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, 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          (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) 543-1000
                                                     --------------

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 July 28, 2000, there were 597,595 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 June 30, 2000.......................................3

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

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

Consolidated Statements of Cash Flows - (Unaudited) for the six months
  ended June 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..............................................................................15

Signatures.............................................................................................................16

</TABLE>
                                       2
<PAGE>
                        SFB BANCORP, INC. AND SUBSIDIARY

                           Consolidated Balance Sheets
                                   (Unaudited)
                      (in thousands, except per share data)
<TABLE>
<CAPTION>

                                                                              December 31,           June 30,
           Assets                                                                 1999                 2000
           ------                                                         --------------------- --------------------
<S>                                                                      <C>                   <C>
Cash on hand                                                              $          1,424      $            598
Interest earning deposits                                                              738                   362
Investment securities:
   Held to maturity (market value of $911
     in 1999 and $889 in 2000)                                                       1,017                   960
   Available for sale (amortized cost of $2,124
     in 1999 and $2,125 in 2000)                                                     2,091                 2,096
Loans receivable, net                                                               43,789                45,443
Mortgage-backed securities:
   Available for sale (amortized cost of $2,225 in
     1999 and $1,894 in 2000)                                                        2,183                 1,813
Premises and equipment, net                                                          1,011                   985
Federal Home Loan Bank stock                                                           487                   504
Accrued interest receivable                                                            280                   308
Prepaid expenses and other assets                                                      109                    84
                                                                           ---------------       ---------------
<S>                                                                      <C>                   <C>
         Total assets                                                     $        53,129       $         53,153
                                                                          ===============       ================

   Liabilities and Stockholders' Equity
   ------------------------------------
Deposits                                                                  $         40,435      $         40,663
Federal Home Loan Bank advances                                                        500                   600
Advance payments by borrowers for taxes and insurance                                  220                   474
Accrued expenses and other liabilities                                                 157                   175
Income taxes payable:
   Current                                                                               -                    47
   Deferred                                                                            101                    87
                                                                           ---------------       ---------------
         Total liabilities                                                          41,413                42,046
                                                                           ---------------       ---------------

   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 602,995 outstanding at                          77                    77
       December 31, 1999 and June 30, 2000, respectively)
   Paid-in capital                                                                   7,382                 7,386
   Retained earnings, substantially restricted                                       6,165                 6,366
   Treasury stock at cost (87,583 and 164,005 shares at December 31,
     1999 and June 30, 2000, respectively)                                          (1,208)               (2,085)
   Accumulated other comprehensive income                                              (45)                  (66)
   Unearned compensation:
     Employee stock ownership plan                                                    (419)                 (383)
     Restricted stock plan                                                            (236)                 (188)
                                                                           ---------------       ----------------
         Total stockholders' equity                                                 11,716                 11,107
                                                                           ---------------       ----------------
         Total liabilities and stockholders' equity                       $         53,129      $          53,153
                                                                          ================      =================
</TABLE>

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

                                       3
<PAGE>
                        SFB BANCORP, INC. AND SUBSIDIARY

                        Consolidated Statements of Income
                                   (Unaudited)
                      (in thousands, except per share data)
<TABLE>
<CAPTION>
                                                 For Three          For Six
                                                Months Ended      Months Ended
                                                   June 30,         June 30,
                                               ---------------   ---------------
                                                 1999     2000     1999     2000
                                               ------   ------   ------   ------
<S>                                           <C>      <C>      <C>      <C>
Interest income:
   Loans                                       $  823   $  899   $1,643   $1,780
   Mortgage-backed securities                      38       25       81       56
   Investments                                     54       50      109       99
   Interest earning deposits                       39        8       76       12
                                               ------   ------   ------   ------
         Total interest income                    954      982    1,909    1,947
                                               ------   ------   ------   ------

Interest expense:
   Deposits                                       452      488      918      944
   FHLB Advances                                    -        8        -       15
                                               ------   ------   ------   ------
         Total interest expense                   452      496      918      959
                                               ------   ------   ------   ------
         Net interest income                      502      486      991      988

Provision for loan losses                           9        9       18       18
                                               ------   ------   ------   ------
         Net interest income after provision
           for loan losses                        493      477      973      970

Non-interest income:
   Loan fees and service charges                   43       43       85       94
   Other                                            2        3        5        6
                                               ------   ------   ------   ------
         Total non-interest income                 45       46       90      100
                                               ------   ------   ------   ------

Non-interest expenses:
   Compensation                                   157      157      297      336
   Employee benefits                               31       29       63       64
   Net occupancy expense                           21       33       44       65
   Deposit insurance premiums                       6        2       12        4
   Data processing                                 21       28       46       60
   Other                                           73       66      144      134
                                               ------   ------   ------   ------
         Total non-interest expenses              309      315      606      663
                                               ------   ------   ------   ------

         Income  before income taxes              229      208      457      407

Income tax expense                                 86       77      172      150
                                               ------   ------   ------   ------

         Net income                            $  143   $  131   $  285   $  257
                                               ======   ======   ======   ======

Earnings per share
   Basic                                       $  .22   $  .23   $  .44   $  .43

   Diluted                                     $  .22   $  .23   $  .44   $  .43
</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                                -       -       257         -           -              -              -        257
   Unrealized losses on securities
     available for sale,
     net of income tax expense               -       -         -         -         (21)             -              -        (21)

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

Treasury stock purchased
   (76,422 shares)                           -       -         -      (877)          -              -              -       (877)

Compensation earned                          -       4         -         -           -             36             48         88
                                       -------  ------   -------   -------   ---------      ---------      ---------    -------

Balance at June 30, 2000               $    77  $7,386   $ 6,366   $(2,085)  $     (66)   $      (383)   $      (188)   $11,107
                                       =======  ======   =======   =======   =========      =========      =========    =======
</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>
                                                                                    Six Months Ended
                                                                                         June 30,
                                                                                  -------------------
                                                                                      1999       2000
                                                                                   -------    -------
<S>                                                                               <C>        <C>
Operating activities:
   Net income                                                                      $   285    $   257
   Adjustments to reconcile net income to net cash provided by
     operating activities:
     Depreciation                                                                       33         47
     Provision for loan losses                                                          18         18
     Decrease in reserve for uncollected interest                                       (1)         -
     Net increase (decrease) in deferred loan fees                                     (35)         4
     Accretion of discounts on investment securities, net                              (13)       (13)
     Amortization of premiums on mortgage-backed securities                              5          5
     Amortization of unearned compensation                                             101         88
     FHLB stock dividends                                                              (16)       (17)
     (Increase) decrease in other assets                                               (61)        25
     (Increase) decrease in accrued interest receivable                                  2        (28)
     Increase in accrued expenses and other liabilities                                  -         18
     Increase in current income taxes                                                    -         47
                                                                                   -------    -------
         Net cash provided by operating activities                                     318        451
                                                                                   -------    -------

Investing activities:
   Purchase of investment securities held to maturity                                    -          -
   Maturities of investment securities held to maturity                                 66         69
   Purchase of investment securities available for sale                             (1,298)         -
   Maturities of investment securities available for sale                            1,500          -
   Principal payments on mortgage-backed securities
     available for sale                                                                775        326
   Net increase in loans                                                              (316)    (1,676)
   Purchase of premises and equipment                                                 (123)       (21)
                                                                                   -------    -------
         Net cash provided (used) by investing activities                              604     (1,302)
                                                                                   -------    -------

Financing activities:
   Net increase (decrease) in deposits                                                (291)       228
   Increase in advance payments by borrowers for taxes
     and insurance                                                                     256        254
   Federal Home Loan Bank Advances                                                       -        100
   Treasury stock purchased                                                            (54)      (877)
   Payment of cash dividend                                                            (64)       (56)
                                                                                   -------    -------
         Net cash used by financing activities                                        (153)      (351)
                                                                                   -------    -------

         Increase (decrease) in cash and cash equivalents                              769     (1,202)

Cash and cash equivalents at beginning of period                                     2,839      2,162
                                                                                   -------    -------

Cash and cash equivalents at end of period                                         $ 3,608    $   960
                                                                                   =======    =======

Supplemental disclosures of cash flow information:  Cash paid during the year
   for:
     Interest                                                                      $   916    $   954
     Income taxes                                                                      206         29
                                                                                   =======    =======

Noncash transactions:
   Unrealized gains (losses) on securities and mortgage-backed
     securities available for sale, net of deferred taxes                          $    (8)   $   (21)
</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)

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 six month
     periods ending June 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
     six months ending June 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,
                                                    -------------------------------------------------------
                                                          June 30, 1999               June 30, 2000
                                                    --------------------------- ---------------------------
                                                       Income        Shares        Income        Shares
                                                       ------        ------        ------        ------
<S>                                                    <C>            <C>          <C>             <C>
Net Income                                              $143                        $131
BASIC  EPS
  Income available to common stockholders               $143           645          $131            578
  Per share amount                                      $.22                        $.23
Effect of Dilutive Securities                           $.00                        $.00
DILUTIVE EPS
  Income available to common stockholders               $143           645           $131           578
  Per share amount                                      $.22                         $.23
</TABLE>

<TABLE>
<CAPTION>

                                                                      Six months ended,
                                                    -------------------------------------------------------
                                                          June 30, 1999               June 30, 2000
                                                    --------------------------- ---------------------------
                                                       Income        Shares        Income        Shares
                                                       ------        ------        ------        ------
<S>                                                    <C>            <C>          <C>             <C>
Net Income                                              $285                        $257
BASIC  EPS
  Income available to common stockholders               $285           645          $257            594
  Per share amount                                      $.44                        $.43
Effect of Dilutive Securities                           $.00                        $.00
DILUTIVE EPS
  Income available to common stockholders               $285           645           $257           594
  Per share amount                                      $.44                         $.43

</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  June  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,  June 30,
                                                             1999        2000
                                                             ----        ----
                                                         (Dollars in Thousands)

         Nonaccrual loans                                   $ 217       $ 276
         Repossessed real estate                                -           -
                                                             ----        ----
         Total nonperforming assets                         $ 217       $ 276
                                                             ====        ====

         Nonperforming loans to net loans                   0.50%        0.61%
         Nonperforming assets to total assets               0.41%        0.52%

                                       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 Six Months Ending June 30,
1999 and 2000

Net Income.  Net income for the three  months  ending June 30,  2000,  decreased
$12,000,  or 8.4%,  from  $143,000  in 1999,  to  $131,000  in 2000.  Net income
decreased $28,000, or 9.8%, to $257,000 for the six months ending June 30, 2000,
from  $285,000 in 1999.  The  decrease for the three month period ended June 30,
2000,  compared  to 1999,  was  principally  due to a decrease  in net  interest
income,  offset by lower  income tax  expense.  The  decrease for the six months
ending June 30, 2000,  compared to 1999, was primarily the result of an increase
in non-interest  expenses,  offset by lower income tax expense.  Dilutive income
per share  increased $.01, from $.22 for the three month ended June 30, 1999, to
$.23 for the  three  months  ended  June 30,  2000.  Dilutive  income  per share
decreased  $.01,  from $.44 for the six months ended June 30, 1999,  to $.43 for
the six months ended June 30, 2000.

Net Interest Income.  Net interest income decreased  $16,000,  from $502,000 for
the three months  ending June 30, 1999,  to $486,000 for the three months ending
June 30, 2000. Net interest income decreased  $3,000,  from $991,000 for the six
months  ending June 30,  1999,  to $988,000  for the six months  ending June 30,
2000.  The decrease in net  interest  income for the three month period in 2000,
primarily  reflects a net  decrease  in  average  interest-earning  assets  over
average  interest-bearing  liabilities of approximately $347,000, as compared to
the same period in 1999.  Furthermore,  the  interest  rate spread  decreased 19
basis  points to 2.87% for the three months  ending June 30,  2000,  compared to
1999,  while the net interest  margin  decreased  14 basis points to 3.81%.  The
overall decrease in net interest income for the six months ending June 30, 2000,

                                       9
<PAGE>

primarily reflects a 7 basis point decrease in net interest spread,  offset by a
net increase in average  interest-earning  assets over average  interest-bearing
liabilities of approximately  $218,000,  as compared to the same period in 1999.
The net interest  margin  increased to 3.90% for the six months  ending June 30,
2000, compared to 1999.

Interest Income.  Interest income increased $28,000, from $954,000 for the three
months  ending June 30, 1999,  to $982,000 for the three months  ending June 30,
2000. The increase was  attributable  to a increase in average  interest-earning
assets of approximately  $149,000, from $50.9 million at June 30, 1999, to $51.0
million  at  June  30,   2000,   and  a  increase  in  the   average   yield  on
interest-earning  assets of 20 basis  points,  from  7.50% for the three  months
ending  June 30,  1999,  to 7.70% for the same period in 2000.  Interest  income
increased  $38,000,  or 2.0%, to  approximately  $1.9 million for the six months
ending June 30, 2000,  as compared to the same period in 1999.  The increase was
primarily  attributable  to a increase in the average yield on  interest-earning
assets of 20 basis  points,  from 7.49% for the six months ending June 30, 1999,
to  7.69%  for the  same  period  in  2000,  offset  by a  decrease  in  average
interest-earning  assets of approximately  $290,000,  from $50.9 million at June
30, 1999, to $50.7 million at June 30, 2000.

Interest on loans  increased  $76,000 for the three months ending June 30, 2000,
as compared to the same period in 1999,  and $137,000 for the six months  ending
June 30, 2000, as compared to the same period in 1999.  The increase in interest
on loans for the three  months  ending  June 30,  2000,  primarily  reflects  an
increase of approximately $4.6 million in the average loans outstanding  balance
for 2000,  compared to 1999,  offset by a 14 basis point decrease in the average
yield on loans from 8.11% in 1999, to 7.97% in 2000. The increase in interest on
loans for the six months ending June 30, 2000, primarily reflects an increase of
approximately  $4.3 million in the average loans  outstanding  balance for 2000,
compared to 1999,  offset by a 17 basis point  decrease in the average  yield on
loans from 8.13% in 1999, to 7.96% in 2000.

Interest on investment  securities  decreased $4,000 for the three months ending
June 30, 2000,  as compared to the same period in 1999,  and $10,000 for the six
months  ending  June 30,  2000,  as  compared  to the same  period in 1999.  The
decrease in interest on  investments  for the three months ending June 30, 2000,
primarily  reflects  a  decrease  of  approximately   $330,000  in  the  average
investment balance for 2000,  compared to 1999, and a 14 basis point decrease in
the  average  yield on  investments  from 5.42% in 1999,  to 5.28% in 2000.  The
decrease in interest on  investments  for the six months  ending June 30,  2000,
primarily  reflects  a  decrease  of  approximately   $461,000  in  the  average
investment balance for 2000,  compared to 1999. The average yield on investments
was 5.28% in 2000, compared 5.29% in 1999.

Interest on  interest-earning  deposits  decreased  $31,000 for the three months
ending June 30,  2000,  as compared to the same period in 1999,  and $64,000 for
the six months ending June 30, 2000, as compared to the same period in 1999. The
decrease in interest on  interest-earning  deposits for the three months  ending
June  30,  2000,  primarily  reflects  a  decrease  in the  average  balance  of
interest-earning  deposits  of $3.1  million  for 2000,  compared  to 1999.  The
decrease in interest on interest-earning deposits for the six months ending June
30,   2000,   primarily   reflects  a  decrease  in  the   average   balance  of
interest-earning deposits of $3.1 million for 2000, compared to 1999.

                                       10
<PAGE>


Interest on  mortgage-backed  securities  decreased $13,000 for the three months
ending June 30,  2000,  as compared to the same period in 1999,  and $25,000 for
the six months  ending June 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 $3.1  million  decrease in average  interest-earning  deposits  for both the
three and six 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 $44,000 from $452,000 for the three
months  ending June 30, 1999,  to $496,000 for the three months  ending June 30,
2000. Interest expense increased $41,000 from $918,000 for the six months ending
June 30, 1999, to $959,000 for the six months ending June 30, 2000. The increase
for the three months  ending June 30,  2000,  was  primarily  the result of a 39
basis point increase in the average cost of funds and an increase in the average
interest-bearing  liabilities of approximately  $496,000,  compared to 1999. The
increase for the six months ending June 30, 2000,  was primarily the result of a
26 basis point  increase in the average cost of funds,  offset by an approximate
$508,000 decrease in the average balance of interest-bearing liabilities for the
six months ending June 30, 2000, compared to 1999.

Provision for Loan Losses.  The provision for loan losses was $9,000 three month
period  ending  June 30, 1999 and 2000,  respectively.  The  provision  for loan
losses was  $18,000  for the six month  period  ending  June 30,  1999 and 2000,
respectively.  The  Company's  management  routinely  performs  an  analysis  to
quantify the inherent risk of loss in its portfolio. At June 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 June 30, 2000, was 134%, and  nonperforming  assets
represented  0.52% of  total  consolidated  assets.  Nonperforming  assets  were
$276,000 at June 30, 2000, compared to $385,000 at June 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. However, there 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  products and  services.  Total  non-interest  income
amounted to $46,000 and  $100,000  for the three and six months  ending June 30,
2000, respectively,  and $45,000 and $90,000 for the three and six months ending
June 30, 1999, respectively.

Non-Interest  Expense.  Non-interest expense increased $6,000, from $309,000 for
the three months  ending June 30, 1999,  to $315,000 for 2000.  The increase was
primarily  the result of a combined  $19,000  increase in net occupancy and data
processing expenses, offset by a $11,000 reduction in deposit insurance premiums
and other expenses  incurred during the period.  Non-interest  expense increased
$57,000,  from $606,000 for the six months ending June 30, 1999, to $663,000 for
2000. The increase was primarily the result of increased compensation expense of
$39,000,  a combined  $35,000  increase  in net  occupancy  and data  processing
expenses,  offset by a

                                       11
<PAGE>

$18,000  reduction in deposit  insurance  premiums and other  expenses  incurred
during the period. The increase in compensation expense for the six months ended
June  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 both the three and six months  ending June 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 six months ending June 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 was for both the three and six months ending June 30, 2000,  compared
to  1999,  mainly  was  attributable  to  expenses   associated  with  increased
transaction  volumes,  data  communications  expenses,  and the teller operating
system.  The decrease in deposit  insurance  premiums for both the three and six
months  ending June 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 June 30, 2000, was
$77,000, compared to $86,000 for the same period in 1999. Income tax expense for
the six months ending June 30, 2000, was $150,000,  compared to $172,000 for the
same  period in 1999.  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 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 June  30,  2000  were  approximately
$430,000.

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


                                       12

<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, 2000:

   Total Capital
      (To risk weighted assets)     $   10,037       30.4%      $    2,641       8.0%      $    3,301       10.0%

   Tier I Capital
      (To risk weighted assets)     $    9,667       29.3%      $    1,320       4.0%      $    1,981        6.0%

   Tier I Capital
      (To total assets)             $    9,667       18.5%      $      990       3.0%      $    1,650        5.0%

   Tangible Capital
      (To total assets)             $    9,667       18.5%      $      495       1.50%     $    1,650        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
            June 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
         ---------------------------------------------------

          The Annual Meeting of Stockholders of the Company ("Meeting") was held
          on May 3, 2000.  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
                                                 --------        -------------

               Peter W. Hampton, Jr.              516,858             9,500

               Donald W. Tetrick                  516,858             9,500

          2.   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     525,358;       Against     -0-;      Abstain     1,000

Item 5.  Other Information
         -----------------

            None


                                       14

<PAGE>

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.



<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.



Date:    August 3, 2000              By: /s/Peter W. Hampton
                                         ------------------------------------
                                         Peter W. Hampton
                                         (President and Chief Executive Officer)





Date:   August 3, 2000               By: /s/Bobby Hyatt
                                         ---------------------------------------
                                         Bobby Hyatt
                                         (Principal Accounting Officer)



                                       16