-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Aw4oU8c4MxXWxsSzcB0cWacwgiKTJgZS2uFx85HmkDT4A0FXUBad6Uq+/ch25xzn tf7pRtWl5HViC2e600PXag== 0000916641-01-500854.txt : 20010810 0000916641-01-500854.hdr.sgml : 20010810 ACCESSION NUMBER: 0000916641-01-500854 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: M&F BANCORP INC /NC/ CENTRAL INDEX KEY: 0001094738 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 561980549 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-27307 FILM NUMBER: 1701960 BUSINESS ADDRESS: STREET 1: 2634 CHAPTEL HILL BLVD STREET 2: PO BOX 19322 CITY: DURHAM STATE: NC ZIP: 27702-3221 BUSINESS PHONE: 9196831521 MAIL ADDRESS: STREET 1: 2634 CHAPTEL HILL BLVD STREET 2: PO BOX 19322 CITY: DURHAM STATE: NC ZIP: 27701-3221 10QSB 1 d10qsb.txt FORM 10-QSB ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2001 Commission File Number 0-27307 M&F BANCORP, INC. - -------------------------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) North Carolina 56-1980549 - -------------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 2634 Chapel Hill Blvd., P.O. Box 1932, Durham, North Carolina 27707 - -------------------------------------------------------------------------------- (Address of principal executive offices) (919) 683-1521 - -------------------------------------------------------------------------------- (Issuer's telephone number, including area code) Check whether the issuer (1) 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 -------- ------ State the number of shares outstanding of each of the issuer's class of common equity, as of the latest practicable date: Common Stock no par value 853,725 - -------------------------------------------------------------------------------- Outstanding at July 20, 2001 Transitional Small Business Disclosure Format (Check one): Yes No X --------- ------------ ================================================================================ M&F BANCORP, INC. INDEX Page PART I. FINANCIAL INFORMATION (unaudited) Item 1. Consolidated Condensed Financial Statements Consolidated Condensed Balance Sheets as of June 30, 2001 and December 31, 2000 3 Consolidated Condensed Statements of Income and Comprehensive Income for the six months ended June 30, 2001 and June 30, 2000 4 Consolidated Condensed Statements of Income and Comprehensive Income for the three months ended June 30, 2001 and June 30, 2000 5 Consolidated Condensed Statements of Shareholders' Equity for the six months ended June 30, 2001 and June 30, 2000 6 Consolidated Condensed Statements of Cash flows for the six months ended June 30, 2001 and June 30, 2000 7 Notes to Consolidated Condensed Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II. OTHER INFORMATION Item 1. Legal Proceedings 13 Item 2. Changes in Securities 13 Item 3. Defaults Upon Senior Securities 13 Item 4. Submission of Matters to a Vote of Security Holders 13 Item 5. Other Information 13 Item 6. Exhibits and Reports on Form 8-K 13 Signature Page 15 2 PART I: FINANCIAL INFORMATION ITEM 1 Financial Statements CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands)
June 30, 2001 December 31, 2000 ------------- ----------------- (unaudited) ASSETS Cash and due from financial institutions $ 8,635 $ 2,982 Interest-earning deposits in financial institutions 15,808 7,617 Federal funds sold 5,000 -------- -------- Cash and cash equivalents 24,443 15,599 Securities available for sale 28,508 29,632 Securities held to maturity 1,412 1,412 Loans: Commercial, financial and agricultural loans 65,935 64,639 Real estate-construction loans 6,577 8,485 Real Estate-mortgage loans 35,809 34,112 Installment loans to individuals 7,476 7,690 -------- -------- Total Loans 115,797 114,926 Unearned income 363 373 Allowance for loan losses 1,972 1,748 -------- -------- Net Loans 113,462 112,805 Bank premises and equipment, net 5,251 5,391 Other assets 1,812 2,122 -------- -------- TOTAL ASSETS $174,888 $166,961 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Noninterest-bearing deposits 32,259 29,984 Interest-bearing deposits 111,002 105,162 -------- -------- Total Deposits 143,261 135,146 Other borrowings 11,885 11,895 Other liabilities 1,748 2,213 -------- -------- Total Liabilities 156,894 149,254 Shareholders' Equity: Common stock 5,999 5,999 Retained earnings 11,237 10,981 Accumulated other comprehensive income 758 727 -------- -------- Shareholders' Equity 17,994 17,707 -------- -------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $174,888 $166,961 ======== ========
3 CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (unaudited) (in thousands, except per share data)
Six months ended: June 30, 2001 June 30, 2000 ------------- ------------- Interest Income: Interest on loans $ 4,890 $ 4,976 Securities: Taxable 676 727 Tax exempt 144 244 Federal funds sold 6 28 Other interest 260 66 ------- ------- Total Interest Income $ 5,976 $ 6,041 ------- ------- Interest Expense: Interest on deposits 1,983 1,699 Interest on other borrowings 315 257 ------- ------- Total Interest Expense $ 2,298 $ 1,956 ------- ------- Net Interest Income 3,678 4,085 Provision for loan losses 272 210 ------- ------- Net Interest Income After Provision for Loan Losses 3,406 3,875 Non-interest Income 996 733 Salaries & employee benefits 2,228 2,221 Other non-interest expense 1,656 1,641 ------- ------- Income before Taxes 518 746 Income tax expense 127 174 ------- ------- Net Income $ 391 $ 572 ------- ------- Other Comprehensive (loss) income, net of tax 32 (84) ------- ------- Comprehensive Income $ 423 $ 488 ======= ======= Net Income per share: Basic $ 0.46 $ 0.67 Diluted $ 0.46 $ 0.67 Weighted average common shares outstanding: Basic 854 854 Diluted 854 854 Dividends per share common: .16 .16
4 CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (unaudited) (in thousands, except per share data)
Three months ended: June 30, 2001 June 30, 2000 ------------- ------------- Interest Income: Interest on loans $ 2,404 $ 2,524 Securities: Taxable 344 355 Tax exempt 36 118 Federal funds sold 0 11 Other interest 119 29 ------- ------- Total Interest Income $ 2,903 $ 3,037 Interest Expense: Interest on deposits 1,005 857 Interest on other borrowings 157 141 ------- ------- Total Interest Expense $ 1,162 $ 998 Net Interest Income 1,741 2,039 Provision for loan losses 138 133 ------- ------- Net Interest Income After Provision for Loan Losses 1,603 1,906 Non-interest Income 573 378 Salaries & employee benefits 1,124 1,166 Other non-interest expense 822 841 ------- ------- Income before Taxes 230 277 Income tax expense 68 27 ------- ------- Net Income $ 162 $ 250 ------- ------- Other comprehensive (loss) income, net of tax 18 (43) ------- ------- Comprehensive Income $ 180 $ 207 ======= ======= Net Income per share: Basic $ 0.19 $ 0.29 Diluted $ 0.19 $ 0.29 Weighted average common shares outstanding: Basic 854 854 Diluted 854 854 Dividends per share common: .08 .08
5 CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited) (in thousands)
June 30, 2001 June 30, 2000 ------------- ------------- Beginning Balance, January 1 $17,707 $16,299 Net Income 391 572 Other Comprehensive (Loss) Income 32 (84) Dividends (136) (136) ------- ------- Ending Balance, June 30 $17,994 $16,651 ======= =======
6 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited) (in thousands, except per share data)
Six months ended: June 30, 2001 June 30, 2000 ------------- ------------- Cash flows from operating activities: Net Income $ 391 $ 572 Adjustments to reconcile net income to net cash from operating activities: Provision for possible loan losses 271 210 Provision for depreciation 212 203 Deferred income taxes provision (benefit) (229) 174 Gain on disposal of assets (178) 0 Deferred loan fees 10 41 Income taxes receivable 70 0 Interest Receivable 153 76 Prepaid expenses and other assets 56 84 Accrued expenses and other liabilities 33 81 Other (624) 30 -------- -------- Net cash from operating activities 165 1,471 Cash flows (used in) provided by Investing Activities: Proceeds from sales and maturities of securities (AFS) 5,500 1,000 Purchase of securities (AFS) (5,612) (2,000) Net increase (decrease) in loans 874 (5,760) Purchase of premises and equipment (62) (392) -------- -------- Net cash (used in) provided by investing activities 700 (7,152) Net cash provided by (used in) Financing Activities: Net increase (decrease) in demand and savings deposits 4,069 (1,114) Net decrease in certificates of deposit 4,046 1,374 Cash dividends (136) (136) -------- -------- Net cash provided by financing activities 7,979 124 Net Increase (decrease) in Cash and Cash Equivalents 8,844 (5,557) Cash and Cash Equivalents at the Beginning of the Period 15,599 14,636 -------- -------- Cash and Cash Equivalents at the End of the Period $ 24,443 $ 9,079 ======== ========
7 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited) 1. Basis of Presentation The consolidated financial statements include the accounts and transactions of M&F Bancorp, Inc. (the "Company") and its wholly owned subsidiary, Mechanics & Farmers Bank ("M&F Bank"). All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying unaudited Consolidated Condensed Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and instructions from Regulation S-B. The condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and the related notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2000. In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair presentation have been included. 2. Investment Securities The Company accounts for investment securities using Statement of Financial Accounting Standards ("SFAS") No. 115, Accounting for Certain Investments in Debt and Equity Securities (SFAS 115). Under SFAS 115, the accounting for investment securities held as an asset is dependent upon their classification as held to maturity, available for sale, or trading assets. 3. Loans Loans are carried at their principal amount outstanding, net of the allowance for possible loan losses and deferred fees. Interest on commercial, mortgage and installment loans is accrued and credited to operating income based upon the principal amount outstanding. The Company's policy is to discontinue the accrual of interest when, in management's judgment, circumstances indicate that collection is doubtful. The Company applies Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan (SFAS 114) and Statement of Financial Accounting Standards No. 118, Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures (SFAS 118). 4. Net Income Per Share Net Income per share are calculated on the basis of the weighted-average number of common shares outstanding. There were no dilutive potential common shares outstanding for the periods ended June 30, 2001 and June 30, 2000. 5. Regulatory Capital Requirements M&F Bank is subject to various regulatory capital requirements administered by regulatory banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. As of June 30, 2001 and June 30, 2000 M&F Bank had the following capital level. Capital ---------------------------- Risk Based Tier 1 Tier 2 Required Capital ---------- ------ ------ ---------------- June 30, 2001 16.11% 14.35% 11.86% 6.00% December 31, 2000 15.63% 13.86% 11.82% 6.00% On June 27, 2001, M&F Bank transferred $500,000 from its capital to the Company to allow the Company explore business opportunities. 8 6. Comprehensive Income The Company applies the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS 130") which requires the Company to (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. 7. New Accounting Pronouncement The Financial Accounting Standards Board has issued Statement of Financial Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133") as amended by FAS No. 137, Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of SFAS No. 133, and SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities. These Statements establish accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, (collectively referred to as derivatives) and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. SFAS 133 is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. The Company adopted SFAS 133 on January 1, 2001. The adoption of this standard did not have a material impact on the Company's financial statements. 8. Common Stock Cash Dividends On March 27, 2001, the Board of Directors of the Company declared a quarterly cash dividend of $0.08 per share to all shareholders of record on March 20, 2001 payable April 13, 2001. The dividend reduced shareholders equity by $68,298. On June 26, 2001, the Board of Directors of the Company declared a quarterly cash dividend of $0.08 per share to all shareholders of record on June 19, 2001. The dividend reduced equity by $68,298. 9. Presentation Certain amounts in 2000 have been reclassified to conform to the 2001 presentation. 10. Subsequent Event On July 5, 2001, the Company liquidated a defaulted loan in a foreclosure sale for $1,965,000 resulting in a loss of $489,823. The loss has been previously reserved and included in the loan loss reserves. ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations General The following discussion and analysis of earnings and related financial data should be read in conjunction with the Company's financial statements and notes thereto included in the Annual Report on Form 10-KSB for the year ended December 31, 2000. It is intended to assist you in understanding the financial condition and the results of operations for the three months and six months ended June 30, 2001 and 2000. 9 Forward-Looking Statements When used in this report, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project" or other similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including changes in economic conditions in the market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the market area, and competition that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any such forward- looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions, which may be made to any forward- looking statements to reflect events or occurrences after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Financial Condition Total assets increased 4.75 percent to $174,888,000 at June 30, 2001 from $166,961,000 at December 31, 2000. The investment portfolio balance (including FHLB stock) as of June 30, 2001 was $29,920,000 compared to $31,044,000 at December 31, 2000. Maturities and deposits were used to fund loan demand and satisfy liquidity needs. The investment portfolio can be liquidated to meet loan demand if necessary. Approximately 95 percent of the portfolio was classified as available-for-sale at June 30, 2001 and December 31, 2000. All securities purchased during 2001 and 2000 were classified in the available-for-sale category. The average yield on the securities portfolio was 5.48 for the six months ended June 30, 2001 percent compared to 6.26 percent for the same period for the prior year. Interest-earning deposits held at financial institutions increased 107.54 percent to $15,808,000 compared to $7,617,000 at December 31, 2000. Net Loans increased less than one percent from December 31, 2000. The average yield on the loan portfolio was 8.45 percent for the six months ended June 30, 2001 compared to 8.66 percent at December 31, 2000. Management continues its effort to add more adjustable rate loans to the portfolio in an effort to reduce the interest rate sensitivity of our loans. This effort is normally achieved in the area of commercial loans, which are primarily secured by real estate. Deposits increased 6.00 percent to $143,261,000 at June 30, 2001 from $135,146,000 at December 31, 2000. The percentage of interest-bearing accounts to total accounts decreased to 77.48 percent compared to 82.99 percent at June 30, 2001 and December 31, 2000, respectively. The average interest rate on deposits increased to 3.57 percent from 3.23 from December 31, 2000 to June 30, 2001. Management believes that large deposit growth will be more difficult as customers continue to look for alternative investment opportunities with higher yields. As a result, the Company will continue to evaluate other sources of liquidity to meet loan demand if necessary. Total shareholders' equity increased 1.62 percent to $17,994,000 on June 30, 2001 from $17,707,000 at December 31, 2000. The change was due to year-to-date net income partially offset by dividends declared. 10 Results of Operations - Comparison for the six months and three months ended June 30, 2001 and 2000 Net income decreased 31.65 percent to $391,000 for the six months ended June 30, 2001 compared with $572,000 for the same period in 2000. The Company has experienced a 9.96 percent decrease in the net interest margin as a result of the declining interest rates. Deposit growth has greatly exceeded loan growth for the year which has also impacted the net interest margin. The deposit growth has been invested in liquid assets to meet anticipated loan demand which provide a lower rate of return than loans. Noninterest income for the period was $996,000 compared to the $733,000. The increase resulted from increased rental income for the corporate facility (currently 100% occupancy of tenant space compared to approximately 60% for the prior year). Net income for the three months ended June 30, 2001 decreased 35.2 percent to $162,000 compared with $250,000 for the same period in 2000. The Company's earnings for the three months ended June 30, 2001 continued to be adversely impacted by the reduction in interest rates and loan growth. The net interest margin decreased by 14.61 percent compared the same period for the prior year. Management plans to increase marketing efforts with expanded advertising and increased product promotions. Noninterest income for the period was $573,000 compared to $378,000 for the same period in the prior year. The increase was attributed to increased rental income from tenant space. Non-performing assets and allowance for loan losses The allowance for loan losses is calculated based upon an evaluation of pertinent factors underlying the types and qualities of the Company's loans. Management considers such factors as the repayment status of a loan, the estimated net realizable value of the underlying collateral, the borrower's ability to repay the loan, current and anticipated economic conditions which might affect the borrower's ability to repay the loan and the Company's past statistical history concerning charge-offs. The June 30, 2001 allowance for loan losses was 1,972,000 or 1.70 percent of total loans outstanding compared with $1,748,000 or 1.52 percent of total loans outstanding at December 31, 2000. Management has considered non-performing assets and total classified assets in establishing the allowance for loan losses. At October 1, 2000 the Company had a loan of $2,485,000 in default. In the quarter preceding the default, the loan had been restructured. At June 30, 2001 the loan remained in default. On July 5, 2001, the Company liquidated a defaulted loan in a foreclosure sale for $1,965,000 resulting in a loss of $489,823. The loss has been previously reserved and included in the loan loss reserves. The ratio of non-performing assets to total assets is one indicator of the exposure to credit risk. Non-performing assets of the Company consist of non- accruing loans, accruing loans delinquent 90 days or more, restructured loans, and foreclosed assets, which have been acquired as a result of foreclosure or deed-in-lieu of foreclosure. The following table provides certain information regarding non-performing assets. 06/30/01 12/31/00 (Dollars in Thousands) ---------------------- Non-Accruing Loans $ 3,297 2,795 Accruing Loans Delinquent 90 days or more 458 475 Foreclosed Assets 112 163 Restructured Loans 1,236 1,329 --------- --------- Total Non-Performing Assets $ 5,103 $ 4,762 ========= ========= Percentage of total assets 2.92% 2.85% 11 The level of non-performing assets impacts the Company's need to maintain reserves adequate to cover loan losses in the existing portfolio. As non- performing assets decline, it has a favorable impact on earning assets and net interest income. 12 PART II Other Information ITEM 1. Legal Proceedings: Not applicable ITEM 2. Changes in Securities: Not applicable ITEM 3. Defaults upon Senior Securities: Not applicable ITEM 4. Submission of Matters to a Vote of Security Holders: The Annual Meeting of Stockholders held on May 1, 2001 was held to vote on the following: 1. Elect six (6) persons to serve on the Board of Directors of M&F Bancorp, Inc. until the annual meeting of stockholders in 2002. The following six directors were elected: Director Votes in Favor Votes Withheld ------------------------ -------------- -------------- Lee Johnson, Jr. 608,418 0 B.S. Ruffin 608,418 0 J.M. Sansom 608,418 0 A.L. Spaulding 608,418 0 G.G. Fulbright 608,418 0 M.K. Sloan 608,332 72 2. To ratify the selection of Deloitte & Touche, LLP as the independent auditor for the M&F Bancorp, Inc. for the fiscal year ending December 31, 2001. 608,404 votes in favor 0 votes against 0 abstentions ITEM 5. Other Information: Not applicable ITEM 6. Exhibits and Report on Form 8-K (c) Exhibits Exhibit (3)(i) Articles of Incorporation of M&F Bancorp, Inc., incorporated by reference to Exhibit (3) to the Form 10-QSB for the quarter ended September 30, 1999 filed with the Securities and Exchange Commission on November 12, 1999. Exhibit (3)(ii) Bylaws of M&F Bancorp, Inc., incorporated by reference to Exhibit (3) to the Form 10-QSB for the quarter ended September 30, 1999 filed with the Securities and Exchange Commission on November 12, 1999. Exhibit (4) Specimen Stock Certificate incorporated by reference to Exhibit (4) to the Form 10-KSB40 for the fiscal year ended December 31, 2000 filed with the Securities and Exchange Commission on April 2, 2001. Exhibit (10)(a) Employment Agreement between Mechanics and Farmers Bank and Lee Johnson, Jr. incorporated by reference to Exhibit 10(a) to the Form 10- QSB for the quarter ended September 30, 2000 filed with the Securities and Exchange Commission on November 9, 2000. Exhibit (10)(b) Retention Bonus Agreement between Mechanics and Farmers Bank and Fohliette Becote incorporated by reference to Exhibit 10(b) to the Form 10_QSB for the quarter ended September 30, 1999 filed with the Securities and Exchange Commission on November 12, 1999. 13 Exhibit (10)(c) Retention Bonus Agreement between Mechanics and Farmers Bank and Walter D. Harrington incorporated by references to Exhibit 10(c) to the Form 10-QSB for the quarter ended September 30, 1999 filed with the Securities and Exchange Commission on November 12, 1999. Exhibit (10)(d) Retention Bonus Agreement between Mechanics and Farmers Bank and Harold G. Sellars incorporated by reference to Exhibit 10(d) to the Form 10-QSB for the quarter ended September 30, 1999 filed with the Securities and Exchange Commission on November 12, 1999. Exhibit (10)(e) Retention Bonus Agreement Between Mechanics and Farmers Bank and Elaine Small incorporated by reference to Exhibit 10(e) to the Form 10- QSB for the quarter ended September 30, 1999 filed with the Securities and Exchange Commission on November 12, 1999. (b) Reports on Form 8-K On May 1, 2001 the Company filed a report on Form 8-K to announce that Benjamin S. Ruffin had been elected as Chairman of the Board and Joseph M. Sansom had been elected as Vice Chairman. It was further announced that Lee Johnson, Jr., would serve as President/Chief Executive Officer, effective May 1, 2001. Mr. Johnson formerly served as President/Chief Operating Officer. 14 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to signed on its behalf by the undersigned, thereunto duly authorized. M&F Bancorp, Inc. - ----------------- (Registrant) Date: August 7, 2001 By: /s/Lee Johnson Jr. ------------------------------------ Lee Johnson, Jr. President/Chief Executive Officer Date: August 7, 2001 By: /s/Fohliette W. Becote ------------------------------------ Fohliette W. Becote Secretary/Treasurer 15 -----END PRIVACY-ENHANCED MESSAGE-----