SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(Mark One)
[X]  Annual report  pursuant to section 13 or 15(d) of the  Securities  Exchange
     Act of 1934 For the fiscal year ended December 31, 1999

[ ]  Transition  report  pursuant  to  section  13 or  15(d)  of the  Securities
     Exchange Act of 1934

         For the transition period from              to             .
                                        ------------    ------------

Commission File No. 0-22587

                                SFB Bancorp, Inc.
--------------------------------------------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

                          Tennessee                         62-1683732
----------------------------------------------           -------------------
(State or Other Jurisdiction of Incorporation            (I.R.S. Employer
Organization)                                            Identification No.)

632 East Elk Avenue, Elizabethton, Tennessee                  37643
--------------------------------------------             ---------------
(Address of Principal Executive Offices)                    (Zip Code)

                (423) 543-1000
-------------------------------------------------
 (Issuer's Telephone Number, Including Area Code)


Securities registered under to Section 12(b) of the Exchange Act:       None
                                                                        ----

Securities registered under to Section 12(g) of the Exchange Act:

                     Common Stock, par value $0.10 per share
                     ---------------------------------------
                                (Title of Class)

         Check  whether  the issuer:  (1) has filed all  reports  required to be
filed by Section 13 or 15(d) of the  Exchange  Act during the past 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.
YES  X     NO    .
    ---       ---

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X ]

State issuer's revenues for its most recent fiscal year:  $3,997,000
                                                           ---------

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant,  based on the average bid and asked price of the registrant's Common
Stock on March 15, 2000 was $5.4 million.

As of March 15, 2000,  there were issued and  outstanding  639,417 shares of the
registrant's Common Stock.

Transition Small Business Disclosure Format (check one):  YES      NO  X
                                                              --      ---

                       DOCUMENTS INCORPORATED BY REFERENCE

1.   Portions  of the Annual  Report to  Stockholders  for the Fiscal Year ended
     December 31, 1999. (Part II)
2.   Portions of the Proxy Statement for the Annual Meeting of Stockholders  for
     the Fiscal Year ended December 31, 1999. (Part III)


<PAGE>

                                     PART I

Forward Looking Statements

         SFB Bancorp, Inc. (the "Company") may from time to time make written or
oral  "Forward-Looking  Statements",   including  statements  contained  in  the
Company's  filings with the Securities and Exchange  Commission  (including this
Annual  Report on Form  10-KSB  and the  Exhibits  thereto),  in its  reports to
stockholders and in other communications by the Company,  which are made in good
faith by the Company  pursuant to the "Safe  Harbor"  provisions  of the Private
Securities Litigation Reform Act of 1995.

         These forward-looking statements involve risks and uncertainties,  such
as statements of the Company's plans,  objectives,  expectations,  estimates and
intentions,  that are subject to change based on various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's  financial  performance to differ  materially from the
plans,  objectives,  expectations,  estimates and  intentions  expressed in such
forward-looking statements: the strength of the United States economy in general
and  the  strength  of  the  local  economies  in  which  the  Company  conducts
operations;  the effects of, and changes in, trade, monetary and fiscal policies
and laws,  including  interest  rate  policies of the Board of  Governors of the
Federal  Reserve  System,   inflation,   interest  rate,   market  and  monetary
fluctuations;  the timely  development  of and  acceptance  of new  products and
services of the Company and the perceived  overall  value of these  products and
services by users,  including  the  features,  pricing  and quality  compared to
competitors'  products and  services;  the  willingness  of users to  substitute
competitors' products and services for the Company's products and services;  the
success of the  Company in  gaining  regulatory  approval  of its  products  and
services,  when required;  the impact of changes in financial services' laws and
regulations   (including  laws  concerning   taxes,   banking,   securities  and
insurance);  technological changes,  acquisitions;  changes in consumer spending
and  savings  habits;  and the  success  of the  Company at  managing  the risks
involved in the foregoing.

         The Company  cautions that the foregoing  list of important  factors is
not  exclusive.  The Company does not  undertake  to update any  forward-looking
statement,  whether written or oral, that may be made from time to time by or on
behalf of the Company.

Item 1.  Description of Business
--------------------------------

General

         SFB Bancorp,  Inc. (the "Company") is a Tennessee corporation organized
in March 1997 at the direction of Security Federal Bank (the "Bank" or "Security
Federal")  to  acquire  all of the  capital  stock  that the Bank  issued in its
conversion from the mutual to stock form of ownership (the "Conversion"). On May
29, 1997, the Bank completed the Conversion and became a wholly owned subsidiary
of the Company. The Company is a unitary savings and loan holding company which,
under  existing  laws,  generally  is not  restricted  in the types of  business
activities  in which it may engage  provided  that the Bank  retains a specified
amount of its assets in  housing-related  investments.  The Company  conducts no
significant  business  or  operations  of its own other than  holding all of the
outstanding  stock of the Bank and investing  the  Company's  portion of the net
proceeds obtained in the Conversion.

         The Bank, chartered in 1963 under the name Security Federal Savings and
Loan Association,  is a federally  chartered stock savings bank headquartered in
Elizabethton,  Tennessee.  The Bank is subject to examination and  comprehensive
regulation  by the Office of Thrift  Supervision  ("OTS") and its  deposits  are
federally  insured by the Savings  Association  Insurance  Fund  ("SAIF") of the
Federal Deposit Insurance  Corporation (the "FDIC"). The Bank is a member of and
owns capital  stock in the FHLB of  Cincinnati,  which is one of the 12 regional
banks in the FHLB System.



<PAGE>

         The Bank  operates a  traditional  savings  bank  business,  attracting
deposit accounts from the general public and using those deposits, together with
other funds, primarily to originate and invest in loans secured by single-family
residential real estate.

         The following table sets forth certain financial ratios for the Company
for the dates indicated.

                                                         At December 31,
                                                     -----------------------
                                                        1998          1999
                                                     ----------   ----------

Return on average assets........................         0.94%         1.06%

Return on average equity........................         4.24%         4.97%

Average equity to average assets................        22.24%        21.29%

Dividend payout.................................        27.85%        22.54%

Competition

         Security  Federal is one of many  financial  institutions  serving  its
market  area  which  consists  of  Carter  County,  Tennessee  and the  adjacent
Tennessee counties of Johnson, Unicoi, Washington, and Sullivan. The competition
for deposit  products comes from other insured  financial  institutions  such as
commercial banks, thrift  institutions,  credit unions, and multi-state regional
banks in the Bank's market area.  Deposit  competition also includes a number of
insurance  products sold by local agents and investment  products such as mutual
funds and other securities sold by local and regional brokers.  Loan competition
varies depending upon market  conditions and comes from other insured  financial
institutions  such as commercial  banks,  thrift  institutions,  credit  unions,
multi-state regional banks, and mortgage bankers.

Lending Activities

         Analysis of Loan  Portfolio.  Set forth below is selected data relating
to the  composition  of the Bank's  loan  portfolio  by type of loan and type of
security on the dates indicated:

<TABLE>
<CAPTION>
                                                               December 31,
                                                   ------------------------------------
                                                          1998             1999
                                                   ------------------ -----------------
                                                     Amount  Percent   Amount  Percent
                                                     ------  -------   ------  -------
<S>                                                <C>        <C>    <C>        <C>
Type of Loans:
Real Estate Loans:
  One- to four-family.............................  $30,054    72.41  $29,815    66.75
  Construction....................................    1,216     2.93    1,397     3.13
  Commercial......................................    1,566     3.77    1,499     3.36
  Multi-family residential........................    1,011     2.44    2,571     5.76
  Land............................................    3,997     9.63    4,280     9.58
Commercial business loans.........................      573     1.38      420     0.94
Consumer Loans:
  Automobile loans................................    2,294     5.53    3,608     8.08
  Share loans.....................................      322     0.78      433     0.97
  Other...........................................      470     1.13      640     1.43
                                                     ------   ------   ------   ------
     Total loans..................................   41,503   100.00   44,663   100.00
                                                              ======            ======
Less:
  Loans in process................................      619               469
  Deferred loan origination fees and costs........      109                53
  Allowance for loan losses.......................      326               352
                                                    -------           -------
     Total loans, net.............................  $40,449           $43,789
                                                     ======            ======
</TABLE>

                                       2

<PAGE>

Loan Maturity Tables

         The  following  table sets forth the  estimated  maturity of the Bank's
loan  portfolio,  including loans held for sale, at December 31, 1999. The table
does not include  prepayments or scheduled  principal  repayments.  All mortgage
loans are shown as maturing based on contractual maturities.
<TABLE>
<CAPTION>
                                                         Due        Due after
                                                        within      1 through        Due after
                                                        1 year      5 years          5 years        Total
                                                     ------------  ------------    -----------   -----------
                                                                          (In Thousands)
<S>                                                 <C>           <C>             <C>           <C>
One- to four-family residential................      $         42  $      1,278    $    28,495   $    29,815
Construction...................................                 -            36          1,361         1,397
Commercial real estate.........................                 -           760            739         1,499
Multi-family residential.......................                 -           191          2,380         2,571
Land...........................................             1,036         2,221          1,023         4,280
Commercial business loans......................               358            50             12           420
Consumer.......................................             1,728         2,833            120         4,681
                                                     ------------  ------------    -----------   -----------
     Total Amount Due..........................      $      3,164  $      7,369    $    34,130   $    44,663
                                                     ============  ============    ===========   ===========
</TABLE>

         The following table sets forth the dollar amount of all loans due after
December  31,  1999,  which have  pre-determined  interest  rates and which have
floating or adjustable interest rates.

<TABLE>
<CAPTION>
                                                                 Floating or
                                                                 Adjustable
                                               Fixed Rates          Rates          Total
                                               -------------     -----------  -------------
                                                                (In Thousands)
<S>                                           <C>               <C>          <C>
One- to four-family residential..........      $      29,751     $       823  $      30,574
Construction.............................                561               -            561
Commercial real estate...................              1,534               -          1,534
Multi-family residential.................              2,472              99          2,571
Land.....................................              2,638             606          3,244
Commercial business loans and
  consumer...............................              3,001              14          3,015
                                               -------------     -----------  -------------
    Total................................      $      39,957     $     1,542  $      41,499
                                               =============     ===========  =============
</TABLE>

         One- to  Four-Family  Residential  Loans.  Security  Federal's  primary
lending activity consists of the origination of one- to four-family  residential
mortgage  loans secured by property in the Bank's  primary market area. The Bank
generally  originates one- to four-family  residential mortgage loans in amounts
up to 97% of the lesser of the appraised value or purchase  price,  with private
mortgage  insurance  required on loans with a  loan-to-value  ratio in excess of
85%.  The  maximum  loan-to-value  ratio on mortgage  loans  secured by nonowner
occupied  properties is limited to 85% and 90% with private mortgage  insurance.
The Bank primarily  originates and retains fixed-rate balloon loans having terms
of up to 15 years, with principal and interest payments calculated using up to a
30-year amortization period.

         Security  Federal  also offers  adjustable  rate  mortgage  loans.  The
interest  rate on  adjustable  rate  mortgage  loans is based on an index plus a
stated  margin.  The  Bank  may  offer  discounted  initial  interest  rates  on
adjustable  rate mortgage loans but the Bank requires that the borrower  qualify
for the adjustable rate mortgage loans at the fully indexed rate (the index rate
plus the margin).  Adjustable rate mortgage loans provide for periodic  interest

                                       3
<PAGE>

rate  adjustments  upward or downward of up to 2% per  adjustment.  The interest
rate  may not  increase  more  than 5% over  the  life of the  loan  and may not
decrease  below the  initial  interest  rate.  Adjustable  rate  mortgage  loans
typically  reprice every one, three or five years and provide for terms of up to
30 years.

         Adjustable  rate  mortgage  loans  decrease  the risk  associated  with
changes in interest  rates by  periodically  repricing,  but involve other risks
because as interest  rates  increase,  the  underlying  payments by the borrower
increase, thus increasing the potential for default by the borrower. At the same
time, the marketability of the underlying  collateral may be adversely  affected
by higher interest rates. Upward adjustment of the contractual  interest rate is
also  limited by the maximum  periodic  and lifetime  interest  rate  adjustment
permitted  by the loan  documents,  and,  therefore  is  potentially  limited in
effectiveness during periods of rapidly rising interest rates.

         Mortgage  loans  originated  and held by the Bank  generally  include a
due-on-sale clause,  which gives the Bank the right to deem the loan immediately
due and payable in the event the  borrower  transfers  ownership of the property
securing the mortgage loan without the Bank's consent.

         Residential  Construction  Loans.  Security Federal offers  residential
construction  loans  on  one-  to  four-family   residential   property  to  the
individuals   who  will  be  the  owners  and  occupants   upon   completion  of
construction.  These loans are made on a long-term  basis and are  classified as
construction/permanent  loans. Usually no principal payments are required during
the first six to eight  months.  After that  time,  the  payments  are set at an
amount  that will pay off the amount of the loan over the term of the loan.  The
maximum loan to value ratio is 97% with private mortgage insurance.

         On a limited  basis,  the Bank  also  originates  speculative  loans to
residential builders who have established business  relationships with the Bank.
These  speculative  loans typically are made for a term of twelve months and may
not require principal payments during the term of the loan. In underwriting such
loans,  the Bank  considers  the  number  of units  that  the  builder  has on a
speculative  bid basis that remain unsold.  The Bank's  experience has been that
most  speculative  loans  are  repaid  well  within  the  twelve  month  period.
Speculative loans are generally  originated with a loan to value ratio that does
not exceed 80%.

         Construction lending is generally considered to involve a higher degree
of credit risk than long-term  financing of residential  properties.  The Bank's
risk of loss on a  construction  loan is dependent  largely upon the accuracy of
the initial  estimate of the property's  value at completion of construction and
the estimated cost of construction. If the estimate of construction cost and the
marketability  of the  property  upon  completion  of the  project  prove  to be
inaccurate,  the Bank may be compelled to advance  additional  funds to complete
the construction.  Furthermore,  if the final value of the completed property is
less  than  the  estimated  amount,  the  value  of the  property  might  not be
sufficient to assure the repayment of the loan. For  speculative  loans that the
Bank  originates  to  builders,  the  ability of the  builder to sell  completed
dwelling  units  will  depend,  among  other  things,  on  demand,  pricing  and
availability of comparable properties, and general economic conditions.

         Commercial and  Multi-Family  Loans.  Commercial  real estate loans are
secured  by  churches,   office  buildings,  and  other  commercial  properties.
Multi-family  loans are secured by apartment and  condominium  buildings.  These
loans generally have not exceeded $500,000 or had terms greater than 10 years.

         Commercial and  multi-family  real estate lending  entails  significant
additional risks compared to residential property lending. These loans typically
involve large loan balances to single borrowers or groups of related  borrowers.
The repayment of these loans typically is dependent on the successful  operation
of the real estate project  securing the loan.  These risks can be significantly
affected  by supply  and demand  conditions  in the market for office and retail
space and may also be subject to adverse conditions in the economy.  To minimize
these risks,  the Bank generally  limits this type of lending to its market area
and to borrowers who are otherwise well known to the Bank.


                                       4
<PAGE>



         Commercial Business Loans.  Security Federal offers commercial business
loans to benefit from the higher fees and interest rates and the shorter term to
maturity.  Commercial  business loans consist of equipment,  lines of credit and
other  business  purpose  loans,  which  generally  are  secured  by either  the
underlying properties or by the personal guarantees of the borrower.

         Unlike  residential  mortgage  loans,  which  generally are made on the
basis of the borrower's ability to make repayment from his or her employment and
other income and which are secured by real property whose value tends to be more
easily ascertainable,  commercial business loans typically are made on the basis
of the borrower's ability to make repayment from the cash flow of the borrower's
business. As a result, the availability of funds for the repayment of commercial
business  loans may be  substantially  dependent  on the success of the business
itself and the general economic environment.

         Consumer  Loans.  Consumer  loans  consist of home equity,  automobile,
farm, mobile home, and demand loans secured by savings deposit  accounts.  These
type loans may entail greater risk than residential mortgage loans, particularly
in the case of  consumer  loans that are  unsecured  or  secured by assets  that
depreciate rapidly. Repossessed collateral for a defaulted consumer loan may not
be  sufficient  for  repayment  of  the  outstanding  loan,  and  the  remaining
deficiency may not be collectible.

         Loan Approval  Authority  and  Underwriting.  The Bank's  President has
unlimited loan approval  authority.  The loan committee  generally  approves all
residential mortgage loans of $25,000 or more, and the Bank's Board of Directors
ratifies all mortgage loans and consumer loans at its regular  monthly  meeting.
Commercial  real  estate  loans and  commercial  business  loans  generally  are
approved in advance by the loan committee.

         Upon  receipt  of a  completed  loan  application  from  a  prospective
borrower,  a credit report is ordered.  Income and certain other  information is
verified. If necessary,  additional financial  information may be requested.  An
appraisal or other  estimate of value of the real estate  intended to be used as
security for the proposed loan is obtained. Appraisals are processed by a member
of the Bank's Board of Directors and/or outside independent fee appraisers.

         Construction/permanent  loans are made on individual properties.  Funds
advanced during the construction  phase are held in a  loans-in-process  account
and disbursed at various stages of completion,  following physical inspection of
the construction by a loan officer or appraiser.

         Either title insurance or a title opinion is generally  required on all
real estate loans. Borrowers also must obtain fire and casualty insurance. Flood
insurance is also  required on loans  secured by property  which is located in a
flood zone.

         Loan Commitments. Verbal commitments are given to prospective borrowers
on all approved real estate loans. Generally, the commitment requires acceptance
within 30 days of the date of issuance.  At December 31,  1999,  commitments  to
cover originations of mortgage loans and undisbursed funds for  loans-in-process
were approximately $622,000 and $469,0000 respectively.

         Non-Performing  Assets.  The  following  table sets  forth  information
regarding  non-accrual  loans,  real estate owned, and certain other repossessed
assets and loans. As of the dates indicated,  the Bank had no loans  categorized
as troubled debt restructuring within the meaning of SFAS 15.


                                       5
<PAGE>
<TABLE>
<CAPTION>
                                                                                          At December 31,
                                                                                      ----------------------
                                                                                         1998        1999
                                                                                      ---------    ---------
<S>                                                                                    <C>         <C>
Loans accounted for on a nonaccrual basis:
Real estate loans:
  One- to four-family residential...............................................         $ 409       $ 168

  Construction..................................................................             -           -

  Commercial....................................................................             -           -

  Multi-family residential......................................................             -           -

  Land..........................................................................            18          18

Commercial business and consumers...............................................            10          31
                                                                                         -----       -----
    Total nonaccrual loans......................................................           437         217

Accruing loans which are contractually past due 90 days or more.................             -           -
                                                                                         -----       -----
    Total nonperforming loans...................................................           437         217

Real estate owned...............................................................             -           -
                                                                                         -----       -----
Total nonperforming assets......................................................        $  437      $  217
                                                                                         =====       =====

Nonaccrual and 90 days past due as a percentage of net loans....................         1.08%       0.50%

Nonaccrual and 90 days past due as a percentage of total assets.................         0.84%       0.41%

Total nonperforming assets as a percentage of total assets......................         0.84%       0.41%

</TABLE>

         At December 31, 1999,  interest income that would have been recorded on
loans accounted for on a nonaccrual basis under the original terms of such loans
was immaterial.

         Classified Assets. OTS regulations provide for a classification  system
for problem assets of insured  institutions.  Under this classification  system,
problem  assets  of  insured   institutions  are  classified  as  "substandard,"
"doubtful," or "loss." An asset is considered  substandard if it is inadequately
protected by the current net worth and paying  capacity of the obligor or of the
collateral  pledged,  if any.  Substandard assets include those characterized by
the "distinct possibility" that the insured institution will sustain "some loss"
if the deficiencies are not corrected. Assets classified as doubtful have all of
the  weaknesses  inherent in those  classified  as  substandard,  with the added
characteristic  that the weaknesses  present make  "collection or liquidation in
full," on the basis of currently existing facts, conditions, and values, "highly
questionable  and  improbable."  Assets  classified as loss are those considered
"uncollectible"  and of such  little  value  that  their  continuance  as assets
without the  establishment  of a specific loss reserve is not warranted.  Assets
may be designated  "special mention" because of potential weakness that does not
currently warrant classification in one of the aforementioned categories.


                                       6
<PAGE>



         When  an  insured  institution  classifies  problem  assets  as  either
substandard or doubtful,  it may establish general allowances for loan losses in
an amount  deemed  prudent by  management.  General  allowances  represent  loss
allowances which have been established to recognize the inherent risk associated
with lending activities,  but which, unlike specific  allowances,  have not been
allocated to particular problem assets. When an insured  institution  classifies
problem assets as loss, it is required either to establish a specific  allowance
for losses equal to 100% of that portion of the asset so classified or to charge
off such amount. An institution's  determination as to the classification of its
assets and the amount of its  valuation  allowances  is subject to review by the
OTS, which may order the  establishment  of additional  general or specific loan
loss  allowances.  A portion of the general loan loss  allowance  established to
cover possible  losses  related to assets  classified as substandard or doubtful
may be  included in  determining  an  institution's  regulatory  capital,  while
specific  valuation  allowances  for loan  losses  generally  do not  qualify as
regulatory capital.

         In  accordance  with its  classification  of  assets  policy,  the Bank
regularly  reviews the problem assets in its portfolio to determine  whether any
assets require classification in accordance with applicable regulations.  On the
basis of management's  review of its assets,  at December 31, 1999, the Bank had
classified  approximately  $342,000  of assets as  substandard,  and  $24,000 of
assets  as  special  mention.  The Bank did not have any  assets  classified  as
doubtful or loss.

         Foreclosed Real Estate. Real estate acquired by the Bank as a result of
foreclosure  is recorded as "real  estate  owned" until such time as it is sold.
When real estate  owned is  acquired,  it is recorded at the lower of the unpaid
principal balance of the related loan or its fair value less disposal costs. Any
write-down of real estate owned is charged to operations.  At December 31, 1999,
the Bank had no foreclosed real estate.

         Allowances for Loan Losses.  It is  management's  policy to provide for
losses on unidentified loans in the loan portfolio.  A provision for loan losses
is charged to  operations  based on  management's  evaluation  of the  potential
losses that may be incurred in the loan portfolio.  The evaluation,  including a
review of all loans on which full  collectibility  of interest and principal may
not be reasonably assured,  considers: (i) the Bank's past loan loss experience,
(ii) known and inherent risks in the portfolio,  (iii) adverse  situations  that
may affect the  borrower's  ability to repay,  (iv) the  estimated  value of any
underlying collateral, and (v) current economic conditions.

         Management monitors the allowance for loan losses and make additions to
the allowance as economic conditions dictate. There can be no assurance that the
allowance  for losses  will be  adequate  to cover  losses  which may in fact be
realized  in the future and that  additional  provisions  for losses will not be
required.


                                       7
<PAGE>



         The following table sets forth  information  with respect to the Bank's
allowance for loan losses at the dates indicated:
<TABLE>
<CAPTION>
                                                                                   At December 31,
                                                                                --------------------
                                                                                  1998        1999
                                                                                 -------    --------
                                                                                (Dollars in Thousands)
<S>                                                                            <C>           <C>
Total loans outstanding...............................................          $41,503       $44,663
                                                                                 ======        ======

Average loans outstanding.............................................          $40,608       $41,566
                                                                                 ======        ======
Allowance at beginning of period......................................             $301          $326

Provision.............................................................               31            36

Recoveries............................................................                -             -

Charge-offs...........................................................               (6)          (10)
                                                                                   ----          ----
Allowance at end of period............................................             $326          $352
                                                                                   ====          ====

Allowance for loan losses as a percent of total loans outstanding.....             0.79%         0.79%

Net loans charged off as percent of average loans outstanding.........             0.01%         0.02%

Ratio of allowance to nonperforming loans.............................            74.60%       162.21%

</TABLE>


                                       8
<PAGE>



Analysis of the Allowance for Loan Losses

         The  following  table sets forth the  allocation  of the  allowance  by
category,  which  management  believes can be allocated  only on an  approximate
basis.  The  allocation  of the  allowance to each  category is not  necessarily
indicative  of future loss and does not  restrict  the use of the  allowance  to
absorb losses in any category.
<TABLE>
<CAPTION>
                                                                      At December 31,
                                                  ----------------------------------------------------------
                                                            1998                         1999
                                                  ---------------------------- -----------------------------
                                                                Percent of                    Percent of
                                                              Loans in Each                 Loans in Each
                                                               Category to                   Category to
                                                  Amount       Total Loans       Amount      Total Loans
                                                  ---------- ----------------- ----------- -----------------
                                                                     (Dollars in Thousands)

<S>                                                <C>             <C>           <C>             <C>
Real estate loans:

  One- to four-family residential............       $147             72.41%       $139             66.75%

  Construction...............................         27              2.93          30              3.13

  Commercial.................................         43              3.77          45              3.36

  Multi-family residential...................         22              2.44          36              5.76

  Land.......................................         33              9.63          35              9.58

Commercial business and consumer.............         54              8.82          67             11.42
                                                    ----            ------        ----            ------
     Total allowance for loan losses.........       $326            100.00%       $352            100.00%
                                                    ====            ======        ====            ======


Investment Activities and Mortgage-Backed Securities

         General.  The Bank is required under federal  regulations to maintain a
minimum  amount of liquid  assets which may be invested in specified  short term
securities  and certain other  investments.  The Bank has maintained a liquidity
portfolio  in  excess  of  regulatory  requirements.  Liquidity  levels  may  be
increased or decreased depending upon the yields on investment  alternatives and
upon management's judgment as to the attractiveness of the yields then available
in relation to other  opportunities  and its expectation of future yield levels,
as well as management's  projections as to the short term demand for funds to be
used in the Bank's loan  origination and other  activities.  The Bank classifies
its investments as securities  available for sale or investment  securities held
to maturity in  accordance  with SFAS No. 115. At December 31, 1999,  the Bank's
investment  portfolio  policy allowed  investments  in instruments  such as U.S.
Treasury  obligations,   U.S.  federal  agency  or  federally  sponsored  agency
obligations,   municipal  obligations,   mortgage-backed  securities,   banker's
acceptances,  certificates of deposit,  federal funds,  including FHLB overnight
and term deposits, as well as investment grade corporate bonds, commercial paper
and the mortgage derivative products described below. The Board of Directors may
authorize additional investments.


                                       9
<PAGE>



         The Bank's  investment  securities  available  for sale and  investment
securities  held to maturity  portfolios  at  December  31, 1999 did not contain
securities  of any issuer with an  aggregate  book value in excess of 10% of the
Bank's  equity,  excluding  those issued by the United States  Government or its
agencies.

         Mortgage-Backed  Securities. To supplement lending activities, the Bank
has  invested  in  residential   mortgage-backed   securities.   Mortgage-backed
securities can serve as collateral for borrowings and, through repayments,  as a
source  of  liquidity.  Mortgage-backed  securities  represent  a  participation
interest in a pool of  single-family  or other type of mortgages,  the principal
and interest payments on which are passed from the mortgage originators, through
intermediaries (generally  quasi-governmental  agencies) that pool and repackage
the participation interests in the form of securities,  to investors such as the
Bank. Such quasi-governmental agencies, which guarantee the payment of principal
and  interest  to  investors,  primarily  include  Federal  Home  Loan  Mortgage
Corporation  ("FHLMC"),   Government  National  Mortgage  Association  ("GNMA"),
Federal   National   Mortgage   Association   ("FNMA"),   and   Small   Business
Administration ("SBA").

         Mortgage-backed  securities  typically are issued with stated principal
amounts and the securities are backed by pools of mortgages that have loans with
interest  rates  that  are  within  a range  and have  varying  maturities.  The
underlying   pool  of  mortgages  can  be  composed  of  either   fixed-rate  or
adjustable-rate  mortgage  loans.   Mortgage-backed   securities  are  generally
referred to as mortgage participation certificates or pass-through certificates.
As a result,  the interest rate risk  characteristics  of the underlying pool of
mortgages (i.e., fixed-rate or adjustable-rate), as well as prepayment risk, are
passed on to the certificate holder. The life of a mortgage-backed  pass-through
security is equal to the life of the underlying  mortgages.  Expected maturities
will differ from contractual  maturities due to scheduled repayments and because
borrowers  may have the  right to call or  prepay  obligations  with or  without
prepayment penalties.

         Real Estate Mortgage Investment Conduits ("REMIC") are typically issued
by a special purpose entity, which may be organized in a variety of legal forms,
such as a trust, a corporation or a partnership.  The entity aggregates pools of
pass-through  securities or mortgage loans,  which are used to collateralize the
mortgage related securities.  Once combined,  the cash flows can be divided into
"tranches"  or  "classes"  of  individual  securities,   thereby  creating  more
predictable  average lives for each security  than the  underlying  pass-through
pools of  mortgage  loans.  Accordingly,  under  this  security  structure,  all
principal  paydowns  from the  various  mortgage  pools or  mortgage  loans  are
allocated to a mortgage-related  securities' class or classes structured to have
priority  until it has been paid off.  These  securities  generally  have  fixed
interest  rates,  and as a result,  changes in interest  rates  generally  would
affect the market value and possibly the  prepayment  rates of such  securities.
The characterization of a mortgage-related security as a REMIC relates solely to
the tax treatment of the mortgage  related  security under the Internal  Revenue
Code.

Investment Activities

         Investment Portfolio. The following table sets forth the carrying value
of the Bank's  securities  at the dates  indicated.  At December 31,  1999,  the
approximate  fair  value  of  the  Bank's  securities  available  for  sale  was
$3,288,000 resulting in a net unrealized loss of $37,000.

                                                                         At December 31,
                                                                    ------------------------
                                                                        1998         1999
                                                                    -----------   ----------
                                                                      (Dollars in Thousands)

<S>                                                                <C>           <C>
U.S. government and agency securities available for sale......      $     2,327   $    2,091
U.S. government securities....................................              440          464
Political subdivision notes...................................              718          553
Mortgage-backed securities available for sale.................            3,502        2,183
FHLB Stock....................................................              454          487
                                                                    -----------   ----------
  Total.......................................................      $     7,441   $    5,778
                                                                    ===========   ==========
</TABLE>


                                       10
<PAGE>



The following table sets forth information  regarding the scheduled  maturities,
carrying  values,  market  value and  weighted  average  yields  for the  Bank's
investment  securities  portfolio at December 31, 1999. The following table does
not take into  consideration the effects of scheduled  repayments or the effects
of possible prepayments.

<TABLE>
<CAPTION>
                                                             December 31, 1999
                         -------------------------------------------------------------------------------------------------
                             Less than           1 to           Over 5 to            Over 10              Total
                              1 year            5 years         10 years              years             Securities
                         ----------------- ---------------- -----------------  ----------------- -------------------------
                         Carrying  Average Carrying Average Carrying  Average  Carrying  Average  Carrying          Market
                           Value    Yield   Value    Yield   Value     Yield    Value     Yield    Value    Yield   Value
                           -----    -----   -----    -----   -----     -----    -----     -----    -----    -----   -----
                                                           (Dollars in Thousands)
<S>                    <C>          <C>   <C>         <C>   <C>         <C>    <C>         <C>    <C>        <C>   <C>
U.S. government and
  Agencies securities
  Available for sale... $    495     5.22% $ 1,596     5.43% $    -         -%  $    -         -%  $2,091     5.38% $2,091
U.S. government
Securities.............        -        -        -        -       -         -      463      5.91      464     5.91     358
Political subdivision
Notes..................        -        -      553     4.56       -         -        -         -      553     4.56     553
Mortgage-backed
  Securities available
  For sale:
  GNMA.................        -        -        -        -       -         -      413      6.25      413     6.25     413
  FHLMC................        -        -        1     7.00       -         -       42      6.33       43     6.34      43
  FHLMC Remic..........        -        -        -        -     198      5.45       38      5.75      236     5.50     236
  FNMA.................        -        -        2    11.00       -         -      395      6.14      397     6.16     397
  FNMA Remic...........        -        -        -        -     493      5.51      601      5.52    1,094     5.51   1,094
FHLB stock (1).........        -        -        -        -       -         -      487      6.76      487     6.76     487
                        --------           -------           ------             ------             ------           ------
  Total................ $    495     5.22% $ 2,152     5.21% $  691      5.49%  $2,439      6.08%  $5,778     5.61% $5,672
                         =======     ====  =======     ====  ======      ====   ======     =====   ======     ====  ======
</TABLE>

-----------------------
(1)  Recorded at cost.

                                       11
<PAGE>

Sources of Funds

         General. Deposits are the major external source of the Bank's funds for
lending and other investment purposes.  The Bank derives funds from amortization
and prepayment of loans and, to a much lesser  extent,  maturities of investment
securities,  borrowings,  mortgage-backed  securities and operations.  Scheduled
loan principal repayments are a relatively stable source of funds, while deposit
inflows and  outflows  and loan  prepayments  are  significantly  influenced  by
general interest rates and market conditions.

         Deposits.  Consumer and commercial  deposits are attracted  principally
from within the Bank's  primary  market area through the offering of a selection
of  deposit  instruments  including  regular  savings  accounts,   money  market
accounts, and term certificate accounts. Deposit account terms vary according to
the minimum balance required,  the time period the funds must remain on deposit,
and the interest rate,  among other factors.  At December 31, 1999, the Bank had
no brokered accounts.

         Time Deposits.  The following  table indicates the amount of the Bank's
time  deposits  of  $100,000  or more by time  remaining  until  maturity  as of
December 31, 1999.

           Maturity Period                               Time Deposits
           ---------------                               -------------
                                                     (Dollars in Thousands)
Within three months.........................                 $2,268
More than three through six months..........                  1,419
More than six through nine months...........                  1,427
Over nine months............................                  3,516
                                                              -----
         Total..............................                 $8,630
                                                              =====

Borrowings

The Bank may obtain  advances  from the FHLB of  Cincinnati  to  supplement  its
supply of lendable  funds.  Advances from the FHLB of  Cincinnati  are typically
secured by a pledge of the Bank's stock in the FHLB of Cincinnati  and a portion
of the Bank's first  mortgage  loans and certain other assets.  Each FHLB credit
program has its own interest rate, which may be fixed or variable,  and range of
maturities.  The Bank, if the need arises,  may also access the Federal  Reserve
Bank  discount  window to  supplement  its supply of lendable  funds and to meet
deposit withdrawal requirements.

Employees

         At  December  31,  1999,  the Bank  had 19  full-time  and 3  part-time
employees.  None  of  the  Bank's  employees  are  represented  by a  collective
bargaining  group. The Bank believes that its relationship with its employees is
good.

Regulation

         Recent Regulation.  On November 12, 1999, President Clinton signed into
law the Gramm-Leach-Bliley Act (the "Act") which will, effective March 11, 2000,
permit  qualifying bank holding  companies to become financial holding companies
and thereby  affiliate with securities firms and insurance  companies and engage
in other activities that are financial in nature.  The Act defines "financial in
nature"  to  include  securities   underwriting,   dealing  and  market  making;
sponsoring  mutual funds and investment  companies;  insurance  underwriting and
agency;  merchant  banking  activities;   and  activities  that  the  Board  has
determined to be closely related to banking. A qualifying national bank also may
engage,  subject to limitations on investment,  in activities that are financial
in nature,  other  than  insurance  underwriting,  insurance  company  portfolio
investment,  real  estate  development,  and real estate  investment,  through a
financial subsidiary of the bank.

                                       12
<PAGE>



         The Act also  prohibits  new  unitary  thrift  holding  companies  from
engaging in  nonfinancial  activities or from  affiliating  with a  nonfinancial
entity.  As a  grandfathered  unitary thrift holding  company,  the Company will
retain  its  authority  to  engage  in  nonfinancial  activities.  However,  the
Gramm-Leach-Bliley  Act will have few direct effects on the operations or powers
of federal savings associations or of savings and loan holding companies.

         The  Gramm-Leach-Bliley  Act imposes  significant new financial privacy
obligations and reporting requirements on all financial institutions,  including
federal savings  associations.  Specifically,  the statute,  among other things,
will  require  financial  institutions  (a) to  establish  privacy  policies and
disclose them to customers both at the  commencement of a customer  relationship
and on an annual  basis and (b) to permit  customers  to opt out of a  financial
institution's   disclosure  of  financial  information  to  nonaffiliated  third
parties. The Gramm-Leach-Bliley Act requires the federal financial regulators to
promulgate  regulations  implementing  these  provisions  within  six  months of
enactment,  and the  statute's  privacy  requirements  will take effect one year
after enactment.

Regulation of the Company

         General.  The  Company is a unitary  savings and loan  holding  company
subject to regulatory  oversight by the OTS. As such, the Company is required to
register  and  file  reports  with  the OTS and is  subject  to  regulation  and
examination by the OTS. In addition,  the OTS has enforcement authority over the
Company and its non-savings association  subsidiaries,  should such subsidiaries
be formed,  which also permits the OTS to restrict or prohibit  activities  that
are determined to be a serious risk to the subsidiary savings association.  This
regulation  and  oversight  is  intended  primarily  for the  protection  of the
depositors of the Bank and not for the benefit of stockholders of the Company.

         As a unitary savings and loan holding company, the Company generally is
not subject to activity restrictions,  provided the Bank satisfies the Qualified
Thrift Lender  ("QTL") test.  The Act  terminated  the "unitary  thrift  holding
company   exemption"  for  all  companies   that  applied  to  acquire   savings
associations  after May 4, 1999. Since the Company is  grandfathered  under this
provision of the Act, its unitary holding  company powers and  authorities  were
not affected.  However,  if the Company were to acquire control of an additional
savings  association,  its business  activities  would be subject to restriction
under the Home Owners' Loan Act. Furthermore,  if the Company were in the future
to sell control of the Bank to any other company, such company would not succeed
to the Company's  grandfathered status under the Act and would be subject to the
same business activity  restrictions.  See "- Regulation of the Bank - Qualified
Thrift Lender Test."

Regulation of the Bank

         General.  Set forth below is a brief  description  of certain laws that
relate to the  regulation of the Bank.  The  description  does not purport to be
complete and is qualified  in its entirety by reference to  applicable  laws and
regulations.  As a federally chartered,  SAIF-insured  savings association,  the
Bank is  subject  to  extensive  regulation  by the OTS  and the  FDIC.  Lending
activities and other  investments must comply with various federal statutory and
regulatory   requirements.   The  Bank  is  also  subject  to  certain   reserve
requirements promulgated by the Federal Reserve Board.

         The OTS, in conjunction with the FDIC,  regularly examines the Bank and
prepares  reports for the  consideration of the Bank's Board of Directors on any
deficiencies that are found in the Bank's  operations.  The Bank's  relationship
with its depositors and borrowers is also regulated to a great extent by federal
and state law,  especially in such matters as the ownership of savings  accounts
and the form and content of the Bank's mortgage documents.

                                       13
<PAGE>



         The Bank must file  reports  with the OTS and the FDIC  concerning  its
activities  and  financial  condition,   in  addition  to  obtaining  regulatory
approvals  prior to entering into certain  transactions  such as mergers with or
acquisitions  of other savings  institutions.  This  regulation and  supervision
establishes a comprehensive  framework of activities in which an institution can
engage and is intended  primarily for the protection of the SAIF and depositors.
The  regulatory  structure  also  gives  the  regulatory  authorities  extensive
discretion in connection with their  supervisory and enforcement  activities and
examination  policies,  including policies with respect to the classification of
assets and the  establishment  of adequate  loan loss  reserves  for  regulatory
purposes.

         Insurance of Deposit  Accounts.  The deposit  accounts held by the Bank
are insured by the SAIF to a maximum of  $100,000  for each  insured  member (as
defined by law and  regulation).  Insurance of deposits may be terminated by the
FDIC  upon a finding  that the  institution  has  engaged  in unsafe or  unsound
practices,  is in an unsafe or unsound  condition to continue  operations or has
violated any applicable law, regulation, rule, order or condition imposed by the
FDIC or the institution's primary regulator.

         The Bank is required to pay insurance premiums based on a percentage of
its insured  deposits to the FDIC for insurance of its deposits by the SAIF. The
FDIC also  maintains  another  insurance  fund, the Bank Insurance Fund ("BIF"),
which primarily insures  commercial bank deposits.  The FDIC has set the deposit
insurance assessment rates for SAIF-member institutions for the first six months
of 2000 at 0% to .027% of insured  deposits  on an  annualized  basis,  with the
assessment rate for most savings institutions set at 0%.

         In  addition,  all  FDIC-insured   institutions  are  required  to  pay
assessments  to the FDIC at an annual  rate of  approximately  .0212% of insured
deposits to fund interest payments on bonds issued by the Financing  Corporation
("FICO"),  an agency of the Federal  government  established to recapitalize the
predecessor to the SAIF.  These  assessments  will continue until the FICO bonds
mature in 2017.

         Regulatory  Capital  Requirements.   OTS  capital  regulations  require
savings institutions to meet three capital standards: (1) tangible capital equal
to 1.5% of total adjusted  assets,  (2) a leverage ratio (core capital) equal to
at least 3% of total adjusted assets, and (3) a risk-based  capital  requirement
equal to 8.0% of total risk-weighted assets.

         Dividend and Other Capital  Distribution  Limitations.  The OTS imposes
various  restrictions or requirements on the ability of savings  institutions to
make capital distributions, including cash dividends.

         A  savings  association  that is a  subsidiary  of a  savings  and loan
holding company,  such as the Bank must file an application or a notice with the
OTS at least 30 days before making a capital distribution.  Savings associations
are not  required  to file  an  application  for  permission  to make a  capital
distribution  and need only file a notice if the following  conditions  are met:
(1) they are eligible for expedited  treatment under OTS  regulations,  (2) they
would  remain  adequately  capitalized  after the  distribution,  (3) the annual
amount of capital  distribution does not exceed net income for that year to date
added to retained net income for the two  preceding  years,  and (4) the capital
distribution  would not violate any  agreements  between the OTS and the savings
association  or any OTS  regulations.  Any  other  situation  would  require  an
application to the OTS.

         The OTS may disapprove an application or notice if the proposed capital
distribution   would:  (i)  make  the  savings   association   undercapitalized,
significantly  undercapitalized,  or  critically  undercapitalized;  (ii)  raise
safety or  soundness  concerns;  or (iii)  violate  a  statute,  regulation,  or
agreement  with  the OTS (or  with  the  FDIC),  or a  condition  imposed  in an
OTS-approved application or notice. Further, a federal savings association, like
the  Bank,  cannot  distribute   regulatory  capital  that  is  needed  for  its
liquidation account.

       Qualified Thrift Lender Test.  Federal savings  institutions  must meet
one of two Qualified Thrift Lender ("QTL") tests. To qualify as a QTL, a savings
institution must either (i) be deemed a "domestic building and loan association"
under the Internal  Revenue Code by maintaining at least 60% of its total assets
in specified types of assets,  including cash,  certain  government  securities,
loans  secured  by and  other  assets  related  to  residential  real

                                       14
<PAGE>

property,  educational  loans and  investments in premises of the institution or
(ii)  satisfy the  statutory  QTL test set forth in the Home Owner's Loan Act by
maintaining at least 65% of its "portfolio assets" in  certain"Qualified  Thrift
Investments"  (defined  to include  residential  mortgages  and  related  equity
investments,  certain mortgage-related securities, small business loans, student
loans and credit card loans, and 50% of certain  community  development  loans).
For purposes of the  statutory QTL test,  portfolio  assets are defined as total
assets minus intangible  assets,  property used by the institution in conducting
its  business,  and  liquid  assets  equal to 10% of  total  assets.  A  savings
institution  must  maintain  its status as a QTL on a monthly  basis in at least
nine out of every 12 months.  A failure to qualify as a QTL  results in a number
of sanctions,  including the imposition of certain operating  restrictions and a
restriction  on obtaining  additional  advances  from its FHLB.  At December 31,
1999, the Bank was in compliance  with its QTL  requirement,  with 73.54% of its
assets invested in Qualified Thrift Investments.

         Federal  Home  Loan  Bank  System.  The Bank is a member of the FHLB of
Cincinnati,  which  is  one of 12  regional  FHLBs  that  administers  the  home
financing credit function of savings associations. Each FHLB serves as a reserve
or  central  bank for its  members  within  its  assigned  region.  It is funded
primarily from proceeds derived from the sale of consolidated obligations of the
FHLB  System.  It makes loans to members  (i.e.,  advances) in  accordance  with
policies and procedures established by the Board of Directors of the FHLB.

         As a member, the Bank is required to purchase and maintain stock in the
FHLB of  Cincinnati  in an amount equal to at least 1% of its  aggregate  unpaid
residential  mortgage loans, home purchase  contracts or similar  obligations at
the beginning of each year.

         Liquidity  Requirements.  All  savings  associations  are  required  to
maintain an average daily balance of liquid assets equal to a certain percentage
of the sum of its average daily balance of net withdrawable deposit accounts and
borrowings payable in one year or less. The liquidity  requirement may vary from
time to time (between 4% and 10%) depending upon economic conditions and savings
flows of all savings  associations.  At December 31, 1999,  the Bank's  required
liquid asset ratio was 4.00%, and its actual ratio was 9.53%.

         Federal  Reserve  System.   The  Federal  Reserve  Board  requires  all
depository  institutions to maintain  non-interest bearing reserves at specified
levels against their transaction  accounts (primarily  checking,  NOW, and Super
NOW checking accounts) and non-personal time deposits.  The balances  maintained
to meet the reserve  requirements  imposed by the Federal  Reserve  Board may be
used to satisfy  the  liquidity  requirements  that are  imposed by the OTS.  At
December 31, 1999, the Bank was in compliance  with these Federal  Reserve Board
requirements.

Item 2. Description of Property
-------------------------------
                                                              Year Leased
Location                            Leased or Owned           or Acquired
--------                            ---------------           -----------

MAIN OFFICE:
  632 East Elk Avenue                    Owned                   1980
  Elizabethton, Tennessee

BRANCH OFFICES:
  510 Wallace Avenue                     Owned                   1989
  Elizabethton, Tennessee

  588 South Shady Street                 Owned                   1998
  Mountain City, Tennessee


                                       15
<PAGE>

         The Bank also owns property at the  intersection of Riverside Drive and
Hattie  Avenue,  Elizabethton,  Tennessee  which  consists  of  a  single-family
dwelling that the Bank rents for $400 per month and a paved parking area for the
Bank's customers and employees.

(b)      Investment Policies.

         See "Item 1.  Business"  above for a general  description of the Bank's
investment  policies and any  regulatory  or Board of  Directors'  percentage of
assets  limitations  regarding certain  investments.  The Bank's investments are
primarily acquired to produce income,  and to a lesser extent,  possible capital
gain.

         (1)  Investments in Real Estate or Interests in Real Estate.  See "Item
1.  Business - Lending  Activities  and - Regulation  of the Bank," and "Item 2.
Description of Property."

         (2)  Investments  in Real  Estate  Mortgages.  See "Item 1.  Business -
Lending Activities and Regulation of the Bank."

         (3)  Investments  in  Securities  of or Interests in Persons  Primarily
Engaged in Real Estate  Activities.  See "Item 1. Business - Lending  Activities
and - Regulation of the Bank."

(c)      Description of Real Estate and Operating Data.

         Not Applicable.

Item 3. Legal Proceedings
-------------------------

         There are various  claims and lawsuits in which the Company or the Bank
(collectively,  the  "Company")  are  periodically  involved,  such as claims to
enforce liens, condemnation proceedings on properties in which the Company holds
security  interests,  claims involving the making and servicing of real property
loans,  and other issues incident to the Company's  business.  In the opinion of
management,  no material  loss is expected  from any of such  pending  claims or
lawsuits.

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

         No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year.

                                     PART II

Item  5.  Market for Common Equity and Related Stockholder Matters
------------------------------------------------------------------

         The  information  contained under the section  captioned  "Stock Market
Information" of the Company's  Annual Report to stockholders for the fiscal year
ended  December  31,  1999  (the  "Annual  Report")  is  incorporated  herein by
reference.

Item  6.  Management's Discussion and Analysis or Plan of Operation
-------------------------------------------------------------------

         The  information  contained  in  the  section  captioned  "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Annual Report is incorporated herein by reference.

Item  7.  Financial Statements
------------------------------

         The  Registrant's   financial  statements  listed  under  Item  13  are
incorporated herein by reference.


                                       16
<PAGE>



Item 8.  Changes  in  and  Disagreements  with  Accountants  On  Accounting  and
--------------------------------------------------------------------------------
         Financial Disclosure.
         ---------------------

         Not applicable.


                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons: Compliance
--------------------------------------------------------------------------------
        with Section 16(a) of the Exchange Act.
        ---------------------------------------

         The information  contained under the sections  captioned "Section 16(a)
Beneficial  Ownership  Reporting  Compliance"  and  "Proposal  I -  Election  of
Directors"  and " -  Biographical  Information"  in  the  "Proxy  Statement"  is
incorporated herein by reference.

Item 10.  Executive Compensation
--------------------------------

         The  information  contained  in the  section  captioned  "Director  and
Executive Officer Compensation" in the Proxy Statement is incorporated herein by
reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

         (a)      Security Ownership of Certain Beneficial Owners
         (b)      Security Ownership of Management

                  The information  required by items (a) and (b) is incorporated
                  herein by reference to the Proxy Statement contained under the
                  sections  captioned  "Principal  Holders"  and  "Proposal  I -
                  Election of Directors."

         (c)      Changes in Control

                  Management  of  the  Registrant   knows  of  no  arrangements,
                  including  any  pledge  by any  person  of  securities  of the
                  Registrant,  the  operation of which may at a subsequent  date
                  result in a change in control of the Registrant.

Item 12.  Certain Relationships and Related Transactions
--------------------------------------------------------

         The  information  required  by this  item  is  incorporated  herein  by
reference  to  the  section   captioned   "Certain   Relationships  and  Related
Transactions" in the Proxy Statement.


                                       17
<PAGE>


Item 13. Exhibits, List and Reports on Form 8-K
-----------------------------------------------

         (a) Listed below are all  financial  statements  and exhibits  filed as
part of this report.

             (1)     The consolidated balance sheets of SFB Bancorp,  Inc.
                     and  subsidiary  as of December 31, 1999 and 1998 and
                     the  related   consolidated   statements  of  income,
                     comprehensive income, changes in stockholders' equity
                     and cash  flows for each of the years in the two year
                     period ended  December 31,  1999,  together  with the
                     related notes and the independent auditors' report of
                     Crisp Hughes Evans LLP, independent  certified public
                     accountants.

             (2)     Schedules omitted as they are not applicable.

             (3)     The following exhibits are included in this Report or
                     incorporated herein by reference:
                     (a) List of Exhibits:
              3(i)   Charter of SFB Bancorp, Inc.*
              3(ii)  Bylaws of SFB Bancorp, Inc.*
              4      Specimen Stock Certificate*
             10      Employment Agreement between the Bank and Peter W. Hampton*
             10.1    1998 Stock Option Plan**
             10.2    Restricted Stock Plan and Trust Agreement **
             13      Portions of the 1999 Annual Report to Stockholders
             21      Subsidiaries of the Registrant (See "Item 1- Description
                     of Business)
             23      Consent of Crisp Hughes Evans LLP
             27      Financial Data Schedule (electronic filing only)

         (b)      Not applicable.



--------------------
*    Incorporated by reference to the registration  statement on Form SB-2 (File
     No. 333-23505) declared effective by the SEC on April 14, 1997.
**   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.

                                       18
<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) 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   as   of
March 24, 2000.

                                       SFB BANCORP, INC.


                                       By:  /s/ Peter W. Hampton
                                                --------------------------------
                                                Peter W. Hampton
                                                President and Director
                                                (Duly Authorized Representative)

         Pursuant to the  requirement  of the  Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities indicated as of March 24, 2000.


/s/Peter W. Hampton                              /s/Donald W. Tetrick
-----------------------------------------        -------------------------------
Peter W. Hampton                                 Donald W. Tetrick
President and Director                           Director
(Principal Executive Officer)


/s/Peter W. Hampton, Jr.                         /s/John R. Crockett, Jr.
-----------------------------------------        -------------------------------
Peter W. Hampton, Jr.                            John R. Crockett, Jr.
Secretary, Treasurer and Director                Director


                                                 /s/Michael L. McKinney
-----------------------------------------        -------------------------------
Julian T. Caudill, Jr.                           Michael L. McKinney
Vice President and Director                      Director


/s/Bobby Hyatt
-----------------------------------------
Bobby Hyatt
Principal Accounting Officer