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, 1998
[ ] 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) 543-3518
--------------
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 10, 1998, there were 752,980 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
--- ---
<PAGE>
SFB BANCORP, INC.
AND SUBSIDIARY
Elizabethton, Tennessee
Index
<TABLE>
<CAPTION>
PART I. Page(s)
- ------- -------
<S> <C>
FINANCIAL INFORMATION
Item 1.
Financial Statements
Consolidated Balance Sheets-(Unaudited) as of December 31, 1997 and June 30, 1998.......................................3
Consolidated Statements of Comprehensive Income - (Unaudited) for the three and six
month periods ended June 30, 1997 and 1998............................................................................4
Consolidated Statements of Cash Flows - (Unaudited) for the six months
ended June 30, 1997 and 1998..........................................................................................5
Notes to (Unaudited) Consolidated Financial Statements................................................................6-8
Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations..........................................................................................9-12
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings.............................................................................................13
Item 2. Changes in Securities.........................................................................................13
Item 3. Defaults Upon Senior Securities...............................................................................13
Item 4. Submission of Matters to a Vote of Security Holders........................................................13-14
Item 5. Other Information.............................................................................................14
Item 6. Exhibits and Reports on Form 8-K..............................................................................14
Signatures.............................................................................................................15
</TABLE>
2
<PAGE>
SFB BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
December 31, June 30,
-------------------- --------------------
Assets 1997 1998
------ ---- ----
<S> <C> <C>
Cash on hand $ 453 $ 573
Interest earning deposits in other banks 4,139 2,774
Investment securities:
Held to maturity (market value of $526
in 1997 and $1,248 in 1998) 577 1,277
Available for sale (amortized cost of $1,149
in 1997 and $2,299 in 1998) 1,148 2,397
Loans receivable, net 40,648 40,342
Mortgage-backed securities:
Available for sale (amortized cost of $5,117 in
1997 and $4,446 in 1998) 5,030 4,384
Premises and equipment, net 575 707
Federal Home Loan Bank stock 423 439
Accrued interest receivable 316 287
Prepaid expenses and other assets 28 58
--------------- ---------------
Total assets $ 53,337 $ 53,238
=============== ===============
Liabilities and Stockholders' Equity
------------------------------------
Deposits $ 40,587 $ 40,273
Advance payments by borrowers for taxes and insurance 199 452
Accrued expenses and other liabilities 144 175
Income taxes payable:
Current 164 -
Deferred 62 41
--------------- ---------------
Total liabilities 41,156 40,941
--------------- ---------------
Commitments and contingencies
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 issued and outstanding) 77 77
Paid-in capital 7,336 7,356
Retained earnings, substantially restricted 5,373 5,542
Accumulated other comprehensive income (loss) (53) (39)
Unearned compensation:
Employee stock ownership plan (552) (522)
Restricted stock plan - (117)
--------------- ----------------
Total stockholders' equity 12,181 12,297
--------------- ---------------
Total liabilities and stockholders' equity $ 53,337 $ 53,238
=============== ===============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
SFB BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Comprehensive Income
(Unaudited)
<TABLE>
<CAPTION>
For Three Months Ended For Six Months Ended
June 30, June 30,
------------------------------- -------------------------------
1997 1998 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Loans $ 793 $ 843 $ 1,572 $ 1,677
Mortgage-backed securities 79 63 162 132
Investments 26 45 50 76
Interest earning deposits 51 43 60 96
------------ ------------ ------------ ------------
Total interest income 949 994 1,844 1,981
------------ ------------ ------------ ------------
Interest expense:
Deposits 511 487 1,002 968
Federal Home Loan Bank advances - - 3 -
------------ ------------ ------------ ------------
Total interest expense 511 487 1,005 968
------------ ------------ ------------ ------------
Net interest income 438 507 839 1,013
Provision for loan losses - 7 - 15
------------ ------------ ------------ ------------
Net interest income after provision
for loan losses 438 500 839 998
Non-interest income:
Loan fees and service charges 35 38 70 75
Other 1 2 6 5
------------ ------------ ------------ ------------
Total non-interest income 36 40 76 80
------------ ------------ ------------ ------------
Non-interest expenses:
Compensation 131 249 249 366
Employee benefits 18 34 34 66
Net occupancy expense 18 20 34 39
Deposit insurance premiums 6 6 8 12
Data processing 17 22 36 42
Other 63 79 109 169
------------ ------------ ------------ ------------
Total non-interest expenses 253 410 470 694
------------ ------------ ------------ ------------
Income before income taxes 221 130 445 384
Income tax expense 82 49 161 143
------------ ------------ ------------ ------------
Net income 139 81 284 241
Other comprehensive income:
Net unrealized gains (losses) on
securities available for sale net of
income taxes of $18 and $4, for the
three months, and $10 and $7, for the six
months, respectively 27 6 17 14
-------------- -------------- -------------- --------------
Comprehensive income $ 166 $ 87 $ 301 $ 255
============= ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE>
SFB BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------
1997 1998
---- ----
<S> <C> <C>
Operating activities:
Net income $ 284 $ 241
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 25 27
Provision for loan losses - 15
Increase (decrease) in reserve for uncollected interest 7 9
Deferred income taxes (benefit) - (30)
Net increase (decrease) in deferred loan fees (16) 5
Accretion of discounts on investment securities, net (12) (11)
Amortization of premiums on mortgage-backed securities 6 7
Amortization of unearned compensation 8 50
Repurchase of shares - RSP - (117)
FHLB stock dividends (15) (16)
(Increase) decrease in other assets (14) (30)
(Increase) decrease in accrued interest receivable (16) 20
Increase (decrease) in accrued expenses and other liabilities 61 31
Increase (decrease) in current income taxes 71 (164)
--------- ------------
Net cash provided by operating activities 389 37
--------- ------------
Investing activities:
Purchase of investment securities held to maturity - (710)
Maturity of investment securities held to maturity - 21
Purchase of investment securities available for sale (300) (2,150)
Maturities of investment securities available for sale 250 900
Principal payments on mortgage-backed securities
available for sale 359 663
Proceeds from sale real estate - -
Net (increase) decrease in loans (1,221) 286
Purchase of premises and equipment (22) (159)
---------- -------------
Net cash used by investing activities (934) (1,149)
---------- -------------
Financing activities:
Net increase (decrease) in deposits (739) (314)
Increase (decrease) in advance payments by borrowers
for taxes and insurance 258 253
Repayment of FHLB advances (800) -
Issuance of common stock 7,056 -
Payment of accrued conversion cost (286) -
Payment of cash dividend - (72)
--------- -------------
Net cash provided (used) by financing activities 5,489 (133)
--------- -------------
Increase (decrease) in cash and cash equivalents 4,944 (1,245)
Cash and cash equivalents at beginning of period 1,414 4,592
--------- ------------
Cash and cash equivalents at end of period $ 6,358 $ 3,347
========= ============
Supplemental disclosures of cash flow information: Cash paid during the year
for:
Interest $ 999 $ 972
Income taxes 81 326
Noncash transactions
Unrealized gain (loss) on securities available for sale, net of deferred tax 17 14
liability
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
5
<PAGE>
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 statements of comprehensive income for the three and
six month periods ending June 30, 1998 is not necessarily indicative of the
results which may be expected for the entire year or any other 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, 1997 which are
included in the Form 10-KSB by reference (file no. 0-22587).
2. Earnings Per Share
------------------
Basic earnings per share amounts for the three and six month periods
ending June 30, 1998 are based on the average number of shares outstanding
throughout the period less unallocated ESOP shares, which are not
considered as outstanding for purposes of this calculation. Dilutive
earnings per share are based on the dilutive effect for potential common
shares outstanding during the period which would include unpurchased
shares granted for the Bank's Restricted Stock Plan and shares granted
under the Company's Stock Option Plan. No earnings per share disclosure
has been included for the three and six months ending June 30, 1997, since
the initial stock offering was completed on May 29, 1997. Therefore, it
was determined that this information would not be meaningful.
6
<PAGE>
SFB BANCORP, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Weighted average shares outstanding
-------------------------------------------------
Three month period Six month period
ended June 30, 1998 ended June 30, 1998
------------------- -------------------
<S> <C> <C>
Common Shares Outstanding 767,000 767,000
Less: Unallocated ESOP shares (53,191) (53,939)
------------ ----------
Basic EPS computation 713,809 713,061
Effect of dilutive securities:
Restricted Stock Plan 115 58
Stock Options 492 250
---------- ---------
Diluted EPS computation 714,416 713,369
Basic net income per share $.11 $.34
Diluted net income per share $.11 $.34
</TABLE>
3. Stock Option Plan and Restricted Stock Plan
-------------------------------------------
On June 1, 1998, the stockholders of the Company approved the Company's
Stock Option Plan and Restricted Stock Plan (RSP) at the Company's annual
meeting. 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. The Company announced on June 15, 1998, in a
press release that it would repurchase up to 4% of its outstanding common
stock to fund its approved Restricted Stock Plan and on July 15, 1998,
announced in a press release that it would initially repurchase up to 5%
for its approved Stock Option Plan. As of June 30, 1998, a total of 13,500
shares of common stock had been repurchased.
The Company granted and awarded on June 1, 1998 under its approved Stock
Option Plan and RSP Plan 73,630 and 30,678 shares, respectively. The stock
options were granted to employees and non-employee directors at an exercise
price of $16.69 per share and are exercisable at the rate of 20% on the
date of grant and 20% annually thereafter. No shares have been exercised as
of June 30, 1998.
The shares awarded under the RSP plan will be earned and vested to the
employees and non-employee directors over a four year period with 20%
vesting on the date of grant and 20% annually thereafter. Compensation
expense recognized for the three and six month periods ending June 30, 1998
for the RSP awards was $114,000.
4.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, 1997 and June 30, 1998, respectively. As of the dates
indicated, the Bank had no loans categorized as troubled debt restructuring
within the meaning of SFAS 15.
7
<PAGE>
SFB BANCORP, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
December 31, June 30,
1997 1998
---- ----
(Dollars in Thousands)
Nonaccrual loans $ 209 $ 386
Repossessed real estate - -
---------- ----------
Total nonperforming assets $ 209 $ 386
========== ==========
Nonperforming loans to net loans 0.51% 0.96%
Nonperforming assets to total assets 0.39% 0.73%
8
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
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 Security Federal Bank as
appropriate.
Comparison of Results of Operations for the Three and Six Months Ending June 30,
1997 and 1998
Net Income. Net income for the three months ending June 30, 1998, decreased
$58,000 from $139,000 in 1997, to $81,000 in 1998. Net income decreased $43,000
to $241,000 for the six months ending June 30, 1998, from $284,000 in 1997. The
decrease for the three and six months ending June 30, 1998, was primarily the
result of an increase in compensation and employee benefits, offset by an
increase in net interest income.
Net Interest Income. Net interest income increased $69,000 or 15.8% from
$438,000 for the three months ending June 30, 1997 to $507,000 for the three
months ending June 30, 1998. Net interest income increased $174,000 or 20.7%
from $839,000 for the six months ending June 30, 1997 to approximately $1.0
million for the six months ending June 30, 1998. The improvement in net interest
income for the three month period in 1998 primarily reflects an increase in
average interest-earning assets over average interest-bearing liabilities of
$5.3 million for the three months ending June 30, 1998, as compared to 1997. The
overall increase in net interest income for the six months ending June 30, 1998,
primarily reflects an increase in average interest-earning assets over average
interest-bearing liabilities of $6.3 million, as compared to the same period in
1997. The interest rate spread decreased 12 basis points from 2.95% for three
months ending June 30, 1997 to 2.83% for the three months ending June 30, 1998,
and decreased 17 basis points from 3.02% for six months ending June 30, 1997 to
2.85% for the six months ending June 30, 1998. The increases in the average
interest-earning assets were primarily the result of the infusion of and
subsequent investment of the proceeds raised in the Company's stock offering.
Interest Income. Interest income increased by $45,000 from $949,000 for the
three months ending June 30, 1997 to $994,000 for the three months ending June
30, 1998, as average interest-earning assets increased approximately $2.0
million for the three month period in 1998, as compared to 1997. The average
yield on interest-earning assets was 7.71% for the three months ending June 30,
1997 and 1998. Interest income increased $137,000 or 7.4% from $1.8 million for
the six months ending June 30, 1997 to approximately $2.0 million for the six
months ending June 30, 1998, as average interest-earning assets increased
approximately $4.0 million for the six month period in 1998, as compared to
1997. These increases in the average interest-earning assets were primarily the
result of the infusion of cash received in the stock offering. The average yield
on interest-earning assets decreased 7 basis points from 7.77% for the six
months ending June 30, 1997 to 7.70% for the six months ending June 30, 1998.
9
<PAGE>
Interest Expense. Interest expense decreased by $24,000 from $511,000 for the
three months ending June 30, 1997 to $487,000 for the three months ending June
30, 1998. Interest expense decreased by $37,000 from approximately $1.0 million
for the six months ending June 30, 1997 to $968,000 for the six months ending
June 30, 1998. The decrease for the three months ending June 30, 1998, was
primarily the result of a decrease of approximately $2.9 million in the average
balance of deposits for the three months ending June 30, 1998, compared to 1997,
offset by a 12 basis point increase in the average cost of funds. The decrease
for the six months ending June 30, 1998, was primarily the result of a $2.3
million decrease in average deposits and the repayment of Federal Home Loan Bank
advances, offset by a 10 basis point increase in the average cost of funds.
Provision for Loan Losses. The provision for loan losses for three month period
ending June 30, 1998 was $7,000. There was no provision recorded for the three
month period ending June 30, 1997. The provision for loan losses for the six
month period ending June 30, 1998 was $15,000. There was no provision recorded
for the six month period ending June 30, 1997. The Company's management
routinely performs an analysis to quantify the inherent risk of loss in its
portfolio. At June 30, 1998 the allowance for loan losses was at a level deemed
adequate by management to provide for losses in the portfolio. The ratio of
allowance for loan loss to non-performing loans at June 30, 1998 was 82.12%, and
nonperforming assets represented 0.73% of total consolidated assets.
Nonperforming assets were $386,000 at June 30, 1998 compared to $209,000 at June
30, 1997.
Non-Interest Income. Non-interest income continues to be an insignificant 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 $40,000 and $80,000 for the three and six months ending June 30,
1998, respectively, and $36,000 and $76,000 for the three and six months ending
June 30, 1997, respectively.
Non-Interest Expense. Non-interest expense increased by $157,000 from $253,000
for the three months ending June 30, 1997 to $410,000 for 1998. The increase for
the three month period was primarily the result of increased compensation
expenses of $118,000 and employee benefit expenses of $16,000. Non-interest
expense increased by $224,000 from $470,000 for the six months ending June 30,
1997 to $694,000 for 1998. The increase was primarily the result of increased
compensation expense of $117,000, employee benefits of $32,000 and $60,000 of
other expenses during the period. The increase in compensation expense for the
quarter ending June 30, 1998, was primarily attributable to the recognition of
additional compensation expense associated with the approval by the stockholders
of the Company's Restricted Stock Plan ("RSP"). On June 1, 1998, such approval
resulted in an immediate recognition of 20% of such plan expenses. The expenses
recognized for the RSP during the entire three and six month period was
approximately $114,000. The increase in employee benefit expenses for the three
and six months ending June 30, 1998 of $16,000 and $32,000, respectively, was
attributable to the recognition of ESOP expenses for the entire three and six
month period in 1998, as compared to only one month in 1997. The increase in
other expenses was mainly attributable to professional fees and other expenses
incurred by the Company in connection with its annual meeting and proxy
material. Net occupancy, deposit insurance premiums, and data processing
expenses remained relatively stable during both three and six month periods.
10
<PAGE>
Income Taxes. Income tax expense for the three months ending June 30, 1998 was
$49,000 compared to $82,000 for the same period in 1997. Income tax expense for
the six months ending June 30, 1998 was $143,000 compared to $161,000 for the
same period in 1997. 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 1997 and 1998 was approximately 37%.
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, 1998 were approximately
$513,000.
During the quarter ended June 30, 1998, the Bank filed a notice with the OTS for
the establishment of a branch office. The Bank purchased land and an existing
building for $135,000 for the proposed branch office which is to be located in
Mountain City, Tennessee. The Company's management estimates that costs
incidental to renovating the building will be approximately $120,000. For the
three and six month period ending June 30, 1998, renovation had not begun, and
other incidental expenses were not material. Management anticipates that
substantially all of the costs will be capitalized.
At June 30, 1998, 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, 1998, 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, 1998. The Bank had
the following capital ratios at June 30, 1998:
11
<PAGE>
<TABLE>
<CAPTION>
For Capital Categorized as
Actual Adequacy Purposes "Well Capitalized"(1)
------------------------ ----------------------- ------------------------
Amount Ratio Amount Ratio Amount Ratio
------------ ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
As of June 30, 1998:
Total Capital
(To risk weighted assets) $ 8,941 31.0% $ 2,306 8.0%` $ 2,883 10.0%
Tier I Capital
(To risk weighted assets) $ 8,624 29.9% $ 1,153 4.0% $ 1,730 6.0%
Tier I Capital
(To total assets) $ 8,624 17.2% $ 865 3.0% $ 1,441 5.0%
Tangible Capital
(To total assets) $ 8,624 17.2% $ 432 1.50% $ 1,441 5.0%
</TABLE>
(1) As categorized under the Prompt Corrective Action Provisions.
A great deal of information has been disseminated about the year 2000 as it
relates to computer systems. Many computer programs that can only distinguish
the final two digits of the year entered (a common programming practice in
earlier years) are expected to read entries for the year 2000 as the year 1900
and compute payment, interest or delinquency based on the wrong date or are
expected to be unable to compute payment, interest or delinquency. Rapid and
accurate data processing is essential to the Bank's operations. Data processing
is also essential to most other financial institutions and many other companies.
Substantially all of the Bank's material data processing that could be affected
by this problem is provided by a third party service bureau. The Bank's service
bureau has advised the Bank that it expects to resolve this potential problem
before the year 2000. However, if the service bureau is unable to resolve this
potential problem in time, the Bank would likely experience significant data
processing delays, mistakes or failures. These delays, mistakes or failures
could have a significant adverse impact on our financial condition and results
of operation. The Company does not expect to incur material costs in addressing
year 2000 issues primarily as a result of its third party service bureau
advising that it would not be assessing additional fees for the renovation and
testing of its hardware and software in preparation for year 2000.
The Bank has formulated a contingency plan for its mission-critical services and
products. The plan is designed to prepare the institution for returning to
operation in the event that systems do not perform as planned either before or
after the century date change. The plan also outlines certain "trigger dates"
allowing sufficient time to change service providers and/or software vendors if
the applicable system or software is not compliant.
12
<PAGE>
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, 1998, 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 June 1, 1998. 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. 678,176 44,425
Julian T. Caudill 678,176 44,425
2. The Company's 1998 Stock Option Plan was approved by stockholders
by the following vote:
For 509,562; Against 56,654 Abstain 1,350
3. The 1998 Security Federal Bank Restricted Stock Plan was approved
by stockholders by the following vote
For 449,462; Against 118,054; Abstain 150
13
<PAGE>
4. 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 721,551; Against 700; Abstain 350
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 * *
27 Financial Data Schedule ( Electronic filing only)
* Incorporated by reference to the Registration Statement on Form
SB-2, File No. 333-23505.
** Incorporated by reference to the Company's Proxy Statement for
the 1998 Annual Meeting of Stockholders, filed with the SEC on
April 17, 1998 (File No. 0- 22587).
(b) Reports on Form 8-K
None.
14
<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: August 12, 1998 By /s/ Peter W. Hampton
---------------------------------------
Peter W. Hampton
(President and Chief Executive Officer)
Date: August 12, 1998 By /s/Bobby Hyatt
--------------------------------------
Bobby Hyatt
(Principal Accounting Officer)
15
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION DERIVED FROM THE
QUARTERLY REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL INFORMATION.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 573
<INT-BEARING-DEPOSITS> 2,774
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 6,781
<INVESTMENTS-CARRYING> 1,277
<INVESTMENTS-MARKET> 1,248
<LOANS> 40,659
<ALLOWANCE> 317
<TOTAL-ASSETS> 53,238
<DEPOSITS> 40,273
<SHORT-TERM> 0
<LIABILITIES-OTHER> 668
<LONG-TERM> 0
0
0
<COMMON> 77
<OTHER-SE> 12,220
<TOTAL-LIABILITIES-AND-EQUITY> 53,238
<INTEREST-LOAN> 1,677
<INTEREST-INVEST> 208
<INTEREST-OTHER> 96
<INTEREST-TOTAL> 1,981
<INTEREST-DEPOSIT> 968
<INTEREST-EXPENSE> 968
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</TABLE>
