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, 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 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. [ ]

         State issuer's revenues for its most recent fiscal year:  $4,221,000
                                                                    ---------

         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 1, 2001 was $5.7 million.

         As of March 30, 2001, there were issued and outstanding  582,995 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, 2000. (Part II)
2.   Portions of the Proxy Statement for the Annual Meeting of Stockholders  for
     the Fiscal Year ended December 31, 2000. (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. 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. All reference to the Bank and or Security Federal refer collectively
to the Company and the Bank, unless the context indicates otherwise.

         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,
                                                     ------------------------
                                                        1999          2000
                                                     ----------   -----------

Return on average assets........................        1.06%          0.91%

Return on average equity........................        4.97%          4.42%

Average equity to average assets................       21.29%         20.57%

Dividend payout.................................       22.54%         22.88%


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.

                                       2
<PAGE>

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,
                                                            ----------------------------------------------------
                                                                  1999                          2000
                                                            ----------------------         ---------------------
                                                            Amount         Percent         Amount        Percent
                                                            ------         -------         ------        -------
<S>                                                      <C>               <C>          <C>              <C>
Type of Loans:
-------------
Real Estate Loans:
  One- to four-family.............................         $29,815           66.75        $30,174          63.25
  Construction....................................           1,397            3.13          1,784           3.74
  Commercial......................................           1,499            3.36          1,707           3.58
  Multi-family residential........................           2,571            5.76          3,217           6.74
  Land............................................           4,280            9.58          4,363           9.15
Commercial business loans.........................             420            0.94          2,009           4.21
Consumer Loans:
  Automobile loans................................           3,608            8.08          3,488           7.31
  Share loans.....................................             433            0.97            217           0.45
  Other...........................................             640            1.43            747           1.57
                                                           -------          ------        -------         ------
     Total loans..................................          44,663          100.00         47,706         100.00
                                                                            ======                        ======
Less:
  Loans in process................................             469                            515
  Deferred loan origination fees and costs........              53                             30
  Allowance for loan losses.......................             352                            347
                                                           -------                        -------
     Total loans, net.............................         $43,789                        $46,814
                                                           =======                        =======
</TABLE>

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, 2000. 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................            $   29      $  1,140       $ 29,005      $ 30,174
Construction...................................                75           165          1,544         1,784
Commercial real estate.........................                 -           595          1,112         1,707
Multi-family residential.......................                 -             -          3,217         3,217
Land...........................................             1,410         1,836          1,117         4,363
Commercial business loans......................             1,223           688             98         2,009
Consumer.......................................             1,134         3,197            121         4,452
                                                           ------      --------       --------      --------
     Total Amount Due..........................            $3,871      $  7,621       $ 36,214      $ 47,706
                                                           ======      ========       ========      ========
</TABLE>

                                       3

<PAGE>

        The following table sets forth the dollar amount of all loans due after
December  31,  2001,  which have  pre-determined  interest  rates and which have
floating or adjustable interest rates.

<TABLE>
<CAPTION>
                                                                    Floating or
                                                      Fixed         Adjustable
                                                      Rates           Rates          Total
                                                    ---------       -----------    --------
                                                                 (In Thousands)
<S>                                               <C>              <C>           <C>
One- to four-family residential..........           $ 29,436         $   709       $ 30,145
Construction.............................              1,709               -          1,709
Commercial real estate...................              1,540             167          1,707
Multi-family residential.................              3,129              88          3,217
Land.....................................              2,181             772          2,953
Commercial business loans and
consumer.................................              4,060              44          4,104
                                                    --------         -------       --------
    Total................................           $ 42,055         $ 1,780       $ 43,835
                                                    ========         =======       ========
</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
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

                                       4
<PAGE>

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.

         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.

                                       5
<PAGE>

         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,  2000,  commitments  to
cover originations of mortgage loans and undisbursed funds for  loans-in-process
were approximately $420,000 and $515,0000 respectively.

                                       6
<PAGE>

         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 and there were no
impaired loans within the meaning of SFAS 114, as amended by SFAS 118.

                                                                 At December 31,
                                                                 ---------------
                                                                  1999    2000
                                                                  ----    ----
Loans accounted for on a nonaccrual basis:

Real estate loans:

  One- to four-family residential...............................   $168    $142

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

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

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

  Land .........................................................     18      43

Commercial business and consumers ..............................     31      29
                                                                   ----    ----
    Total nonaccrual loans .....................................    217     214

Accruing loans which are contractually past due 90 days or more       -       -
                                                                   ----    ----
    Total nonperforming loans ..................................    217     214

Real estate owned ..............................................      -       -
                                                                   ----    ----
Total nonperforming assets .....................................   $217    $214
                                                                   ====    ====

Nonaccrual and 90 days past due as a percentage of net loans ...   0.50%   0.46%
                                                                   ====    ====
Nonaccrual and 90 days past due as a percentage of total assets    0.41%   0.39%
                                                                   ====    ====
Total nonperforming assets as a percentage of total assets .....   0.41%   0.39%
                                                                   ====    ====


         At December 31, 2000,  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

                                       7
<PAGE>

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.

        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, 2000, the Bank had
classified  approximately $291,000 of assets as substandard,  and $425 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, 2000,
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.

                                       8

<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,
                                                                               ---------------------
                                                                                 1999          2000
                                                                                 ----          ----
                                                                               (Dollars in Thousands)
<S>                                                                          <C>          <C>
Total loans outstanding ....................................................   $ 44,663     $ 47,706
                                                                               ========     ========

Average loans outstanding                                                      $ 41,566     $ 45,519
                                                                               ========     ========

Allowance at beginning of period ...........................................   $    326     $    352

Provision ..................................................................         36           36

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

Charge-offs ................................................................        (10)         (41)
                                                                               --------     --------
Allowance at end of period .................................................   $    352     $    347
                                                                               ========     ========

Allowance for loan losses as a percent of total loans outstanding ..........       0.79%        0.73%
                                                                               ========     ========

Net loans charged off as percent of average loans outstanding ..............       0.02%        0.09%
                                                                               ========     ========

Ratio of allowance to nonperforming loans ..................................     162.21%      162.15%
                                                                               ========     ========
</TABLE>
                                       9
<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,
                                                    -------------------------------------------------
                                                             1999                         2000
                                                    -------------------------  ----------------------
                                                                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>
  One- to four-family residential............          $139        66.75%       $131       63.25%

  Construction...............................            30         3.13          31        3.74

  Commercial.................................            45         3.36          45        3.58

  Multi-family residential...................            36         5.76          35        6.74

  Land.......................................            35         9.58          35        9.15

Commercial business and consumer.............            67        11.42          70       13.54
                                                       ----       ------        ----      ------
     Total allowance for loan losses.........          $352       100.00%       $347      100.00%
                                                       ====       ======        ====      ======
</TABLE>

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, 2000,  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.

         The Bank's  investment  securities  available  for sale and  investment
securities  held to maturity  portfolios  at  December  31, 2000 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.

                                       10
<PAGE>

         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 Company's  securities at the dates  indicated.  At December 31, 2000, the
approximate  fair  value  of the  Company's  securities  available  for sale was
$3,280,000 resulting in a net unrealized loss of $95,000.

<TABLE>
<CAPTION>
                                                                          At December 31,
                                                                        --------------------
                                                                          1999         2000
                                                                        -------      -------
                                                                       (Dollars in Thousands)

<S>                                                                   <C>          <C>
U.S. government and agency securities available for sale......          $ 2,091      $ 1,621
U.S. government securities....................................              464          487
Political subdivision notes...................................              553          383
Mortgage-backed securities available for sale.................            2,183        1,659
FHLB Stock....................................................              487          524
                                                                        -------      -------
  Total.......................................................          $ 5,778      $ 4,674
                                                                        =======      =======
</TABLE>

                                       11
<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, 2000. The following table does
not take into  consideration the effects of scheduled  repayments or the effects
of possible prepayments.

<TABLE>
<CAPTION>

                                                                      December 31, 2000
                     --------------------------------------------------------------------------------------------------
                        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.........  $ 1,123     5.30% $  498       5.72%   $   -        -%   $   -        -%  $1,621     5.43%   $1,621
U.S. government
Securities.........        -        -       -          -        -        -      487      5.91     487     5.91       458
Political
  subdivision
  Notes............       31     4.50     352       5.70        -        -        -         -     383     5.60       383
Mortgage-backed
  Securities
  available
  For sale:
  GNMA.............        -        -       -          -        -        -      343      7.25     343     7.25       343
  FHLMC............        -        -       -          -        -        -       35      7.60      35     7.60        35
  FHLMC Remic......        -        -       -          -        4     5.10       24      5.75      28     5.65        28
  FNMA.............        -        -       -          -        -        -      358      6.89     358     6.89       358
  FNMA Remic.......        -        -       -          -      450     6.45      445      5.23     895     5.84       895

FHLB stock (1).....        -        -       -          -        -               524      7.02     524     7.02       524
                    --------           ------               -----            ------            ------             ------
  Total............ $  1,154     5.28% $  850       5.71%   $ 454     6.44%  $2,216      6.43% $4,674     6.01%   $4,645
                    ========     ====  =======      ====    =====     ====   ======     =====  ======     ====    ======
</TABLE>

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

                                       12
<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, 2000, 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, 2000.

                                                             Time Deposits
                     Maturity Period                     (Dollars in Thousands)
                     ---------------                     ----------------------
Within three months.................................             $2,079
More than three through six months..................              1,923
More than six through nine months...................              3,527
Over nine months....................................              2,296
                                                                 ------
         Total......................................             $9,825
                                                                 ======

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,  2000,  the Bank  had 20  full-time  and 2  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

         Set forth below is a brief  description of certain laws which relate to
the regulation of the Company and the Bank. The description  does not purport to
be complete and is qualified in its entirety by reference to applicable laws and
regulations.

                                       13
<PAGE>

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  authority  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  any  restrictions  on  its  business  activities.   While  the
Gramm-Leach-Bliley Act (the "GLB Act"), enacted in November 1999, terminated the
"unitary  thrift  holding  company"  exemption from activity  restrictions  on a
prospective basis, the Company enjoys  grandfathered status under this provision
of the GLB Act because it acquired  the Bank prior to May 4, 1999.  As a result,
the Company's  freedom from activity  restrictions as a unitary savings and loan
holding company were not affected by the GLB Act.  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
GLB Act and would be subject to the same activity restrictions. The continuation
of the Company's exemption from restrictions on business activities as a unitary
savings and loan  holding  company is also  subject to the  Company's  continued
compliance  with the Qualified  Thrift Lender ("QTL") test. 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,  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.

                                       14
<PAGE>

         The Bank must file reports with the OTS  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 has set the deposit insurance assessment rates for SAIF-member institutions
for the  first  six  months  of 2001 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) core capital equal to at least 3% of total
adjusted assets for savings  institutions  that receive the highest  supervisory
rating for safety and  soundness and 4% of total  adjusted  assets for all other
thrifts,  and (3) risk-based capital equal to 8% of total risk-weighted  assets.
At December 31, 2000,  the Bank was in compliance  with its  regulatory  capital
requirements.

         For  purposes  of the OTS  capital  regulations,  tangible  capital  is
defined as core  capital  less all  intangible  assets,  less  certain  mortgage
servicing  rights and less  certain  investments.  Core,  or Tier 1,  capital is
defined as common stockholders' equity,  noncumulative perpetual preferred stock
and minority  interests  in the equity  accounts of  consolidated  subsidiaries,
certain  nonwithdrawable   accounts  and  pledged  deposits  of  mutual  savings
associations and qualifying supervisory goodwill, less nonqualifying  intangible
assets, certain mortgage servicing rights and certain investments.

         The risk-based capital standard for savings  institutions  requires the
maintenance  of  total  risk-based  capital  of  8%  of  risk-weighted   assets.
Risk-based  capital  equals  the  sum of core  and  supplementary  capital.  The
components  of  supplementary  capital  include,  among other items,  cumulative
perpetual preferred stock,  perpetual  subordinated debt, mandatory  convertible
subordinated  debt,  intermediate-term  preferred  stock,  the  portion  of  the
allowance for loan losses not designated for specific loan losses, and up to 45%
of unrealized gains on equity securities.  The portion of the allowance for loan
and lease losses includable in supplementary  capital is limited to a maximum of
1.25% of risk-weighted assets. Overall, supplementary capital is limited to 100%
of core capital. A savings  association must calculate its risk-weighted  assets
by

                                       15
<PAGE>

multiplying  each asset and  off-balance  sheet item by various  risk factors as
determined  by the OTS,  which  range  from 0% for  cash to 100% for  delinquent
loans,  property  acquired  through  foreclosure,  commercial  loans,  and other
assets.

         In addition to the above  regulatory  capital  requirements,  the OTS's
prompt corrective action regulation  classifies savings  associations by capital
levels and provides that the OTS will take various corrective actions, including
imposing significant operational restrictions,  against any thrift that fails to
meet  the  regulation's  capital  standards.  Under  this  regulation,  a  "well
capitalized"  savings  association  is one that has a total  risk-based  capital
ratio of at least 10%, a Tier 1  risk-based  capital  ratio of at least 6% and a
leverage  capital  ratio  of 5%,  and is not  subject  to any  capital  order or
directive.  A thrift is deemed  "adequately  capitalized"  category  if it has a
total risk-based capital ratio of at least 8%, a Tier 1 risk-based capital ratio
of at least 4%, and a leverage capital ratio of at least 4%.  Institutions  with
lower  capital  levels  are  deemed  to  be  "undercapitalized,"  "significantly
undercapitalized" or "critically  undercapitalized,"  depending on their capital
levels. A thrift that falls within any of the three undercapitalized  categories
is subject to severe  regulatory  sanctions under the prompt  corrective  action
regulation. At December 31, 2000, the Bank was classified as "well capitalized."

         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,  such as the Bank,  that is a  subsidiary  of a
savings and loan holding company,  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  statue,  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  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

                                       16
<PAGE>

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 would result in
a number of sanctions, including certain operating restrictions. At December 31,
2000, the Bank was in compliance  with its QTL  requirement,  with 71.22% 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 the  greater of 1% of its  aggregate
unpaid   residential   mortgage  loans,  home  purchase   contracts  or  similar
obligations at the beginning of each year or 5% of the Bank's  advances from the
FHLB. At December 31, 2000, the Bank was in compliance with this requirement.

         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, 2000, 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                   1999
  Mountain City, Tennessee

         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.

                                       17
<PAGE>

(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,  2000  (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.

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

         Not applicable.

                                       18
<PAGE>

                                    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.

                                       19
<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, 2000 and 1999 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,  2000,  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:
<TABLE>
<CAPTION>
               <S>        <C>
                  (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     1999 Stock Option Plan**
                  10.2     Restricted Stock Plan and Trust Agreement **
                  13       Portions of the 2000 Annual Report to Stockholders
                  21       Subsidiaries of the Registrant (See "Item 1- Description of Business)
                  23       Consent of Crisp Hughes Evans LLP
</TABLE>

         (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, 1999 and filed with the SEC on April 17, 1999.

                                       20

<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 23, 2001.

                                    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 23, 2001.


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


/s/Bobby Hyatt
-----------------------------
Bobby Hyatt
Vice President and Finance Officer