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 September 30, 2000

[ ]  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 incorporation            (I.R.S. Employer
           or organization)                          Identification Number)

 632 East Elk Avenue, Elizabethton, Tennessee               37643
----------------------------------------------           -------------
   (Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code:  (423) 543-1000
                                                     --------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

                   X      Yes                    No
               ----------               --------

As of November 1, 2000,  there were 590,595  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, 1999 and September 30, 2000..................................3

Consolidated  Statements  of Income -  (Unaudited)  for the three and nine month
periods ended September 30, 1999 and 2000...............................................................................4

Consolidated Statements of Stockholders' Equity - (Unaudited)...........................................................5

Consolidated Statements of Cash Flows - (Unaudited) for the nine months
  ended September 30, 1999 and 2000.....................................................................................6

Notes to (Unaudited) Consolidated Financial Statements................................................................7-8

Item 2.
Management's Discussion and Analysis of Financial Condition
  and Results of Operations..........................................................................................9-13

PART II.

OTHER INFORMATION

Item 1.  Legal Proceedings.............................................................................................14

Item 2.  Changes in Securities.........................................................................................14

Item 3.  Defaults Upon Senior Securities...............................................................................14

Item 4.  Submission of Matters to a Vote of Security Holders...........................................................14

Item 5.  Other Information.............................................................................................14

Item 6.  Exhibits and Reports on Form 8-K..............................................................................14

Signatures.............................................................................................................15
</TABLE>

                                       2
<PAGE>
                        SFB BANCORP, INC. AND SUBSIDIARY

                           Consolidated Balance Sheets
                                   (Unaudited)
                        (in thousands, except share data)
<TABLE>
<CAPTION>
                                                                                    December 31,         September 30,
                                                                                        1999                 2000
                                                                               --------------------- --------------------
<S>                                                                            <C>                   <C>
            Assets
            ------
Cash on hand                                                                    $          1,424      $            469
Interest earning deposits                                                                    738                   896
Investment securities:
   Held to maturity (market value of $911
     in 1999 and $835 in 2000)                                                             1,017                   899
   Available for sale (amortized cost of $2,124
     in 1999 and $2,125 in 2000)                                                           2,091                 2,105
Loans receivable, net                                                                     43,789                46,002
Mortgage-backed securities:
   Available for sale (amortized cost of $2,225 in
     1999 and $1,818 in 2000)                                                              2,183                 1,744
Premises and equipment, net                                                                1,011                   969
Federal Home Loan Bank stock                                                                 487                   514
Accrued interest receivable                                                                  280                   324
Prepaid expenses and other assets                                                            109                    56
                                                                                 ---------------       ---------------
         Total assets                                                           $         53,129       $        53,978
                                                                                 ===============       ===============
   Liabilities and Stockholders' Equity
   ------------------------------------
Deposits                                                                        $         40,435       $        41,913
Federal Home Loan Bank advances                                                              500                     -
Advance payments by borrowers for taxes and insurance                                        220                   578
Accrued expenses and other liabilities                                                       157                   207
Income taxes payable:
   Current                                                                                     -                    39
   Deferred                                                                                  101                    93
                                                                                ----------------      ----------------

         Total liabilities                                                                41,413                42,830
                                                                                 ---------------       ---------------


   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; 679,417 and 590,595 outstanding at
     December 31, 1999 and September 30, 2000, respectively)                                  77                    77
   Paid-in capital                                                                         7,382                 7,389
   Retained earnings, substantially restricted                                             6,165                 6,487
   Treasury  stock  at cost  (87,583  and  176,405  shares  at  December 31,
     1999 and September 30, 2000, respectively)                                           (1,208)               (2,221)
   Accumulated other comprehensive income                                                    (45)                  (56)
   Unearned compensation:
     Employee stock ownership plan                                                          (419)                 (365)
     Restricted stock plan                                                                  (236)                 (163)
                                                                                 ---------------       ----------------
         Total stockholders' equity                                                       11,716                 11,148
                                                                                 ---------------       ----------------
         Total liabilities and stockholders' equity                             $         53,129       $         53,978
                                                                                 ===============       ================

</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)
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                             For Three Months Ended         For Nine Months Ended
                                                  September 30,                 September 30,
                                               ------------------             ------------------
                                                  1999       2000                1999       2000
                                               -------    -------             -------    -------
<S>                                           <C>        <C>                 <C>        <C>
Interest income:
   Loans                                       $   842    $   946             $ 2,485    $ 2,726
   Mortgage-backed securities                       34         27                 115         83
   Investments                                      51         49                 160        148
   Interest earning deposits                        23          8                  99         20
                                               -------    -------             -------    -------
         Total interest income                     950      1,030               2,859      2,977
                                               -------    -------             -------    -------
Interest expense:
   Deposits                                        442        529               1,360      1,473
   FHLB Advances                                     -          4                   -         19
                                               -------    -------             -------    -------
         Total interest expense                    442        533               1,360      1,492
                                               -------    -------             -------    -------
         Net interest income                       508        497               1,499      1,485

Provision for loan losses                            9          9                  27         27
                                               -------    -------             -------    -------
         Net interest income after provision
           for loan losses                         499        488               1,472      1,458

Non-interest income:
   Loan fees and service charges                    45         42                 130        136
   Other                                             3          7                   8         13
                                               -------    -------             -------    -------
         Total non-interest income                  48         49                 138        149
                                               -------    -------             -------    -------
Non-interest expenses:
   Compensation                                    166        183                 463        519
   Employee benefits                                32         31                  95         95
   Net occupancy expense                            28         29                  72         94
   Deposit insurance premiums                        6          2                  18          6
   Data processing                                  28         31                  74         91
   Other                                            64         69                 208        203
                                               -------    -------             -------    -------
         Total non-interest expenses               324        345                 930      1,008
                                               -------    -------             -------    -------

         Income  before income taxes               223        192                 680        599

Income tax expense                                  85         71                 257        221
                                               -------    -------             -------    -------
         Net income                                138        121                 423        378

Other comprehensive (loss) income                   (8)        10                 (16)       (11)
                                               -------    -------             -------    -------
         Comprehensive income                  $   130    $   131             $   407    $   367
                                               =======    =======             =======    =======

Earnings per share
   Basic                                       $   .21    $   .22             $   .66    $   .65

   Diluted                                     $   .21    $   .22             $   .66    $   .65
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       4
<PAGE>
                                             SFB BANCORP, INC. AND SUBSIDIARY

                                 Consolidated Statements of Stockholders' Equity
                                                        (Unaudited)
                                             (in thousands, except share data)
<TABLE>
<CAPTION>
                                                                                    Accumulated
                                                                                      Other     Unearned Compensation
                                          Common   Paid-In  Retained  Treasury    Comprehensive ---------------------
                                          Stock    Capital   Income     Stock         Income    for ESOP    for RSP       Total
                                          -----    -------   ------     -----         ------    --------    -------       -----
<S>                                     <C>      <C>       <C>      <C>        <C>            <C>       <C>        <C>
Balance at December 31, 1998                77     7,368     5,732    (1,034)           (24)     (491)      (358)        11,270

Comprehensive income:
   Net income                                -         -       559         -              -         -          -            559
   Unrealized losses on
     securities available for sale,
     net of income tax expense               -         -         -         -            (21)        -          -            (21)

Cash dividends declared ($.20 share)         -         -      (126)        -              -         -          -           (126)

Treasury stock purchased (14,733 shares)     -         -         -      (174)             -         -          -           (174)

Compensation earned                          -        14         -         -              -        72        122            208
                                          ----    ------    ------    ------      ---------     -----    -------      ---------

Balance at December 31, 1999                77     7,382     6,165    (1,208)           (45)     (419)      (236)        11,716

Comprehensive income:
    Net income                               -         -       378         -              -         -          -            378
   Unrealized losses on securities
     available for sale,
     net of income tax expense               -         -         -         -            (11)        -          -            (11)

Cash dividends declared ($.10 share)                           (56)                                                         (56)

Treasury stock purchased (88,822 shares)     -         -         -    (1,013)             -         -          -         (1,013)

Compensation earned                          -         7         -         -              -        54         73            134
                                          ----    ------    ------    ------      ---------     -----    -------      ---------

Balance at September 30, 2000            $  77    $7,389    $6,487   $(2,221)   $       (56)   $ (365)   $  (163)   $    11,148
                                         =====    ======    ======   =======    ===========    ======    =======    ===========
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                       5
<PAGE>
                        SFB BANCORP, INC. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows
                                   (Unaudited)
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                   Nine Months Ended
                                                                                     September 30,
                                                                                  -------------------
                                                                                     1999       2000
                                                                                     ----       ----
<S>                                                                               <C>        <C>
Operating activities:
   Net income                                                                      $   423    $   378
   Adjustments to reconcile net income  to net cash  provided by
     operating activities:
     Depreciation                                                                       53         69
     Provision for loan losses                                                          27         27
     Increase (decrease) in reserve for uncollected interest                            (1)        (1)
     Deferred income taxes (benefit)                                                     -          -
     Net increase (decrease) in deferred loan fees                                     (54)       (15)
     Accretion of discounts on investment securities, net                              (18)       (19)
     Amortization of premiums on mortgage-backed securities                              7          7
     Amortization of unearned compensation                                             155        134
     FHLB stock dividends                                                              (25)       (27)
     (Increase) decrease in other assets                                               (39)        53
     (Increase) decrease in accrued interest receivable                                 (6)       (43)
     Increase (decrease) in accrued expenses and other liabilities                      23         50
     Increase (decrease) in current income taxes                                         -         39
                                                                                   -------    -------
         Net cash provided by operating activities                                     545        652
                                                                                   -------    -------
Investing activities:
   Purchase of investment securities held to maturity                                    -          -
   Maturities of investment securities held to maturity                                130        136
   Purchase of investment securities available for sale                             (1,299)         -
   Maturities of investment securities available for sale                            1,500          -
   Principal payments on mortgage-backed securities
      available for sale                                                             1,080        400
   Net decrease in loans                                                            (1,953)    (2,225)
   Purchase of premises and equipment                                                 (225)       (27)
                                                                                   -------    -------
         Net cash used by investing activities                                        (767)    (1,716)
                                                                                   -------    -------
Financing activities:
   Net (decrease) in deposits                                                          (92)     1,478
    Repayment of FHLB Advances                                                           -       (500)
   Increase in advance payments by borrowers for taxes
     and insurance                                                                     371        358
   Treasury stock purchased                                                           (174)    (1,013)
   Payment of cash dividend                                                            (64)       (56)
                                                                                   -------    -------
         Net cash provided by financing activities                                      41        267
                                                                                   -------    -------
         Decrease in cash and cash equivalents                                        (181)      (797)

Cash and cash equivalents at beginning of period                                     2,839      2,162
                                                                                   -------    -------
Cash and cash equivalents at end of period                                         $ 2,658    $ 1,365
                                                                                   =======    =======
Supplemental  disclosures  of cash flow  information:
  Cash paid during the year for:
     Interest                                                                      $ 1,348    $ 1,486
     Income taxes                                                                      289        130
                                                                                   =======    =======
Noncash transactions:
   Unrealized gains (losses) on securities and mortgage-backed
     securities available for sale, net of deferred taxes                              (16)       (11)
   Loan charge off's                                                                     2          7
</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       6
<PAGE>



SFB BANCORP, INC. AND SUBSIDIARY      Notes to Consolidated Financial Statements
--------------------------------      ------------------------------------------


                                SFB BANCORP, INC.
                                 AND SUBSIDIARY

                   Notes to Consolidated Financial Statements
                                   (Unaudited)
                         (Tabular amounts in thousands)

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   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 income for the three and nine month
     periods ending  September 30, 2000 are 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, 1999 which are
     included in the Form 10-KSB by reference (file no. 0-22587).

2.   Earnings Per Share
     ------------------

     Basic  earnings  per common  share  ("EPS") for all periods  presented  is
     computed by dividing  net income by the weighted average  number of common
     share  outstanding.  Diluted  earnings  per  common share is  computed  by
     dividing  net  income  available  to common  stockholders by the  weighted
     average number of common shares  outstanding and dilutive potential common
     shares,  which include stock options. Dilutive potential common shares are
     calculated  using the treasury  stock method.  Options to purchase  73,630
     shares of the Company's common stock were outstanding during the three and
     nine months period ended  September 30, 2000, but were not included in the
     computation of diluted EPS because their effect would be anti-dilutive.

                                       7
<PAGE>

SFB BANCORP, INC. AND SUBSIDIARY      Notes to Consolidated Financial Statements
--------------------------------      ------------------------------------------


<TABLE>
<CAPTION>
                                                                 Three months ended,
                                                -------------------------------------------------------
                                                    September 30, 1999          September 30, 2000
                                                --------------------------- ---------------------------
                                                      Income         Shares       Income         Shares
                                                      ------         ------       ------         ------
<S>                                                   <C>            <C>          <C>             <C>
Net Income                                              $138                        $121
BASIC  EPS
  Income available to common stockholders               $138           643          $121            556
  Per share amount                                      $.21                        $.22
Effect of Dilutive Securities                           $.00                        $.00
DILUTIVE EPS
  Income available to common stockholders               $138           643          $121            556
  Per share amount                                      $.21                        $.22
</TABLE>

<TABLE>
<CAPTION>
                                                                  Nine months ended,
                                                -------------------------------------------------------
                                                    September 30, 1999          September 30, 2000
                                                --------------------------- ---------------------------
                                                      Income        Shares        Income         Shares
                                                      ------        ------        ------         ------
<S>                                                   <C>            <C>          <C>             <C>
Net Income                                              $423                        $378
BASIC  EPS
  Income available to common stockholders               $423           644          $378            582
  Per share amount                                      $.66                        $.65
Effect of Dilutive Securities                           $.00                        $.00
DILUTIVE EPS
  Income available to common stockholders               $423           644           $378           582
  Per share amount                                      $.66                         $.65
</TABLE>

3.   Asset Quality
     -------------

     The following table provides information regarding the Bank's nonperforming
     loans  (i.e.,  loans which are  contractually  past due 90 days or more) at
     December 31, 1999 and  September  30, 2000,  respectively.  As of the dates
     indicated, the Bank had no loans categorized as troubled debt restructuring
     within the meaning of SFAS 15.

                                                    December 31,  September 30,
                                                       1999            2000
                                                       ----            ----
                                                     (Dollars in Thousands)

         Nonaccrual loans                             $ 217           $ 239
         Repossessed real estate                          -               -
                                                      -----           -----
         Total nonperforming assets                   $ 217           $ 239
                                                      =====           =====

         Nonperforming loans to net loans              0.50%           0.52%
         Nonperforming assets to total assets          0.41%           0.45%


                                       8
<PAGE>




Item 2.
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS

General

The  Private  Securities  Litigation  Reform Act of 1995  contains  safe  harbor
provisions regarding forward-looking  statements.  When used in this discussion,
the words  "believes",  "anticipates",  "contemplates",  "expects",  and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties  which could cause actual results
to differ materially from those projected. Those risks and uncertainties include
changes in  interest  rates,  risk  associated  with the effect of opening a new
branch,  the  ability  to  control  costs and  expenses,  and  general  economic
conditions. The Company undertakes no obligation to publicly release the results
of any  revisions  to those  forward  looking  statements  which  may be made to
reflect  events  or  circumstances  after  the date  hereof  or to  reflect  the
occurrence of unanticipated events.

The following discussion and analysis is intended to assist in understanding the
financial condition and the results of operations of the Company.  References to
the "Company" include SFB Bancorp, Inc. and/or the Bank as appropriate.


Comparison  of  Results  of  Operations  for the  Three and Nine  Months  Ending
September 30, 1999 and 2000

Net Income. Net income for the three months ending September 30, 2000, decreased
$17,000,  or 12.3%,  from  $138,000 in 1999,  to  $121,000  in 2000.  Net income
decreased  $45,000,  or 10.6%, to $378,000 for the nine months ending  September
30,  2000,  from  $423,000 in 1999.  The  decrease  for the three and nine month
periods ended  September 30, 2000,  compared to 1999, was  principally  due to a
decrease in net  interest  income,  combined  with an  increase in  non-interest
expenses,  offset  by lower  income  tax  expense.  Dilutive  income  per  share
increased  $.01, from $.21 for the three month ended September 30, 1999, to $.22
for the three  months  ended  September  30,  2000.  Dilutive  income  per share
decreased  $.01, from $.66 for the nine months ended September 30, 1999, to $.65
for the nine months ended September 30, 2000.

Net Interest Income. Net interest income decreased  $11,000,  from approximately
$508,000 for the three months  ending  September  30, 1999,  to $497,000 for the
three months ending September 30, 2000. Net interest income decreased $14,000 to
approximately  $1.5 million for the nine months ending  September 30, 2000.  The
decrease in net interest  income for the three month  period in 2000,  primarily
reflects a 39 basis point  decrease in the  interest  rate spread from 3.23% for
the three  months  ending  September  30,  1999,  to 2.84% in 2000,  offset by a
increase  in  average  interest-earning  assets  over  average  interest-bearing
liabilities of approximately  $567,000 for the three months ending September 30,
2000, as compared to the same period in 1999. The net interest margin  decreased
24 basis points to 3.84% for the three months ending  September  30, 2000,  from
4.08% for the three months ending  September 30, 1999.  The overall  decrease in
net interest

                                       9
<PAGE>

income for the nine months ending  September 30, 2000,  primarily  reflects a 14
basis point  decrease in the interest rate spread from 3.06% for the nine months
ending September 30, 1999, to 2.92% in 2000. The net interest margin decreased 7
basis points to 3.88% for the nine months ending  September 30, 2000, from 3.95%
for the nine months ending September 30, 1999.

Interest Income.  Interest income increased $80,000, from approximately $950,000
for the three months  ending  September 30, 1999, to $1.03 million for the three
months ending September 30, 2000. The increase was attributable to a increase in
average interest-earning assets of approximately $2.0 million from $49.7 million
at September 30, 1999,  to $51.7 million at September 30, 2000,  combined with a
increase in the average  yield on  interest-earning  assets of 32 basis  points,
from 7.65% for the three months ending September 30, 1999, to 7.97% for the same
period in 2000.  Interest income increased  $118,000,  from approximately  $2.86
million for the nine months ending  September 30, 2000,  to  approximately  $3.0
million  for the nine  months  ending  September  30,  2000.  The  increase  was
attributable to a increase in average  interest-earning  assets of approximately
$481,000,  from  $50.5  million  at  September  30,  1999,  to $51.0  million at
September  30,  2000,   combined  with  a  increase  in  the  average  yield  on
interest-earning  assets of 24 basis  points,  from  7.54%  for the nine  months
ending September 30, 1999, to 7.78% for the same period in 2000.

Interest on loans increased  $104,000 for the three months ending  September 30,
2000,  as compared to the same period in 1999,  and $241,000 for the nine months
ending  September 30, 2000, as compared to the same period in 1999. The increase
for the three months  ending  September  30, 2000,  compared to 1999,  primarily
reflects a $3.8 million increase in average loans outstanding, and a increase in
the average yield on average loans  outstanding  of 24 basis points,  from 8.01%
for the three months ending  September 30, 1999, to 8.25% for the same period in
2000.  The increase for the nine months ending  September 30, 2000,  compared to
1999,  primarily  reflects a $4.2 million increase in average loans outstanding,
offset by a decrease  in the average  yield on average  loans  outstanding  of 3
basis points, from 8.09% for the nine months ending September 30, 1999, to 8.06%
for the same period in 2000.

Interest on investment  securities  decreased $2,000 for the three months ending
September  30,  2000,  as  compared to the same  period in 1999,  and  decreased
$12,000 for the nine months  ending  September 30, 2000, as compared to the same
period in 1999.  The  decrease in interest on  investments  for the three months
ending  September  30,  2000,  primarily  reflects an decrease of  approximately
$142,000 in the average investment balance for 2000, compared to 1999, offset by
a increase in the average yield on investments of 2 basis points,  from 5.26% in
1999,  to 5.28% in 2000.  The decrease in interest on  investments  for the nine
months   ending   September  30,  2000,   primarily   reflects  an  decrease  of
approximately  $354,000 in the average investment balance for 2000,  compared to
1999. The nine month average yield on investments was 5.28% in 1999 and 2000.

Interest on  interest-earning  deposits  decreased  $15,000 for the three months
ending September 30, 2000, as compared to the same period in 1999, and decreased
$79,000 for the nine months  ending  September 30, 2000, as compared to the same
period in 1999.

                                       10
<PAGE>

These  decreases  in interest on  interest-earning  deposits  for three and nine
months  ending  September  30,  2000,  compared  to 1999,  primarily  reflects a
decrease  of  approximately  $923,000  and $2.4  million,  respectively,  in the
average balance of interest-earning deposits.

Interest on  mortgage-backed  securities  decreased  $7,000 for the three months
ending  September 30, 2000, as compared to the same period in 1999,  and $32,000
for the nine months ending September 30, 2000, as compared to the same period in
1999,  as the  portfolio  continued to pay down  principal  and those funds were
invested in other earning assets.

The  decrease in average  interest-earning  deposits for both the three and nine
month periods in 2000,  compared to 1999, along with the principal payments from
mortgage-backed  securities were used to fund loan demand,  deposit  withdrawals
and stock repurchases.

Interest  Expense.  Interest expense  increased  $91,000,  from $442,000 for the
three months ending  September 30, 1999, to $533,000 for the three months ending
September 30, 2000. Interest expense increased $132,000, from approximately $1.4
million for the nine months  ending  September 30, 1999, to $1.5 million for the
nine months ending  September 30, 2000. The increase for the three months ending
September 30, 2000, was primarily the result of a 71 basis point increase in the
average cost of funds, combined with an approximate $1.5 million increase in the
average  balance of  interest-bearing  liabilities  for the three months  ending
September  30, 2000,  compared to 1999.  The increase for the nine months ending
September 30, 2000, was primarily the result of a 38 basis point increase in the
average cost of funds,  combined with an  approximate  $458,000  increase in the
average  balance of  interest-bearing  liabilities  for the nine  months  ending
September 30, 2000,  compared to 1999. Interest rates of certificate of deposits
increased  during the three and nine month  periods in 2000,  compared  to 1999.
These  increases  were  primarily  due to the  continued  increase in short term
interest  rates which forced the Company to reprice its  certificate of deposits
at a much higher  rate.  Until the  interest  rate  environment  stabilizes  and
returns to a normal pattern, management does not foresee any relief in repricing
customer deposits at a higher cost of funds.

Provision for Loan Losses.  The provision for loan losses was $9,000 three month
periods ending September 30, 1999 and 2000, respectively. The provision for loan
losses was $27,000 for the nine months  periods  ending  September  30, 1999 and
2000,  respectively.  The Company's management routinely performs an analysis to
quantify the inherent risk of loss in its portfolio.  At September 30, 2000, the
ratio  of the  allowance  for  loan  loss  was at a  level  deemed  adequate  by
management to provide for losses in the loan  portfolio.  The ratio of allowance
for loan loss to  non-performing  loans at  September  30, 2000,  was 156%,  and
nonperforming   assets   represented   0.45%  of  total   consolidated   assets.
Nonperforming  assets were $239,000 at September 30, 2000,  compared to $349,000
at September 30, 1999.  Management is not aware of any trends or events inherent
to its  loan  portfolio  that  have  not  been  provided  for in its  loan  loss
allowance.  There,  however,  can be no  assurance  that future  losses will not
exceed estimated amounts or that additional  provisions for loan losses will not
be required in future periods.

Non-Interest Income. Non-interest income continues to be an additional source of
income for the  Company.  The income is produced by fees on new loan  production
and service  fees on other

                                       11
<PAGE>

products  and  services.  Total  non-interest  income  amounted  to $49,000  and
$149,000 for the three and nine months ending September 30, 2000,  respectively,
and $48,000 and  $138,000  for the three and nine months  ending  September  30,
1999, respectively.

Non-Interest Expense.  Non-interest expense increased $21,000, from $324,000 for
the three months ending  September 30, 1999, to $345,000 for 2000.  The increase
was primarily the result of a combined $25,000  increase in  compensation,  data
processing and other expenses, offset by a $4,000 reduction in deposit insurance
premiums incurred during the period.  Non-interest  expense  increased  $78,000,
from  approximately  $930,000 for the nine months ending  September 30, 1999, to
$1.0  million for 2000.  The  increase  was  primarily  the result of  increased
compensation  expense of $56,000,  a combined  $39,000 increase in net occupancy
and data processing expenses, offset by a $17,000 reduction in deposit insurance
premiums  and other  expenses  incurred  during  the  period.  The  increase  in
compensation expense for the nine months ended September 30, 2000, was primarily
attributable normal compensation increases,  combined with the addition of extra
personnel associated with the new branch office in Mountain City, Tennessee. The
decrease in other  non-interest  expense for nine months  ending  September  30,
2000,  compared to 1999,  was mainly  attributable  to  management's  attempt to
control general  operating  expenses and those expenses  associated with being a
public  company.  The increase in net  occupancy  expense for both the three and
nine months ending September 30, 2000, compared to 1999, was mainly attributable
to expenses  associated  with the Bank's  additional  branch  office in Mountain
City, Tennessee.  The increase in data processing expense for both the three and
nine months ending September 30, 2000, compared to 1999, was mainly attributable
to expenses associated with increased  transaction volumes,  data communications
expenses, and the new teller operating system. The decrease in deposit insurance
premiums for both the three and nine months ending September 30, 2000,  compared
to 1999,  was  attributable  to reduced  insurance  assessment  rates  beginning
January 1, 2000.

Income Taxes. Income tax expense for the three months ending September 30, 2000,
was $71,000, compared to $85,000 for the same period in 1999. Income tax expense
for the nine  months  ending  September  30,  2000,  was  $221,000,  compared to
$257,000 for the same period in 1999.  The decrease for the three and nine month
periods  ending  September 30, 2000,  compared to 1999, was  principally  due to
lower pre-tax income.  The effective tax rate for both the three and nine months
in 1999 and 2000, 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 September 30, 2000 were  approximately
$814,000.

                                       12
<PAGE>

At September  30,  2000,  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 September 30, 2000,  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 September  30, 2000.  The
Bank had the following capital ratios at September 30, 2000:

<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 September 30, 2000:

   Total Capital
      (to risk weighted assets)     $   10,182       30.5%      $    2,671       8.0%      $    3,339       10.0%

   Tier I Capital
      (to risk weighted assets)     $    9,825       29.4%      $    1,336       4.0%      $    2,004        6.0%

   Tier I Capital
      (to total assets)             $    9,825       18.5%      $    1,591       3.0%      $    2,625        5.0%

   Tangible Capital
      (to total assets)             $    9,825       18.5%      $      795       1.50%     $    2,625        5.0%
</TABLE>

   (1) As categorized under the Prompt Corrective Action Provisions.

                                       13

<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
          September  30,  2000,  there  were no legal  proceedings  to which the
          Company  or any  subsidiary  was a party,  or to which of any of their
          property was subject, which were expected by management to result in a
          material loss.

Item 2.   Changes in Securities
          ---------------------

          None

Item 3.   Defaults Upon Senior Securities
          -------------------------------

          None

Item 4.   Submission of Matters to a Vote of Security Holders
          ---------------------------------------------------

          None

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 proxy  statement for the annual
               meeting of  stockholders  on June 1, 1998, and filed with the SEC
               on April 17, 1998 (File No. 0-22587).

(b)            Reports on Form 8-K

               None.


                                       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:      November 13, 2000         By  /s/ Peter W. Hampton
                                         ---------------------------------------
                                         Peter W. Hampton
                                         (President and Chief Executive Officer)






Date:      November 13, 2000         By  /s/ Bobby Hyatt
                                         ---------------------------------------
                                         Bobby Hyatt
                                         (Finance Officer)