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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<PAGE>
[SFB Bancorp, Inc. Letterhead]
March 30, 2000
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 3, 2000, 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 any questions 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 2000. 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. 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
<PAGE>
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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 3, 2000
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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 3, 2000, 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, 2000;
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 15,
2000 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,
1999 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.
-------------------------------------------
Peter W. Hampton, Jr.
Secretary
Elizabethton, Tennessee
March 30, 2000
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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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<PAGE>
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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 3, 2000
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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
3, 2000, 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 March 30, 2000.
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 (the
"Secretary") 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 15, 2000
(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 639,417 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.
<PAGE>
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.
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.
2
<PAGE>
<TABLE>
<CAPTION>
Percent of Shares
Amount and Nature of of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding
- ------------------------------------ -------------------- -----------
<S> <C> <C>
Security Federal Bank
Employee Stock Ownership Plan ("ESOP")
632 East Elk Avenue
Elizabethton, Tennessee 37643 60,912(1) 9.5%
Peter W. Hampton
632 East Elk Avenue
Elizabethton, Tennessee 37643 49,404(2) 7.6%
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
712 Fifth Avenue, 22nd Floor
New York, New York 10019 69,000(3) 10.8%
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 40,400(4) 6.3%
All directors and executive officers of the
Company as a group (7 persons) 102,711(5) 15.5%
</TABLE>
- ----------------------------
(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 Voting Record Date, 20,297 shares have
been allocated under the ESOP to participant accounts.
(footnotes continued on next page)
3
<PAGE>
(2) Includes 8,590 shares that may be purchased through the stock option plan
within 60 days of the Record Date. Excludes 17,028 restricted stock plan
shares which Mr. Hampton serves as a member of the restricted stock plan
trust. Mr. Hampton disclaims beneficial ownership to such shares.
(3) The information as to Malta Hedge Fund II, L.P. ("MHF II"), 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"), and Terry Maltese ("Maltese") is derived from an
amended Schedule 13D, dated January 11, 1999, which states that as of
December 1, 1998, MHF II, MHF, MP II, MPLP, Sandler O'Neill, SOAM, and
Maltese had shared voting and shared dispositive power with respect to
6,120 shares, 19,380 shares, 9,760 shares, 33,740 shares, 69,000 shares,
69,000 shares, and 69,000 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 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 owned by Holdings and SOAM. Holdings, SOAM and Maltese
disclaims direct ownership of the Common Stock.
(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 February 14, 2000, filed by the Reporting Group,
which states that as of February 11, 2000, that the Reporting Group each
had shared voting and shared dispositive power with respect to 40,400
shares.
(5) Includes options to purchase 24,697 shares of Common Stock that may be
exercised within 60 days of the Record Date to purchase shares of Common
Stock under the 1998 Stock Option Plan (the "1998 Stock Option Plan").
Excludes 17,028 shares of Common Stock previously awarded under the Bank's
Restricted Stock Plan ("RSP") which are subject to forfeiture and for which
the individuals in the group exercise no voting control and also excludes
54,218 shares held by the ESOP (60,912 shares minus 6,694 shares allocated
to executive officers), over which certain directors, by their position as
either a member of the ESOP Committee, ESOP trust or RSP trust, exercise
shared voting and investment power. Such individuals serving either as a
member of the ESOP Committee, ESOP trust, or RSP trust disclaim beneficial
ownership with respect to such shares. See "Proposal 1 - Election of
Directors."
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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 and executive officers 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, all of the
filings by the Company's directors and executive officers were made on a timely
basis during the 1999 fiscal year. With the exception of Mr. Terry Maltese
(together with Malta Hedge Funds, Malta Partners, Sandler O'Neill Partners, and
Soam Holdings, as shown in the "Principal Holders" table), the Company is not
aware of other beneficial owners of more than ten percent of its Common Stock.
4
<PAGE>
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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.
Peter W. Hampton, Jr. and Donald Tetrick (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 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. Each
director of the Company is also a member of the Board of Directors of the Bank.
Beneficial ownership of executive officers and directors of the Company, as a
group, is shown under "Principal Holders."
5
<PAGE>
<TABLE>
<CAPTION>
Shares of Common
Stock
Beneficially
Year First Current Owned as of
Elected or Term to March 15, Percent
Name and Title Age(1) Appointed(2) Expire 2000 (3) Owned
- -------------- ------ ------------ ------ ------- -----
<S> <C> <C> <C> <C> <C>
BOARD NOMINEES FOR TERM TO EXPIRE IN 2002
Peter W. Hampton, Jr.
Secretary, Treasurer and Director 49 1994 1999 26,034(4) 4.0%
Donald W. Tetrick
Director 84 1963 1999 6,316(4) 1.0%
DIRECTORS CONTINUING IN OFFICE
John R. Crockett, Jr.
Director 79 1963 2000 3,321(4) --%(5)
Julian T. Caudill
Vice President and Director 81 1963 2000 8,221(4) 1.3%
Michael L. McKinney
Director 41 1999 2001 500 --%(5)
Peter W. Hampton
President and Director 80 1963 2001 49,490(4) 7.6%
</TABLE>
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(1) At December 31, 1999.
(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, Jr. 7,976, Donald W. Tetrick 2,300, John R. Crockett, Jr.
2,300, Julian T. Caudill 2,300, and Peter W. Hampton, 8,590.
(4) Excludes 60,912 shares of Common Stock under the ESOP (except Messrs.
Hampton and Hampton, Jr.) and 17,028 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. each excludes 17,028 RSP shares. 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
<PAGE>
Executive Officers of the Company
The following individuals hold the executive offices in the Company set
forth below opposite their names.
Age as of
Name December 31, 1999 Positions Held With the Company
- ---- ----------------- -------------------------------
Peter W. Hampton 80 President and Director
Peter W. Hampton, Jr. 49 Secretary, Treasurer and Director
Julian T. Caudill 81 Vice President
Bobby K.S. Hyatt 31 Principal Accounting Officer
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. Mr. Caudill is a retired pharmacist. He is a member of the
Elizabethton Rotary Club and the American Cancer Society. On April 29, 1999, Mr.
Caudill was appointed Vice President of the Company and the Bank.
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.
7
<PAGE>
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, the 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 has been the Principal Accounting Officer of the
Company since 1997 and an Assistant Vice President of the Bank since 1995. 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 board of directors
of the Elizabethton Kiwanis Club.
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, 1999, 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,
1999. In addition to other committees, as of December 31, 1999, the Board had a
Nominating Committee, a Compensation and Benefits Committee, and an Audit
Committee.
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
1999 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 three times
during the 1999 fiscal year.
The Audit Committee is comprised of Directors Donald W. Tetrick, John
R. Crockett, Jr. and Julian T. Caudill. This standing committee is responsible
for developing and maintaining the Bank's audit program. The Committee also
meets with the Bank's outside accountants to discuss the results of the annual
audit and any related matters. The Audit Committee met two times during the 1999
fiscal year
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
- --------------------------------------------------------------------------------
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, 1999 were $52,505.
8
<PAGE>
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.
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.
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. All compensation paid
to officers and employees is paid by the Bank.
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 $100,000 for services rendered for the years presented.
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
--------------------------------------- ---------------------------
#Securities
Restricted Underlying All
Name and Fiscal Other Annual Stock Options/ Other
Principal Position Year Salary($) Bonus($) Compensation(1) Award(s) (2) SARs (3) Compensation($)
- ------------------- ---- --------- -------- --------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Peter W. Hampton 1999 80,000 22,000 10,597 -- -- 12,830(4)
President 1998 80,000 22,000 10,307 $153,615 21,476 14,940
1997 77,295 24,000 10,238 -- -- 13,542
</TABLE>
- -------------------------------
(1) Consists of director and committee fees of $8,880, and $1,717 for health,
life and disability insurance premiums paid on behalf of the named
executive officer in 1999; consists of $8,880 director and committee fees
and $1,427 health, life and disability insurance premiums in 1998; and
$8,715 and $1,523 for these fees and premiums in 1997.
(2) Represents the award of 9,204 shares of Common Stock under the RSP as of
June 1, 1998 on which date the market price of such stock was $16.69 per
share. Such stock awards become non-forfeitable at the rate of 20% shares
per year commencing on June 1, 1998. Dividend rights associated with such
stock are accrued and held in arrears to be paid at the time that such
stock becomes non-forfeitable. As of December 31, 1999, 5,522 shares with a
market value of $60,742 at such date (based upon the closing price of
$11.00 per share at such date) remain unvested.
(3) Such awards under the 1998 Stock Option Plan are first exercisable at the
rate of 20% per year commencing on June 1, 1998. The exercise price equals
the market value of the Common Stock on the date of grant of $16.69. See
"-- Stock Awards."
(4) Consists of 1,283 shares ($12,830) of stock allocated under the ESOP, with
an aggregate market value of $14,113 at December 31, 1999.
9
<PAGE>
Stock Awards. The following table sets forth information with respect to
previously awarded stock options to purchase the Common Stock granted in 1998 to
Mr. Hampton and held by him as of December 31, 1999. The Company has not granted
to Mr. Hampton any stock appreciation rights ("SARs").
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year, and FY-End Option/SAR Values
---------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-The-Money Options/SARs
Shares Acquired FY-End (#) at FY-End ($)
Name on Exercise (#) Value Realized($)(1) Exercisable/Unexercisable Exercisable/Unexercisable(1)
- ------------------------ --------------- -------------------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Peter W. Hampton 0 0 8,590 / 12,886 $ 0 / $0
</TABLE>
- --------------------------
(1) Based upon an exercise price of $16.69 per share and estimated price of
$11.00 at December 31, 1999.
Employment Agreement. The Bank entered into an employment agreement
with Peter W. Hampton, President of the Bank ("Agreement"). Mr. Hampton's base
salary under the Agreement is $73,614. 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, 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, 1999, such payments would have
equaled approximately $299,000. 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
- --------------------------------------------------------------------------------
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., is a partner of the law firm of Hampton & Street
in Elizabethton, Tennessee. The Bank retains the services of Mr. Hampton's firm,
and the firm performs certain legal work for the Bank. Fees paid to the law firm
by the Bank's borrowers for services performed on the Bank's behalf was
approximately $64,000 for the 1999 fiscal year.
10
<PAGE>
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PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
- --------------------------------------------------------------------------------
Crisp Hughes Evans LLP, was the Company's independent public accountant
for the 1999 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, 2000, 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, 2000.
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STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be considered for inclusion in the Company's proxy
statement for the annual meeting of stockholders to be held in 2001, all
stockholder proposals must be submitted to the Secretary at the Company's
office, 632 East Elk Avenue, Elizabethton, Tennessee 37564, on or before
November 29, 2000. Under the Articles of Incorporation, in order to be
considered for possible action by stockholders at the 2001 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 3, 2001.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
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.
11
<PAGE>
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FORM 10-KSB
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1999 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
March 30, 2000
12
<PAGE>
- --------------------------------------------------------------------------------
SFB BANCORP, INC.
632 EAST ELK AVENUE
ELIZABETHTON, TENNESSEE 37643
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 3, 2000
- --------------------------------------------------------------------------------
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 3, 2000, 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):
Peter W. Hampton, Jr.
Donald W. Tetrick
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name on the space provided below)
-----------------------------------------------------------------------
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, 2000.
The Board of Directors recommends a vote "FOR" the above listed
propositions.
- --------------------------------------------------------------------------------
THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS 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 PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------
13
<PAGE>
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 March 30, 2000 and the 1999 Annual Report.
Please check the box if you are planning to attend the meeting. [ ]
Dated: , 2000
------------------
- ------------------------- ------------------------------------
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.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
- --------------------------------------------------------------------------------
14
