FEDERAL SAVINGS BANK
AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
For Three Months Ended
March 31,
-----------------------------------------
1996 1997
---- ----
<S> <C> <C>
Operating activities:
Net income $ 102 $ 145
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation 14 12
Provision for loan losses 8 -
Deferred income taxes (benefit) - -
Net increase (decrease) in deferred loan fees (4) (17)
Accretion of discounts on investment securities, net (5) (5)
Amortization of premiums on mortgage-backed securities 4 4
FHLB stock dividends (6) (7)
Decrease (increase) in interest receivable (17) 2
Decrease (increase) in other assets (13) (22)
Increase (decrease) in accrued expenses and other liabilities (26) 26
Increase in current income taxes 31 71
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Net cash provided by operating activities 88 209
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Investing activities:
Purchase of investment securities held to maturity (1,000) -
Maturities of investment securities available for sale 250 -
Principal payments on mortgage-backed securities
available for sale 264 154
Net increase in loans (573) (358)
Purchase of equipment (7) (6)
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Net cash provided (used) in investing activities (1,066) (210)
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</TABLE>
(continued)
<PAGE>
SECURITY FEDERAL SAVINGS BANK
AND SUBSIDIARY
Consolidated Statements of Cash Flows, Continued
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
For Three Months Ended
March 31,
-----------------------------------------
1996 1997
---- ----
<S> <C> <C>
Financing activities:
Net increase in deposits $ 337 $ 926
Increase (decrease) in advance payments by borrowers
for taxes and insurance 125 143
Payment of conversion cost - (81)
Repayment of FHLB advances - (800)
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Net cash provided by financing activities 462 188
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Increase (decrease) in cash and
cash equivalents (516) 187
Cash and cash equivalents at beginning of year 2,729 1,414
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Cash and cash equivalents at end of year $ 2,213 $ 1,601
=============== ===============
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest on deposits and other borrowings $ 533 $ 491
Income taxes 8 7
=============== ===============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
SECURITY FEDERAL SAVINGS BANK
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
1. Basis of Preparation
--------------------
The consolidated financial statements included herein are for the Savings
Bank and the Savings Bank's wholly owned subsidiary, SFS, Inc.(SFS). The
impact of SFS on the consolidated financial statements is insignificant.
SFS has no operating activity other than to own stock in the third-party
service bureau. All significant intercompany items have been eliminated.
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 income 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 income for the three month period ended
March 31, 1997 is not necessarily indicative of the results which may be
expected for the entire year.
It is suggested that these unaudited consolidated financial statements be
read in conjunction with the audited consolidated financial statements and
notes thereto for the Bank for the year ended December 31, 1996.
2. Plan of Conversion
------------------
On January 15, 1997, the Bank's Board of Directors formally approved a
plan ("Plan") to convert from a federally-chartered mutual savings bank to
a federally-chartered stock savings bank subject to approval by the Bank's
members as of a still-to-be determined future voting record date. The
Plan, which includes formation of a holding company, is subject to
approval by the Office of Thrift Supervision (OTS) and includes the filing
of a registration statement with the Securities and Exchange Commission.
The Bank received regulatory approval on April 14, 1997. As of March 31,
1997, the Bank had incurred conversion costs of approximately $91,000. If
the conversion is ultimately successful, actual conversion costs will be
accounted for as a reduction in gross proceeds. If the conversion is
unsuccessful, the conversion costs will be expensed.
The Plan calls for the common stock of the Bank to be purchased by the
holding company and for the common stock of the holding company to be
offered to various parties in a subscription offering at a price based on
an independent appraisal. It is anticipated that any shares not
<PAGE>
SFB BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
- --------------------------------------------------------------------------------
purchased in the subscription offering will be offered in a direct
community offering, and then any remaining shares offered to the general
public in a solicited offering.
The stockholders of the holding company will be asked to approve a
proposed stock option plan and a proposed restricted stock plan at a
meeting of the stockholders after the conversion. Shares issued to
directors and employees under these plans may be from authorized but
unissued shares of common stock or they may be purchased in the open
market. In the event that options or shares are issued under these plans,
such issuances will be included in the earnings per share calculation;
thus, the interests of existing stockholders would be diluted.
The Bank may not declare or pay a cash dividend if the effect thereof
would cause its net worth to be reduced below either the amounts required
for the liquidation account discussed below or the regulatory capital
requirements imposed by federal regulations.
At the time of conversion, the Bank will establish a liquidation account,
which will be a memorandum account that does not appear on the balance
sheet, in an amount equal to its retained income as reflected in the
latest consolidated balance sheet used in the final conversion prospectus.
The liquidation account will be maintained for the benefit of eligible
account holders who continue to maintain their deposit accounts in the
Bank after conversion. In the event of a complete liquidation of the Bank
(and only in such an event), eligible depositors who continue to maintain
accounts shall be entitled to receive a distribution from the liquidation
account before any liquidation may be made with respect to common stock.
