SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K


[X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934 [NO FEE REQUIRED]

       For the Fiscal Year Ended June 30, 2000.

[ ]    TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

       For the transition period from_________to__________
                        Commission File Number: 0-18832

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
             (Exact name of registrant as specified in its charter)

                Kentucky                                      61-1168311
----------------------------------------------             -------------------
(State or other jurisdiction of incorporation              (I.R.S. Employer
 or organization)                                           Identification No.)

2323 Ring Road, Elizabethtown, Kentucky                          42701
----------------------------------------                      -----------
(Address of principal executive offices)                        Zip Code

Registrant's telephone number, including area code:   (270) 765-2131

Securities registered pursuant to Section 12(b) of the Act:  None

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

                     Common Stock, par value $1.00 per share
                                (Title of Class)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past ninety days. Yes X No ___

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not 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-K or any
amendment to this Form 10-K. [X]

         The  aggregate  market  value of the  outstanding  voting stock held by
non-affiliates  of the  registrant,  based  on the  closing  sales  price of the
Registrant's  Common Stock as quoted on The NASDAQ  National Market on September
15, 2000, was $63,850,963.  Solely for purposes of this calculation,  the shares
held  by  directors  and  executive  officers  of  the  registrant  and  by  any
stockholder  beneficially  owning more than 5% of the  registrant's  outstanding
common stock are deemed to be shares held by affiliates.

         As of September 15, 2000,  there were issued and outstanding  3,755,939
shares of the  registrant's  common  stock,  of which  directors  and  executive
officers  held 460,283  shares and more than 5%  beneficial  owners held 211,503
shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

    1.  Portions of Proxy Statement for the 2000 Annual Meeting of Stockholders.
        (Part III)


<PAGE>


                                     PART I

PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

         Certain   statements    contained   in   "Item    1--Business,"   "Item
7--Management's  Discussion  and Analysis of Financial  Condition and Results of
Operations,"  and other  sections  of this  report  that are not  statements  of
historical  fact  constitute  forward-looking  statements  within the meaning of
Section 21E of the  Securities  Exchange Act of 1934,  as amended.  In addition,
forward-looking statements may be made in future filings by the Company with the
Securities and Exchange Commission,  in press releases,  and in oral and written
statements  made  by or  with  the  approval  of  the  Company.  Forward-looking
statements include, but are not limited to: (1) projections of revenues,  income
or loss,  earnings  or loss per share,  capital  structure  and other  financial
items;  (2)  statements of plans and objectives of the Company or its management
or Board of  Directors;  (3)  statements  regarding  future  events,  actions or
economic  performance;   and  (4)  statements  of  assumptions  underlying  such
statements.  Words  such as  "believes,"  "anticipates,"  "expects,"  "intends,"
"plans,"   "targeted,"   and  similar   expressions  are  intended  to  identify
forward-looking  statements but are not the exclusive means of identifying  such
statements.

         Forward-looking  statements  involve risks and  uncertainties  that may
cause  actual  results  to  differ  materially  from  those  indicated  by  such
statements.  Some of the events or circumstances that could cause actual results
to differ from those indicated by forward-looking  statements  include,  but are
not limited  to,  changes in economic  conditions  in the markets  served by the
Corporation,  in  Kentucky  and the  surrounding  region,  or in the nation as a
whole; changes in interest rates; the impact of legislation and regulation;  the
Corporation's  ability  to offer  competitive  banking  products  and  services;
competition from other providers of financial services,  the continued growth of
the markets in which the Corporation operates;  and the Corporation's ability to
expand into new markets  and to maintain  profit  margins in the face of pricing
pressure.  All of these events and  circumstances  are  difficult to predict and
many of them are beyond the Corporation's control.

ITEM 1.  BUSINESS

The Corporation

         First Federal Financial Corporation of Kentucky (the "Corporation") was
incorporated  in August 1989 under the laws of the  Commonwealth of Kentucky for
the purpose of becoming the holding  company for First  Federal  Savings Bank of
Elizabethtown   ("First   Federal"  or  the  "Bank")   pursuant  to  the  Bank's
reorganization into the holding company form of ownership, which was consummated
on June 1, 1990.  Prior to its acquisition of all the  outstanding  stock of the
Bank  in  connection  with  the  Bank's  holding  company  reorganization,   the
Corporation had no assets or liabilities and engaged in no business  activities.
Since its  acquisition  of First  Federal,  the  Corporation  has  engaged in no
significant activity other than holding the stock of First Federal and operating
the  business  of  a  savings  bank  through  First  Federal.  Accordingly,  the
information set forth in this report, including financial statements and related
data, relates primarily to First Federal and its subsidiary.

The Bank

         First Federal is a federally  chartered  savings bank  headquartered in
Elizabethtown,  Kentucky.  The business of First Federal  consists  primarily of
attracting  deposits from the general public and  originating  mortgage loans on
single-family  residences,  and to a lesser extent on  multi-family  housing and
commercial property.  First Federal also makes home improvement loans,  consumer
loans  and  commercial  business  loans  and  through  its  subsidiaries  offers
insurance  products and brokerage  services to its customers and makes qualified
VA and FHA loans for sale to investors on the  secondary  market.  In April 1993
the Bank  established  a full service  trust  department  to serve the fiduciary
needs of its  customers.  The  principal  sources  of funds for First  Federal's
lending activities include deposits received from the general public, borrowings
from the Federal Home Loan Bank ("FHLB") of Cincinnati,  principal  amortization
and prepayment of loans.  First Federal's primary sources of income are interest
and origination  fees on loans and interest on  investments.  First Federal also
invests  in  various  federal  and  government  agency   obligations  and  other
investment  securities  permitted  by  applicable  laws and  regulations.  First
Federal's principal expenses are interest paid on deposit accounts and operating
expenses.

         First  Federal  was  originally  founded  in 1923 as a  state-chartered
institution and became federally  chartered in 1940. In 1987, the Bank converted
to a federally chartered savings bank and converted from mutual to stock form.

                                       2
<PAGE>

         The  Bank is a member  of the  FHLB of  Cincinnati  and is  subject  to
regulation,  examination  and  supervision  by the Office of Thrift  Supervision
("OTS").  The Bank's deposits are insured by the Savings  Association  Insurance
Fund ("SAIF") and  administered  by the Federal  Deposit  Insurance  Corporation
("FDIC").


LENDING ACTIVITIES

         GENERAL.  The  principal  lending  activity  of  First  Federal  is the
origination  of  conventional   first  mortgage  loans  secured  by  residential
property.  Residential  mortgage loans are generally  underwritten  according to
Federal  National  Mortgage  Association  (FNMA) and Federal Home Loan  Mortgage
Corporation  (FHLMC)  guidelines.  To  a  lesser  extent  the  Bank  engages  in
commercial real estate,  consumer and commercial  business lending.  Residential
mortgage  loans made by First  Federal are secured  primarily  by  single-family
homes and include  construction  loans. The majority of First Federal's mortgage
loan portfolio is secured by real estate located in Hardin, Nelson, Hart, Meade,
LaRue and Bullitt counties in the state of Kentucky.

         The following  table presents a summary of the Bank's loan portfolio by
category for each of the last five years.  The Bank has no foreign  loans in its
portfolio and other than the  categories  noted,  there is no  concentration  of
loans in any industry exceeding 10% of total loans.
<TABLE>
<CAPTION>

                                                          June 30,
                  -----------------------------------------------------------------------------------
                         2000             1999             1998            1997              1996
                         ----             ----             ----            ----              ----
                   Amount    %      Amount     %     Amount     %     Amount    %      Amount    %
                   ------    -      ------     -     ------     -     ------    -      ------    -
<S>              <C>       <C>    <C>        <C>    <C>      <C>     <C>       <C>    <C>       <C>
Type of Loan:
Real Estate:
   Mortgage      $311,756  64.55% $300,326   72.92% $285,528  77.27% $269,031  79.34% $256,510  81.10%
   Construction    15,257   3.16    18,104    4.39    15,689   4.25    15,444   4.55    15,766   4.98
   Commercial      65,244  13.51    32,729    7.85    22,169   5.99    17,141   5.05    13,321   4.21
Consumer and
     home equity   59,744  12.37    48,281   11.72    45,136  12.21    35,528  10.48    28,892   9.15
Indirect consumer  15,186   3.14       762     .28      -       -         -      -        -        -
Commercial,
     other         15,769   3.27    11,692    2.84     1,020    .28     1,953    .58     1,785    .56
                 -------- ------  --------  ------  -------- ------- -------- ------- -------- ------
    Total loans  $482,956 100.00% $411,894  100.00% $369,542 100.00% $339,097 100.00% $316,274 100.00%
                 ======== ======= ========  ======  ======== ======= ======== ======= ======== =======
</TABLE>

LOAN MATURITY SCHEDULE.  The following table sets forth certain  information at
June 30, 2000,  regarding the dollar amount of loans maturing in the Bank's loan
portfolio based on their contractual terms to maturity.

<TABLE>
<CAPTION>

                                               Due after
                              Due during       1 through     Due after 5
                            the year ended   5 years after   years after
                               June 30,         June 30,       June 30,     Total
                                 2001             2000           2000       Loans
                                 ----             ----           ----       -----
<S>                             <C>            <C>           <C>          <C>
                                                (Dollars in thousands)

Real estate mortgage            $ 1,695        $ 13,019      $297,042     $311,756
Real estate construction (1)     14,741             516             0       15,257
Consumer                          7,726          64,317         2,887       74,930
Commercial, financial and
   Agricultural                  11,752          33,622        35,639       81,013
                                 ------          ------        ------       ------

      Total                     $35,914        $111,474      $335,568     $482,956
                                =======        ========      ========     ========
</TABLE>

   (1) These loans will become  permanent real estate loans upon  completion
of construction.


                                       3
<PAGE>

         The following  table  reflects a breakdown of loans  maturing after one
year, by fixed and adjustable rates.

                                                     Floating or
                              Fixed Rates         Adjustable Rates      Total
                              -----------         ----------------      -----
                                              (Dollars in thousands)

 Real estate mortgage          $226,229              $83,832           $310,061
 Real estate construction           516                    0                516
 Consumer                        63,874                3,330             67,204
 Commercial, financial and
    Agricultural                 61,104                8,157             69,261
                                -------              -------           --------
       Total                   $351,723              $95,319           $447,042
                               ========              =======           ========


         RESIDENTIAL REAL ESTATE LENDING. The Bank's primary lending activity is
the  origination  of  loans  on  single-family  residences,   which  consist  of
one-to-four  individual dwelling units. Fixed rate residential real estate loans
originated  by the Bank have terms  ranging from ten to thirty  years.  Interest
rates are competitively priced within the primary geographic lending market, and
vary according to the term for which they are fixed.

         In  recent  years,   the  Bank  has  emphasized   the   origination  of
adjustable-rate  mortgage loans ("ARMs").  The Bank offers an ARM with an annual
adjustment,  which is tied to various national indeces with a maximum adjustment
of 2% annually,  and a lifetime  cap of 15%. As of June 30, 2000,  approximately
19% of the Bank's real estate loans were  adjustable  rate loans with adjustment
periods ranging from one to five years and balloon loans of seven years or less.
The  origination of these mortgage loans can be more difficult in a low interest
rate environment where there is a significant demand for fixed rate mortgages.

         The Bank limits the maximum  loan-to-value ratio on  one-to-four-family
residential  first  mortgages to 80% of the  appraised  value and 95% on certain
mortgages,  with the requirement that private mortgage insurance be obtained for
loans with loan-to-value  ratios in excess of 80%. The Bank generally limits the
loan-to-value ratio to 80% on second mortgages on one-to-four-family dwellings.

         First  Federal's  residential  lending  activities  also include  loans
secured by multi-family residential property, consisting of properties with more
than four separate  dwelling units.  These loans amounted to $8.2 million of the
loan portfolio at June 30, 2000. First Federal generally does not lend above 75%
of the appraised values of multi-family  residences on first mortgage loans. The
mortgage  loans First Federal  currently  offers on  multi-family  dwellings are
generally one or five year ARMs with maturities of 25 years or less.

         CONSTRUCTION AND COMMERCIAL REAL ESTATE LENDING.         First  Federal
originates  loans secured by existing  commercial  properties  and  construction
loans primarily on residential real estate. The loans are secured by real estate
located in  Kentucky.  Substantially  all of the  commercial  real estate  loans
originated by First Federal have adjustable interest rates with maturities of 25
years or less or are loans  with fixed  interest  rates and  maturities  of five
years or less.  At June 30,  2000,  the Bank had $15.3  million  in  outstanding
interim  construction  loans and $65.2 million  outstanding  in commercial  real
estate loans.  The security for  commercial  real estate loans  includes  retail
businesses,  warehouses,  churches,  apartment buildings and motels. The largest
commercial real estate loan originated during the June 30, 2000, fiscal year had
a balance of $2.1 million.

         Commercial real estate loans  typically  involve large loan balances to
single borrowers or groups of related borrowers and may also involve higher loan
principal  amount to security  property  appraisal  value  ratios as compared to
loans secured by residential real estate. In addition, the payment experience of
loans  secured by income  producing  properties  is  typically  dependent on the
successful  operation  of the related  real estate  project and thus may be more
vulnerable  to adverse  conditions  in the real estate  market or in the economy
generally.  Construction  loans involve additional risks as a result of the fact
that  loan  funds  are  advanced   upon  the  security  of  the  project   under
construction,   which  is  of  uncertain   value  prior  to  the  completion  of
construction.  Moreover,  because of the  uncertainties  inherent in  estimating
construction costs, delays arising from labor problems,  material shortages, and
other  unpredictable  contingencies,  it is  relatively  difficult  to  evaluate
accurately  the total loan funds  required  to  complete a project,  and related
loan-to-value  ratios.  The analysis of prospective  construction  loan projects
thus requires an expertise that varies in  significant  respects from that which
is required for residential mortgage lending.

         The Bank's underwriting  criteria are designed to evaluate and minimize
the risks of each  construction  loan.  Among other things,  the Bank  considers
evidence of the availability of permanent  financing or a takeout  commitment to
the borrower; the reputation of the borrower and his or her financial condition;
the amount of the borrower's equity in the project;  independent  appraisals and
cost  estimates;  preconstruction  sale and leasing  information;  and cash flow
projections of the borrower.

                                       4
<PAGE>

         CONSUMER LOANS.  Federal  regulations permit federally chartered thrift
institutions to make secured and unsecured  consumer loans of up to 35% of their
assets.  This limit may be exceeded  for certain  consumer  loans,  such as home
equity loans, property improvement loans, mobile home loans and loans secured by
savings accounts.  The consumer loans granted by the Bank have included loans on
automobiles,  boats,  recreational vehicles and other consumer goods, as well as
loans secured by savings accounts,  home improvement  loans, and unsecured lines
of credit.  In 1999,the Bank developed a dealer loan program in our Meade County
banking center that would serve all areas of operation for the Bank. The program
is producing a large volume of consumer loans at higher yields than our mortgage
portfolio.  At June 30,2000,  total loans under the dealer loan program  totaled
$15.2  million.  As of June 30,  2000,  consumer  loans  outstanding  were $74.9
million or approximately  15.5% of the Bank's total gross loan portfolio.  These
loans involved a higher risk of default than loans secured by one-to-four-family
residential  loans.  The Bank believes,  however,  that the shorter term and the
normally higher interest rates available on various types of consumer loans have
been helpful in maintaining a profitable  spread between the Bank's average loan
yield and its cost of funds.

         In view of the  riskier  nature  of  consumer  lending,  the  Bank  has
developed what management believes are conservative  underwriting  standards. In
applying these standards,  the Bank obtains detailed  financial  information and
credit bureau reports concerning each applicant.  In addition,  the relationship
of the loans to the value of the  collateral  is  considered.  The Bank offers a
home equity line of credit,  which is a revolving  line of credit secured by the
equity in a customer's  home.  As of June 30, 2000,  these loans  totaled  $19.3
million.

         COMMERCIAL BUSINESS LENDING.  The Bank is permitted to make secured and
unsecured loans for commercial,  corporate, business, and agricultural purposes,
including  issuing  letters of credit and  engaging in inventory  financing  and
commercial   leasing   activities.   Commercial  loans  generally  are  made  to
small-to-medium  size businesses  located within the Bank's defined market area.
Commercial  loans  are  considered  to  involve  a higher  degree  of risk  than
residential  real estate loans.  However,  commercial  loans  generally  carry a
higher yield and are made for a shorter term than real estate loans.  Commercial
business  loans  outstanding  at June 30, 2000 totaled $15.8  million.  The Bank
offers a commercial line of credit,  which is a revolving line of credit secured
by the equity in the property,  primarily real estate, of a business. As of June
30, 2000, these loans totaled approximately $7.4 million.

         LOAN UNDERWRITING POLICIES.   During the loan approval  process,  First
Federal assesses both the borrower's  ability to repay the loan and the adequacy
of  the  underlying  security.   Potential  residential  borrowers  complete  an
application,  which is submitted to a salaried loan officer. As part of the loan
application process, qualified fee appraisers inspect and appraise the property,
which is  offered  to  secure  the  loan.  The  Bank  also  obtains  information
concerning the income, financial condition, employment and credit history of the
applicant. First Federal's loan committee, consisting of certain officers of the
Bank,  analyzes the loan  application  and the property to be used as collateral
and  subsequently  approves or denies the loan  request.  If the  mortgage  loan
amount is less than $250,000, it must be approved by a loan committee consisting
of certain  members of  management.  The Board of  Directors  must  approve  all
mortgage  loans in excess of $250,000.  All consumer  loans under $25,000 may be
approved by authorized loan officers under Board approved lines of authority and
all loans  under  $100,000  may be approved by an officer  loan  committee.  The
President must approve consumer loans in excess of $100,000.  In connection with
the  origination of  single-family  residential  adjustable rate mortgage loans,
borrowers are  qualified at a rate of interest  equal to the fully accrued index
rate.  It is the policy of  management  to make loans to borrowers  who not only
qualify  at the  low  initial  rate of  interest,  but who  would  also  qualify
following an upward interest rate adjustment.

         ORIGINATION, PURCHASES AND SALES.   Historically,  all  residential and
commercial real estate loans have been  originated  directly by the Bank through
salaried loan officers. Residential loan originations are generally attributable
to  referrals  from real  estate  brokers  and  builders,  radio and  periodical
advertising,  depositors  and  walk-in  customers.  Commercial  real  estate and
construction  loan  origination have been obtained by direct  solicitation,  and
consumer  loan  origination  by  walk-in  customers  in  response  to the Bank's
advertising,  as well as by direct solicitation.  The Bank has not purchased any
loans in the past five fiscal years. For information regarding loans sold in the
secondary market, see "Subsidiary Activities" on page 13.

         LOAN COMMITMENTS. Conventional loan commitments by the Bank are granted
for periods of 30 days. The total amount of the Bank's  outstanding  commitments
to originate real estate loans at June 30, 2000, was approximately $5.1 million.
It has been the Bank's experience that few commitments expire unfunded.

         LOAN FEES.  In addition to interest  earned on loans,  certain fees are
received for  committing  to and  ultimately  originating  loans.  The Bank also
receives  other fees and  charges  relating  to existing  loans,  which  include
prepayment penalties,  late charges and fees for loan modifications.  Management
believes that these fees and charges do not materially affect operating results.

                                       5
<PAGE>

         NON-PERFORMING ASSETS.  Non-performing assets consist of loans on which
interest is no longer accrued and real estate acquired through foreclosure.  The
Bank does not have any loans greater than 90 days past due still on accrual. All
loans considered  impaired under SFAS 114 are included in non-performing  loans.
Loans are  considered  impaired if full  principal or interest  payments are not
anticipated in accordance  with the contractual  loan terms.  Impaired loans are
carried at the present  value of expected  future cash flows  discounted  at the
loans effective interest rate or at the fair value of the collateral if the loan
is collateral dependent. A portion of the allowance for loan losses is allocated
to impaired loans if the value of such loans is less than the unpaid balance. If
these allocations cause the allowance for loan losses to require increase,  such
increase is reported in the provision  for loan losses.  Loans are reviewed on a
regular basis and normal  collection  procedures are implemented when a borrower
fails to make a required  payment on a loan.  If the  delinquency  on a mortgage
loan exceeds 90 days and is not cured through normal collection procedures or an
acceptable  arrangement is not worked out with the borrower, the Bank institutes
measures to remedy the  default,  including  commencing  a  foreclosure  action.
Consumer loans generally are charged off when a loan is deemed  uncollectible by
management  and any  available  collateral  has  been  disposed  of.  Commercial
business and real estate loan  delinquencies  are handled on an individual basis
by management with the advice of the Bank's legal counsel.  The Bank anticipates
that the increase in  non-performing  real estate loans will continue due to the
growth of the Bank's loan portfolio.

                 Interest  income on loans is  recognized  on the accrual  basis
except for those loans in a nonaccrual of income status. The accrual of interest
on impaired loans is discontinued when management believes,  after consideration
of economic and business  conditions and collection  efforts that the borrowers'
financial  condition  is such that  collection  of  interest is  doubtful.  When
interest  accrual is  discontinued,  interest income is subsequently  recognized
only to the extent cash payments are received.

                 Real estate  acquired by the Bank as a result of foreclosure or
by deed in lieu of  foreclosure  is  classified  as real estate owned until such
time as it is sold.  When such  property is acquired it is recorded at the lower
of the unpaid  principal  balance of the related loan or its fair market  value.
Any write-down of the property is charged to the allowance for loan losses.

The  following  table  sets  forth   information  with  respect  to  the  Bank's
non-performing assets for the periods indicated.

                                                     At June 30,

                                      2000     1999     1998     1997     1996
                                      ----     ----     ----     ----     ----
                                               (Dollars in thousands)

Loans on non-accrual status (1)(2)   $1,562   $2,529   $2,128   $1,550   $1,252
                                     ------   ------   ------   ------   ------
        Total non-performing
        loans                         1,562    2,529    2,128     1,550   1,252

Real estate acquired
   through foreclosure                  -        109      134      184      375
                                     ------   ------   ------    -----   ------
        Total non-performing
        assets                       $1,562   $2,638   $2,262   $1,734   $1,627
                                     ======   ======   ======   ======   ======

Ratios:  Non-performing
          loans to loans             .33%      .63%     .60%      .47%     .41%
         Non-performing
          assets to total assets     .28%      .54%     .55%      .46%     .46%
-------------------------------------------
(1)  Loans on non-accrual status include impaired loans.
(2)  The interest income that would have been earned and
     received on non-accrual loans was not material.

ALLOWANCE  AND  PROVISION  FOR  LOAN LOSSES.  The  allowance  for loan losses is
regularly  evaluated by  management  and  maintained  at a level  believed to be
adequate  to absorb  loan  losses in the  Bank's  lending  portfolios.  Periodic
provisions to the allowance are made as needed.  The amount of the provision for
loan  losses  necessary  to  maintain  an  adequate  allowance  is based upon an
assessment of current economic  conditions,  analysis of periodic  internal loan
reviews, delinquency trends and ratios, changes in the mixture and levels of the
various  categories  of loans,  historical  charge-offs,  recoveries,  and other
information. Management believes, based on information presently available, that
it has adequately provided for loan losses at June 30, 2000. Although management
believes it uses the best  information  available to make allowance  provisions,
future  adjustments,  which could be material,  may be necessary if management's
assumptions differ significantly from the loan portfolio's actual performance.

                                       6

<PAGE>

         The  following  table sets forth an  analysis  of the Bank's  loan loss
experience for the periods indicated.

                                                 Year Ended June 30,

                                      2000     1999     1998     1997     1996
                                      ----     ----     ----     ----     ----
                                               (Dollars in thousands)

Balance at beginning of period      $2,108    $1,853   $1,715   $1,613   $1,662
                                    ------    ------   ------   ------   ------
Loans charged-off:
   Real estate mortgage                 36        42       16       17        0
   Consumer                            147       248      132      114       50
   Commercial                           82         0        0        0       24
                                      ----      ----     ----     ----     ----
Total charge-offs                      265       290      148      131       74
                                      ----      ----     ----     ----     ----
Recoveries:
   Real estate mortgage                  1         5        0        0        1
   Consumer                              8        21       21       33        1
   Commercial                            0         0        0        0       23
                                      ----      ----     ----     ----     ----
Total recoveries                         9        26       21       33       25
                                      ----      ----     ----     ----     ----
Net loans charged-off                  256       264      127       98       49
                                      ----     -----     -----    ----     ----

Acquired reserves                        0       205        0        0        0
Provision for loan losses              400       314      265      200        0
                                    ------    ------   ------   ------   ------
Balance at end of period            $2,252    $2,108   $1,853   $1,715   $1,613
                                    ------    ------   ------   ------   ------
Net charge-offs to average
   loans outstanding                  .058%     .068%    .037%    .031%    .017%
Allowance for loan losses to
    total non-performing assets        144%       80%      85%      99%      99%


         The  following  table is  management's  allocation of the allowance for
loan  losses  by loan  type.  Allowance  funding  and  allocation  is  based  on
management's  current evaluation of risk in each category,  economic conditions,
past loss  experience,  loan volume,  past due history and other factors.  Since
these  factors  are  subject  to  change,  the  allocation  is  not  necessarily
predictive of future portfolio performance.
<TABLE>
<CAPTION>
                                                     At June 30,
                      -------------------------------------------------------------------------

                               2000                     1999                    1998
                               ----                     ----                    ----

                                Percent of                Percent of              Percent of
                                 Loans to                  Loans to                Loans to
                       Amount   Total loans     Amount    Total loans    Amount   Total loans
                       ------   -----------     ------    -----------    ------   -----------
                                                 (Dollars in thousands)
<S>                    <C>       <C>            <C>       <C>            <C>       <C>
Real estate mortgage   $1,411        63%        $1,546         73%       $1,340        72%
Consumer                  603        27            472         22           451        24
Commercial                238        10             90          5            62         4
                       ------    -------        ------     -------       ------    -------

      Total            $2,252    100.00%        $2,108     100.00%       $1,853    100.00%
                       ======    =======        ======     =======       ======    =======
</TABLE>

         There were no material  changes in  estimation  methods or  assumptions
affecting allowance  allocation.  Any reallocation to the allowance is primarily
indicative of changes in loan portfolio mix, not changes in loan  concentrations
or terms.

                                       7

<PAGE>

         Federal regulations require insured  institutions to classify their own
assets on a regular  basis.  In addition,  in connection  with  examinations  of
insured  institutions,  OTS examiners have authority to identify  problem assets
and,  if  appropriate,   classify  them.  The  regulations   provide  for  three
classifications  of asset  categories  --  substandard,  doubtful and loss.  The
regulations also contain a special mention category,  defined as assets which do
not currently  expose an insured  institution to a sufficient  degree of risk to
warrant   classification  but  do  possess  credit   deficiencies  or  potential
weaknesses  deserving   management's  close  attention.   Assets  classified  as
substandard or doubtful require the institution to establish general  allowances
for loan  losses.  If an asset or portion  thereof is  classified  as loss,  the
insured institution must either establish  specified  allowances for loan losses
in the amount of 100% of the portion of the asset classified loss, or charge off
such amount.

         At June 30,  2000,  on the basis of  management's  review of the Bank's
loan portfolio,  the Bank had $1.6 million of assets classified substandard,  no
assets classified as doubtful and $97,000 of assets classified as loss.

INVESTMENT SECURITIES

         Interest on securities  provides the largest source of income for First
Federal after interest on loans,  constituting 8.4% of the total interest income
for fiscal  year 2000.  First  Federal  maintains  its liquid  assets  above the
minimum  requirements imposed by regulation at a level believed adequate to meet
requirements of normal banking  activities and potential savings outflows.  Cash
flow  projections  are  regularly  reviewed and updated to assure that  adequate
liquidity is provided.  As of June 30, 2000,  First  Federal's  liquidity  ratio
(liquid assets as a percentage of deposits and short-term borrowings) was 6.01%.

         First  Federal has the  authority to invest in various  types of liquid
assets,  including  short-term United States Treasury obligations and securities
of various  federal  agencies,  certificates  of deposit at insured  savings and
loans and banks,  bankers'  acceptances,  and federal  funds.  The Bank may also
invest a portion of its assets in certain  commercial  paper and corporate  debt
securities.  First  Federal  is also  authorized  to invest in mutual  funds and
stocks whose assets conform to the investments  that First Federal is authorized
to make directly.  See Note 3 of Notes to Consolidated  Financial Statements for
further information concerning the Bank's investment portfolio.

         As a member of the Federal  Home Loan Bank System,  First  Federal must
maintain  minimum levels of liquid assets  specified by the OTS, which vary from
time to time.  See  "Regulation - Federal Home Loan Bank System."  Liquidity may
increase or decrease  depending upon the  availability  of funds and comparative
yields on investments in relation to return on loans.

         The  following  table  sets  forth  the  carrying  value of the  Bank's
securities portfolio at the dates indicated.  At June 30, 2000, the market value
of the Bank's securities portfolio was $43.2 million.


                                                        At June 30,
                                            -----------------------------------

                                             2000          1999          1998
                                             ----          ----          ----
                                                   (Dollars in thousands)
 Securities available-for-sale:
    Equity securities                      $ 1,105       $ 1,948      $ 1,934
    Obligations of states and political
       subdivisions                            943           988          -
                                           -------       -------      -------

    Total available-for-sale               $ 2,048       $ 2,936      $ 1,934
                                           =======       =======      =======

 Securities held-to-maturity:
    U.S. Treasury and agencies             $41,860       $42,814      $22,693
    Mortgage-backed securities               1,274         1,590        1,946
                                           -------       -------      -------

    Total held-to-maturity                 $43,134       $44,404      $24,639
                                           =======       =======      =======

                                       8

<PAGE>
               The  following   table  sets  forth  the  scheduled   maturities,
amortized cost, fair value and weighted average yields for the Bank's securities
at June 30, 2000.

                                                                        Weighted
                                                 Amortized     Fair     Average
                                                    Cost       Value     Yield*
                                                    ----       -----     ------
                                                      (Dollars in thousands)
   Securities available-for-sale:
      Due after one year through five years       $   75      $    71     4.20
      Due after five years through ten years         821          771     4.41
      Due after ten years                            114          101     4.55
      Equity securities                              365        1,105     3.87
                                                  ------      -------

             Total available-for-sale             $1,375      $ 2,048
                                                  ======      =======

   Securities held-to-maturity:
      Due after one year through five years      $19,878      $19,394     6.43
      Due after five years through ten years      20,982       19,630     6.41
      Due after ten years                          1,000          912     6.75
      Mortgage-backed securities                   1,274        1,258     6.96
                                                  ------      -------

                Total held-to-maturity           $43,134      $41,195
                                                 =======      =======


   *The weighted  average yields are calculated on historical cost on a
    non tax-equivalent basis.


SOURCES OF FUNDS

         GENERAL.   Savings   accounts   and  other  types  of   deposits   have
traditionally  been an  important  source of the Bank's funds for use in lending
and for other general business  purposes.  In addition to deposit accounts,  the
Bank derives funds from loan  repayments,  FHLB advances,  other  borrowings and
operations.  Borrowings  may be used on a  short-term  basis to  compensate  for
reductions in deposits or deposit inflows at less than projected  levels and may
be used on a longer-term basis to support expanded lending activities.

         DEPOSITS. First Federal attracts both short-term and long-term deposits
from the  general  public by  offering  a wide  range of  deposit  accounts  and
interest rates. In recent years the Bank has been required by market  conditions
to rely  increasingly  on  short-term  certificate  accounts  and other  deposit
alternatives  that are more responsive to market  interest rates.  First Federal
offers  statement and passbook  savings  accounts,  NOW  accounts,  money market
accounts and fixed and variable rate certificates with varying maturities. First
Federal also offers tax-deferred  individual  retirement  accounts.  The flow of
deposits is influenced significantly by general economic conditions,  changes in
interest rates and  competition.  The Bank relies  primarily on customer service
and  long-standing  relationships  with  customers  to attract and retain  these
deposits;  however,  market  interest  rates  and  rates  offered  by  competing
financial  institutions  significantly  affect the Bank's ability to attract and
retain deposits.

         As of June 30, 2000,  approximately  31.9% of First Federal's  deposits
consisted of various  savings and demand deposit  accounts from which  customers
are permitted to withdraw funds at any time without penalty.

         Interest earned on savings accounts is paid from the date of deposit to
the date of withdrawal and compounded quarterly. Interest earned on NOW accounts
is paid  from the date of  deposit  to the date of  withdrawal,  compounded  and
credited  monthly.  Interest  rates  paid,  maturity  terms,  service  fees  and
withdrawal penalties are established by First Federal's management on a periodic
basis.

                                       9
<PAGE>

         First  Federal  also  makes  available  to its  depositors  a number of
certificates  of deposit with various terms and interest rates to be competitive
in its market area.  These  certificates  have minimum  deposit  requirements as
well.  The variety of deposit  accounts by First  Federal has permitted it to be
more  competitive  in  obtaining  funds and has allowed it to respond  with more
flexibility  to  disinter  mediation  (the flow of funds  away  from  depository
institutions such as savings  institutions into direct investment  vehicles such
as government  and corporate  securities).  However,  the ability of the Bank to
attract and maintain deposits and its cost of funds have been, and will continue
to be, significantly affected by money market conditions.


         The  following  table sets forth the amount of  deposits as of June 30,
2000 by various interest rate categories.

 Weighted
 Average                                                                Percent
 Interest                                                                 of
   Rate                Category                    Balances (1)        Deposits
   ----                --------                    ------------        --------

    -  %     Non-interest bearing demand accounts     $ 16,822            3.98%
   1.57      NOW demand accounts                        55,949           13.20
   2.90      Savings accounts                           36,484            8.61
   4.06      Money market deposit accounts              25,894            6.11
   5.41      Certificates of deposit                   256,265           60.47
   4.76      Individual Retirement Accounts             32,345            7.63
                                                      --------          ------

                                                      $423,759          100.00%
                                                      ========          =======
  (1) Dollars in thousands.

         The following table indicates at June 30, 2000 the amount of the Bank's
certificates of deposit of $100,000 or more by time remaining until maturity.



                                                       Certificates
     Maturity Period                                    of Deposit
     ---------------                                    ----------
                                                      (In Thousands)

    Three months or less                                  $13,570
    Three through six months                               22,456
    Six through twelve months                              17,213
    Over twelve months                                     34,702
                                                           ------
         Total                                            $87,941
                                                          =======

         The following table sets forth the average  balances and interest rates
based on month-end  balances for various deposit  categories  during the periods
indicated.
<TABLE>
<CAPTION>
                                                    Year Ended June 30,
                           -------------------------------------------------------------------
                                   2000                   1999                   1998
                                   ----                   ----                   ----
                            Average    Average     Average     Average    Average    Average
                            Balance   Rate Paid    Balance    Rate Paid   Balance   Rate Paid
                            -------   ---------    -------    ---------   -------   ---------
                                                  (Dollars in thousands)
<S>                         <C>        <C>        <C>           <C>       <C>        <C>
Non-interest bearing
  demand accounts           $16,896      -  %     $ 14,651        - %     $ 12,289     -  %
Demand deposit and
   money market accounts     78,222     2.39        72,224      2.11        53,595    2.03
Savings deposits             36,115     2.90        38,494      2.56        30,696    2.64
Certificates of deposit     279,941     5.41       266,575      5.50        07,333    5.78
</TABLE>



                                       10
<PAGE>

         BORROWINGS.  Deposits  are  the  primary  source  of  funds  for  First
Federal's  lending  and  investment  activities  and  for its  general  business
purposes.  The  Bank  can  also  use  advances  (borrowings)  from  the  FHLB of
Cincinnati to supplement its supply of lendable funds,  meet deposit  withdrawal
requirements and to extend the term of its  liabilities.  Advances from the FHLB
are  typically  secured  by the  Bank's  stock in the FHLB and a portion  of the
Bank's first mortgage loans. At June 30, 2000 First Federal had $80.3 million in
advances  outstanding  from the FHLB and the capacity to increase its borrowings
an additional $200 million.

         The FHLB of Cincinnati  functions as a central  reserve bank  providing
credit for savings banks and certain other member financial  institutions.  As a
member,  First  Federal  is  required  to own  capital  stock in the FHLB and is
authorized  to apply for  advances on the  security of such stock and certain of
its  home  mortgages  and  other  assets  (principally,   securities  which  are
obligations of, or guaranteed by, the United States) provided certain  standards
related to credit-worthiness have been met.

         The following table sets forth certain information regarding the Bank's
FHLB advances during the periods indicated.

                                                      At June 30,
                                          -------------------------------------

                                          2000           1999            1998
                                          ----           ----            ----
                                                 (Dollars in thousands)

 Average balance outstanding             $52,419        $23,560        $41,990
 Maximum amount outstanding at
    any month-end during the period       80,339         25,894         43,441
 Year end balance                         80,339         25,894         43,249
 Weighted average interest rate:
    At end of year                          6.85%          5.25%          5.39%
    During the year                         5.34%          5.52%          5.68%


                                       11

<PAGE>


AVERAGE BALANCE SHEET

         The  following  table sets  forth  information  relating  to the Bank's
average  balance sheet and reflects the average yield on assets and average cost
of  liabilities  for the periods  indicated.  Dividing  income or expense by the
average  monthly balance of assets or  liabilities,  respectively,  derives such
yields and costs for the periods presented
<TABLE>
<CAPTION>

                                                                           Year Ended June 30,
                                     -----------------------------------------------------------------------------------------------
                                                   2000                            1999                             1998
                                                   ----                            ----                             ----
                                      Average             Average     Average              Average     Average             Average
                                      Balance  Interest  Yield/Cost   Balance   Interest  Yield/Cost   Balance   Interest Yield/Cost
                                      -------  --------  ----------   -------   --------  ----------   -------   -------- ----------
<S>                                <C>          <C>         <C>     <C>         <C>         <C>      <C>          <C>      <C>
ASSETS
Interest earning assets:
   Equity securities                 $ 1,432     $  43      2.99%    $ 2,109     $  28       1.33%    $ 2,492      $  73    2.93%
   State and political subdivision
     securities (1)                      960        67      7.03         992        68       6.85        -            -       -
   U.S. Treasury and agencies         41,507     2,711      6.53      40,506     2,730       6.74      16,475      1,058    6.42
   Mortgage-backed securities          1,403        93      6.61       1,786       124       6.94       2,090        147    7.03
   Loans receivable (2) (3)          437,640    35,317      8.07     386,132    31,896       8.26     343,822     29,339    8.53
   FHLB stock                          3,354       237      7.08       3,082       216       7.01       2,875        207    7.20
   Interest bearing deposits           3,221        97      3.02       8,635       457       5.29       6,689        358    5.35
                                     -------    ------     -----      ------    ------      -----     -------     ------   -----
     Total interest earning assets   489,517    38,565      7.88     443,242    35,519       8.01     374,443     31,182    8.33
Less: Allowance for loan losses       (2,221)                         (2,071)                          (1,725)
Non-interest earning assets           36,383                          37,636                           21,284
                                      ------                          ------                          -------
     Total assets                   $523,679                        $478,807                         $394,002
                                    ========                        ========                         ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
   Savings accounts                  $36,115   $ 1,047      2.90%    $38,494     $ 984       2.56%    $30,696     $  809    2.64%
   NOW and money market
     Accounts                         78,222     1,871      2.39      72,224     1,522       2.11      43,595        887    2.03
   Certificates of deposit and
     other time deposits             279,941    15,155      5.41     266,575    14,674       5.50     207,333     11,980    5.78
   FHLB Advances                      52,419     2,800      5.34      23,560     1,301       5.52      41,990      2,383    5.68
                                      ------     -----      ----      ------     -----       ----      ------      -----    ----
     Total interest bearing          446,697    20,873      4.67     400,853    18,481       4.61     323,614     16,059    4.96
       liabilities
Non-interest bearing liabilities:
   Non-interest bearing deposits      16,896                          14,651                           12,289
   Other liabilities                   6,231                           6,542                            4,697
                                       -----                           -----                            -----
     Total liabilities               469,824                         422,046                          340,600

Stockholders' equity                  53,855                          56,761                           53,402
                                      ------                          ------                         --------
     Total liabilities and
       stockholders' equity         $523,679                        $478,807                         $394,002
                                    ========                        ========                         ========

Net interest income                            $17,692                         $17,038                           $15,123
                                               =======                         =======                           =======
Net interest spread                                         3.21%                            3.40%                          3.37%
                                                            =====                            =====                          =====
Net interest margin                                         3.61%                            3.84%                          4.04%
                                                            =====                            =====                          =====

Ratio of average interest earning
   assets to average interest bearing
   liabilities                                            109.59%                          110.57%                        115.71%
                                                          =======                          =======                        =======
</TABLE>

------------------------------------------------------
(1) Taxable  equivalent yields are calculated  assuming a 34% federal income tax
rate.
(2) Includes loan fees,  immaterial in amount,  in both interest  income and the
calculation of yield on loans.
(3) Calculations  include  non-accruing  loans  in  the average loan amounts
outstanding.

                                       12

<PAGE>

RATE/VOLUME ANALYSIS

The table below sets forth  certain  information  regarding  changes in interest
income and  interest  expense of the Bank for the  periods  indicated.  For each
category   of   interest-earning   assets  and   interest-bearing   liabilities,
information is provided on changes  attributable to (1) changes in rate (changes
in rate  multiplied  by old  volume);  (2)  changes in volume  (change in volume
multiplied  by old  rate);  and  (3)  changes  in  rate-volume  (change  in rate
multiplied  by change in volume).  Changes in  rate-volume  are  proportionately
allocated between rate and volume variance.
<TABLE>
<CAPTION>

                                                                     Year Ended June 30,
                                  --------------------------------------------------------------------------------------

                                        2000 vs. 1999                 1999 vs. 1998                  1998 vs. 1997
                                     Increase (decrease)           Increase (decrease)            Increase (decrease)
                                      Due to change in               Due to change in              Due to change in

                                                       Net                          Net                            Net
                                  Rate     Volume     Change    Rate      Volume   Change     Rate     Volume     Change
                                  ----     ------     ------    ----      ------   ------     ----     ------     ------
                                                                  (Dollars in Thousands)
<S>                               <C>      <C>       <C>        <C>      <C>       <C>        <C>      <C>       <C>
Interest income:
  Loans                           $(713)   $4,134    $3,421     $(885)   $3,442    $2,557     $159     $2,288    $2,447
  Equity securities                  20        (5)       15       (35)      (10)      (45)    (104)      (135)     (239)

  State and political subdivision
   securities                         4        (5)       (1)       34        34        68        -         -          -
  U.S. Treasury and agencies        (92)       73       (19)       55     1,617     1,672       (5)        87        82
  Mortgage-backed securities         (6)      (25)      (31)       (2)      (21)      (23)      (1)       (31)      (32)
  FHLB stock                          2        19        21        (5)       14         9        5         14        19
  Interest bearing deposits        (146)     (214)     (360)       (4)      103        99       45         78       123
                                  -----    ------    ------     -----    ------    ------      ---     ------    ------
  Total interest earning assets   $(922)   $4,014    $3,092     $(842)   $5,179    $4,337      $99     $2,301    $2,400
                                  =====    ======    ======     =====    ======    ======      ===     ======    ======

Interest expense:
  Savings accounts                $ 118    $ (55)    $   63     $ (24)     $199    $  175       $7     $  (14)   $   (7)
  NOW and money market accounts     215      134        349        36       599       635      (77)        48       (29)
  Certificates of deposit and other
    time deposits                  (233)     714        481      (550)    3,244     2,694      503      1,136     1,639
  FHLB advances                     (41)   1,540      1,499       (65)   (1,017)   (1,082)      52         29        81
                                   ----    -----      -----      ----    ------    ------      ---      -----     -----
  Total interest bearing           $ 59   $2,333     $2,392     $(603)   $3,025    $2,422     $485     $1,199    $1,684
   liabilities                     ====   ======     ======     =====    ======    ======     ====     ======    ======
</TABLE>


SUBSIDIARY ACTIVITIES

         As a federally  chartered savings bank, the Bank is permitted to invest
an  amount  equal  to 2% of  its  assets  in  subsidiaries  with  an  additional
investment of 1% of assets where such  investment  serves  primarily  community,
intercity, and community development purposes.  Under such limitations,  on June
30, 2000, the Bank was authorized to invest up to approximately $16.8 million in
the  stock  of or loans  to  subsidiaries.  In  addition,  institutions  meeting
regulatory  capital  requirements,  which the Bank does, may invest up to 50% of
their  regulatory  capital in conforming first mortgage loans to subsidiaries in
which they own 10% or more of the capital stock. As of June 30, 2000, the Bank's
investment in and loans to subsidiaries was approximately $428,000 consisting of
investments in common stock and earnings.

         In 1978,  the Bank formed First Service  Corporation  of  Elizabethtown
("First  Service").  First  Service  acts as a broker for the purpose of selling
mortgage life,  credit life and accident and disability  insurance to the Bank's
customers.  In March,  1998 First  Service  entered into a contract  with Robert
Thomas Securities,  Inc. to provide investment  services to the Bank's customers
in the area of tax  deferred  annuities,  government  securities  and stocks and
bonds. First Service employs five full-time employees to perform these services.
This investment function operates under licenses held by First Service.  The net
earnings of First Service were $95,000 during fiscal year 2000.

                                       13

<PAGE>

             In July 1999, the Bank formed First Heartland  Mortgage  Company of
Elizabethtown  ("First  Heartland")  through which the secondary  market lending
department  makes  qualified  VA and FHA  loans for sale to  investors,  thereby
providing necessary liquidity to the Bank and needed loan products to the Bank's
customers.  After  a full  year  of  operation,  the  new  subsidiary  has  been
moderately  successful in assisting  other banks that for whatever reason do not
have access to the  secondary  mortgage  loan market.  The Bank has continued to
experience  good  growth  in the level of  mortgages  being  processed  by First
Heartland.  As of June 30, 2000,  First  Heartland  originated  $23.6 million in
loans  and  sold  $22.9  million  to  investors.   Conventional  mortgage  loans
originated by the Bank do not meet certain  guidelines;  therefore,  they do not
qualify for sale on the secondary market.

         Savings   associations,   in   determining   compliance   with  capital
requirements,  are required to deduct from capital an  increasing  percentage of
their  debt and equity  investments  in, and  extensions  of credit to,  service
corporations  in  activities  not  permissible  for  a  national  bank.  Certain
activities of the Bank's service  corporation  are not  permissible for national
banks.  Accordingly,  on June 30, 2000, the Bank deducted 100% of its investment
in  its  service   corporation   from  its  core  and  tangible   capital.   See
"Regulation--Regulatory  Capital Requirements." Because the Bank's investment in
its subsidiary is  insignificant,  management does not believe that the required
deductions  from  capital will have a material  effect on the Bank's  regulatory
capital position.

COMPETITION

         First Federal  experiences  substantial  competition both in attracting
and  retaining  deposits and in the making of mortgage  and other loans.  Direct
competition  for  deposits  comes from other  savings  institutions,  commercial
banks,  and  credit  unions  located  in  north-central   Kentucky.   Additional
significant  competition  for deposits  comes from money market mutual funds and
corporate and government debt securities.

         The primary  factors in competing for loans are interest rates and loan
origination  fees and the range of  services  offered by the  various  financial
institutions.  Competition  for  origination of real estate loans normally comes
from other savings institutions,  commercial banks,  mortgage bankers,  mortgage
brokers, and insurance  companies.  First Federal is able to compete effectively
in its primary market area.

         First Federal has offices in nine cities in six contiguous counties. In
addition to the financial  institutions,  which have offices in these  counties,
First Federal competes with several commercial banks and savings institutions in
surrounding counties, many of which have assets substantially greater than First
Federal.  These competitors attempt to gain market share through their financial
products mix,  pricing  strategies  and banking center  locations.  In addition,
Kentucky's  interstate  banking  statute,  which  permits banks in all states to
enter the Kentucky market if they have reciprocal  interstate  banking statutes,
has  further  increased  competition  for  the  Bank.  It  is  anticipated  that
competition from both bank and non-bank  entities will continue to remain strong
in the near future.

EMPLOYEES

         As of June  30,  2000,  the Bank had 178  employees  of which  161 were
full-time  and 17  part-time.  None of the  Bank's  employees  are  subject to a
collective  bargaining  agreement  and the Bank  believes  that it  enjoys  good
relations with its personnel.

REGULATION

         GENERAL. As a federally chartered savings association, First Federal is
subject to extensive  regulation  by the OTS. The lending  activities  and other
investments   of  the  Bank  must  comply  with   various   federal   regulatory
requirements. The OTS periodically examines the Bank for compliance with various
regulatory  requirements  and the FDIC also has the authority to conduct special
examinations  of  institutions  insured by the SAIF.  The Bank must file reports
with the OTS describing its activities and financial condition. The Bank is also
subject to certain reserve requirements promulgated by the Board of Governors of
the Federal Reserve System (the "Federal Reserve  Board").  This supervision and
regulation is intended primarily for the protection of depositors.  As a savings
and loan holding  company,  the  Corporation is subject to the OTS'  regulation,
examination, supervision and reporting requirements.

         FEDERAL HOME LOAN BANK SYSTEM. The Bank is a member of the FHLB System,
which consists of 12 regional Federal Home Loan Banks subject to supervision and
regulation by the Federal  Housing  Finance  Board.  The Federal Home Loan Banks
provide a Central Credit facility primarily for member institutions. As a member
of the FHLB, the Bank is required to acquire and hold shares of capital stock in
the FHLB in an amount at least equal to 1% of the aggregate  unpaid principal of
its home mortgage loans, home purchase contracts, and similar obligations at the
beginning  of each year,  or 1/20 of its  advances  (borrowings)  from the FHLB,
whichever is greater. First Federal was in compliance with this requirement with
investment in the FHLB stock at June 30, 2000, of $4.1 million.

                                       14
<PAGE>

         The  FHLB  serves  as  a  reserve  or  central   bank  for  its  member
institutions  within its assigned  region.  It is funded primarily from proceeds
derived from the sale of consolidated  obligations of the FHLB System.  It makes
advances to members in accordance  with policies and  procedures  established by
the FHFB and the Board of  Directors  of the FHLB.  As of June 30,  2000,  First
Federal had $80.3 million in advances outstanding from the FHLB. See "Business -
Sources of Funds - Borrowings."

         LIQUIDITY REQUIREMENTS.  As a member of the FHLB System,  the Bank has
been  required to  maintain  average  daily  balances  of liquid  assets  (cash,
deposits  maintained  pursuant to Federal Reserve Board  requirements,  time and
savings  deposits in certain  institutions,  obligations of states and political
subdivisions thereof,  shares in mutual funds with certain restricted investment
policies,  highly rated corporate debt, and mortgage loans and  mortgage-related
securities with less than one year to maturity or subject to purchase within one
year) equal to the monthly  average of not less than a specified  percentage  of
its net withdrawable  savings deposits plus short-term  borrowings.  The OTS may
change this liquidity  requirement,  which is currently 4%, from time to time to
any amount within the range of 4% to 10% depending upon economic  conditions and
the savings flows of member  institutions.  Member  institutions  have also been
required to maintain  average daily  balances of  short-term  liquid assets at a
specified  percentage  (currently  1%) of the  total of their  net  withdrawable
savings accounts and borrowings payable in one year or less.  Monetary penalties
may be imposed for failure to meet  liquidity  requirements.  The Bank's average
liquidity ratio for June 2000 was 6.01%, which exceeded the applicable liquidity
requirements.

         QUALIFIED THRIFT  LENDER  TEST.  The Bank is  currently  subject to OTS
regulations,  which use the qualified  thrift  lender  ("QTL") test to determine
eligibility  for Federal Home Loan Bank advances and for certain other purposes.
To qualify as a QTL, a savings  association  must  maintain  at least 65% of its
"portfolio" assets in qualified thrift investments. Portfolio assets are defined
as total assets less goodwill and other intangibles,  property used by a savings
association in its business and liquidity investments in an amount not exceeding
20% of total assets.  Qualified thrift investments consist of: (i) loans, equity
positions,  or  securities  related  to  domestic,  residential  real  estate or
manufactured housing, credit card and education loans; (ii) property used by the
savings association in the conduct of its business; and (iii) stock in a Federal
Home Loan Bank or the Federal National Mortgage  Association or the Federal Home
Loan  Mortgage  Corporation.  Qualified  thrift  investments  may  also  include
liquidity investments and 50% of the dollar amount of residential mortgage loans
subject  to sale  under  certain  conditions.  To  qualify  as a QTL,  a savings
association  must maintain its status as a QTL on a monthly basis in nine out of
every 12 months.  Failure to qualify as a QTL results in a number of  sanctions,
including the imposition of certain operating  restrictions  imposed on national
banks and a restriction on obtaining  additional  advances from the Federal Home
Loan Bank  System.  Upon  failure to  qualify as a QTL for two years,  a savings
association must convert to a commercial  bank. At June 30, 2000,  approximately
93.97% of the Bank's assets were invested in qualified thrift investments.

         LENDING LIMITS.  Under  regulations of the OTS, loans and extensions of
credit  to a person  outstanding  at one time and not  fully  secured  shall not
exceed 15% of the unimpaired capital, surplus and the loan loss allowance of the
savings  association.  Loans and  extensions  of credit fully secured by readily
marketable  collateral (as defined) may comprise an additional 10% of unimpaired
capital and surplus.  At June 30, 2000,  the Bank complied  with its  regulatory
lending limits.

         The  aggregate  amount of loans,  which a federally  chartered  savings
association may make, on the security of liens on non-residential  real property
may not exceed 400% of the institution's capital, though the Director of OTS has
the authority to permit savings associations to exceed the 400% of capital limit
in certain circumstances.

         REGULATORY CAPITAL REQUIREMENTS.     OTS  regulations  require  savings
associations  to satisfy three  different  capital  requirements.  Specifically,
savings  associations  must  maintain  a 3% Tier 1 leverage  ratio,  a 4% Tier 1
capital ratio and an 8% risk-based  capital  standard.  OTS  regulations  impose
certain  restrictions  on  savings  associations  that  have a total  risk-based
capital ratio that is less than 8.0%, a ratio of Tier 1 capital to risk-weighted
assets of less than 4.0% or a ratio of Tier 1 capital to adjusted  total  assets
of less than 4.0% (or 3.0% if the institution is rated composite 1 under the OTS
examination  rating  system).  As of June 30, 2000,  the Bank's  actual  capital
percentages  for Tier 1 leverage of 7.7%,  Tier 1 capital of 10.8%,  and current
risk-based capital of 11.4%, significantly exceed the regulatory requirement for
each  category.   For  additional  information  see  Note  9  of  the  Notes  to
Consolidated Financial Statements in the Annual Report.

                                       15
<PAGE>

         For purposes of the OTS's regulatory capital regulations,  core capital
is  defined  as  common  stockholders'  equity  (including  retained  earnings),
noncumulative perpetual preferred stock and related surplus,  minority interests
in  the   equity   accounts   of  fully   consolidated   subsidiaries,   certain
nonwithdrawable  accounts  and  pledged  deposits  and  "qualifying  supervisory
goodwill."  Core  capital is  generally  reduced  by the  amount of the  savings
association's  intangible assets for which no market exists.  Limited exceptions
to the  deduction  of  intangible  assets are provided  for  purchased  mortgage
servicing rights and qualifying supervisory goodwill held by an eligible savings
association.

         Adjusted  total  assets  are a savings  association's  total  assets as
determined under generally accepted accounting principles,  adjusted for certain
goodwill  amounts,  and  increased  by a pro  rata  portion  of  the  assets  of
subsidiaries  in which the savings  association  holds a minority  interest  and
which are not  engaged in  activities  for which the capital  rules  require the
savings  association to net its debt and equity investments  against capital, as
well as a pro rata portion of the assets of other subsidiaries for which netting
is not fully  required  under the  phase-in  rules.  Adjusted  total  assets are
reduced  by the  amount of assets  that have been  deducted  from  capital,  the
portion of savings association's investments in subsidiaries that must be netted
against  capital  under the capital  rules and, for purposes of the core capital
requirement, qualifying supervisory goodwill.

         In determining  compliance with the risk-based capital  requirement,  a
savings  association  is  allowed to use both Tier 1 capital  and  supplementary
capital  provided the amount of  supplementary  capital used does not exceed the
savings  association's  Tier 1  capital.  Supplementary  capital  is  defined to
include  certain  preferred stock issues,  nonwithdrawable  accounts and pledged
deposits that do not qualify as Tier 1 capital;  certain  approved  subordinated
debt,   certain  other  capital   instruments  and  a  portion  of  the  savings
association's  general loss allowances.  Total Tier 1 and supplementary  capital
are reduced by an amount equal to the savings  association's  high loan-to-value
ratio  land  loans and  non-residential  construction  loans  and the  amount of
capital instruments held by other depository institutions pursuant to reciprocal
arrangements as well as by an increasing percentage of the savings association's
equity investments.

         The risk-based  capital  requirement is measured against  risk-weighted
assets, which equals the sum of each asset and the  credit-equivalent  amount of
each  off-balance  sheet item after being multiplied by an assigned risk weight.
Under the OTS risk-weighted  system, one-to four-family first mortgages not more
than 90 days past due with  loan-to-value  ratios  under 80% are assigned a risk
weight  of  50%.   Consumer   loans  are   assigned  a  risk   weight  of  100%.
Mortgage-backed  securities  issued,  or fully  guaranteed  as to principal  and
interest,  by the FNMA or FHLMC are  assigned a 20% risk  weight.  Cash and U.S.
Government securities backed by the full faith and credit of the U.S. Government
are  given  a 0%  risk  weight.  The  risk-based  capital  requirement  is 8% of
risk-weighted assets.

         In  determining  compliance  with capital  standards,  all of a savings
association's  investments  in, and  extensions  of credit  to,  any  subsidiary
engaged  in  activities  not  permissible  for a  national  bank  are also to be
deducted  from the  savings  association's  capital.  Certain  subsidiaries  are
exempted from this treatment,  including any subsidiary engaged in impermissible
activities  solely  as agent  for its  customers  (unless  the  FDIC  determined
otherwise),  subsidiaries  engaged  solely in mortgage  banking,  and depository
institution subsidiaries acquired prior to May 1, 1989. In addition, the capital
deduction is not applied to federal savings  associations  existing as of August
9, 1989 that were either chartered as a state savings bank or state  cooperative
bank prior to October 10, 1982 or that acquired their principal assets from such
an  association.  The  required  reduction  of capital for this purpose is being
phased in over a period of  approximately  five  years.  At June 30,  2000,  the
Bank's  investment  in First  Service,  a wholly  owned  subsidiary  of the Bank
engaged in activities  which are not permitted for a national bank,  amounted to
$414,000.  Accordingly,  on  June  30,  2000,  the  Bank  deducted  100% of this
investment from its core and tangible capital.

         The OTS risk-based capital  requirements  require savings  institutions
with more than a "normal"  level of interest  rate risk to  maintain  additional
total capital. A savings  institution's  interest rate risk is measured in terms
of the  sensitivity of its "net portfolio  value" to changes in interest  rates.
Net portfolio value is defined, generally, as the present value of expected cash
inflows from existing  assets and  off-balance  sheet contracts less the present
value of expected cash outflows from existing liabilities. A savings institution
is  considered  to have a "normal"  level of interest  rate risk exposure if the
decline in its net portfolio  value after an immediate 200 basis point  increase
or decrease in market interest rates (whichever  results in the greater decline)
is less than two percent of the current estimated  economic value of its assets.
A savings  institution with a greater than normal interest rate risk is required
to deduct from total capital, for purposes of calculating its risk-based capital
requirement,  an amount (the "interest rate risk  component")  equal to one-half
the difference  between the  institution's  measured  interest rate risk and the
normal level of interest  rate risk,  multiplied  by the  economic  value of its
total assets.

                                       16
<PAGE>

         The OTS will calculate the sensitivity of a savings  institution's  net
portfolio value ("NPV") based on data submitted by the institution in a schedule
to its  quarterly  Thrift  Financial  Report  and using the  interest  rate risk
measurement  model  adopted  by the OTS.  The amount of the  interest  rate risk
component,  if  any,  for any  quarter  is  based  on the  institution's  Thrift
Financial Report filed three quarters earlier.  The Bank does not have more than
a normal  level of interest  rate risk under the new rule and is not required to
increase its total capital as a result of the rule.

         Presented  below  as of June  30,  2000 is an  analysis  of the  Bank's
interest rate risk ("IRR") as measured by changes in NPV for  instantaneous  and
sustained parallel shifts of 100 basis points in market interest rates.

                                As of June 30, 2000


                  Net Portfolio Value           NPV as % of PV of Assets
                   ------------------           ------------------------

 Change
In Rates    $ Amount    $ Change    % Change    NPV Ratio       Change
--------    --------    --------    --------    ---------       ------
  +300 bp     23,235    (31,124)        (57)         4.42     (527 bp)
  +200 bp     33,476    (20,883)        (38)         6.23     (346 bp)
  +100 bp     44,042    (10,317)        (19)         8.02     (167 bp)
     0 bp     54,359                                 9.70
  -100 bp     63,215       8,856          16        11.08       138 bp
  -200 bp     69,322      14,963          28        11.99       230 bp
  -300 bp     75,348      20,989          39        12.88       318 bp


         While  the  Bank  complies  with  its  currently   applicable   capital
requirements  and  expects to  continue  to comply  with the  requirements,  any
failure to comply with the capital  requirements  in the future  would result in
severe  penalties.   In  addition  to  requiring  generally  applicable  capital
standards  for  savings  associations,   applicable  regulations  authorize  the
Director  of OTS to  establish  the  minimum  level  of  capital  for a  savings
institution at such amount or at such ratio of capital-to-assets as the Director
determines to be necessary or appropriate  for such  institution in light of the
particular  circumstances of the institution.  The Director of OTS may treat the
failure of any savings institution to maintain capital at or above such level as
an unsafe or unsound  practice and may issue a directive  requiring  any savings
institution,  which  fails to maintain  capital at or above the  minimum  level,
required by the Director to submit and adhere to a plan for increasing  capital.
Such an order may be enforced in the same manner as an order issued by the FDIC.

         The OTS staff policies  specify that savings  institutions  failing any
one of their minimum  regulatory  capital  requirements  may not increase  their
total  assets  during any quarter in excess of an amount  equal to net  interest
credited  during the  quarter.  Under  these  policies,  institutions  that have
submitted  capital plans that are rejected by the District Director or that have
had capital plans  approved but do not meet the targets or  requirements  of the
capital  plan may not make any new loans or  investments  except  with the prior
written  approval of the District  Director.  Such approval will only be granted
when the  proposed  loan or  investment  is  reasonable  in the  context  of the
institution's operations and does not significantly increase the risk profile of
the savings institution.

         The  Director  of  OTS  must  restrict  the  asset  growth  of  savings
associations  not  in  regulatory  capital  compliance,  subject  to  a  limited
exception  for growth not  exceeding  interest  credited.  In addition,  savings
associations  not in full  compliance  with  applicable  capital  standards  are
subject to a capital directive,  which may include such restrictions,  including
restrictions  on the  payment  of  dividends  and on  compensation,  as,  deemed
appropriate  by the Director of OTS. The Director of OTS is directed to treat as
an unsafe and unsound practice any material failure by a savings  association to
comply with a capital plan or capital  directive.  The  sanctions  and penalties
that could be imposed range from  restrictions on branching or on the activities
of the institution,  to restrictions on the ability to obtain FHLB advances,  to
termination of insurance of accounts following appropriate  proceedings,  to the
appointment of a conservator or receiver.

PROMPT CORRECTIVE REGULATORY ACTION

         Under the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"),   the  federal  banking  regulators  are  required  to  take  prompt
corrective action if an insured depository  institution fails to satisfy certain
minimum  capital  requirements.  All  institutions,  regardless of their capital
levels,  are  restricted  from  making any  capital  distribution  or paying any
management fees if the institution  would thereafter fail to satisfy the minimum
levels for any of its capital  requirements.  An institution  that fails to meet
the  minimum  level  for any  relevant  capital  measure  (an  "undercapitalized

                                       17
<PAGE>

institution")  may be: (i) subject to increased  monitoring  by the  appropriate
federal  banking  regulator;  (ii)  required  to  submit an  acceptable  capital
restoration plan within 45 days; (iii) subject to asset growth limits;  and (iv)
required to obtain prior regulatory approval for acquisitions, branching and new
lines of businesses.  The capital  restoration  plan must include a guarantee by
the institution's holding company that the institution will comply with the plan
until  it has been  adequately  capitalized  on  average  for  four  consecutive
quarters, under which the holding company would be liable up to the lesser of 5%
of the  institution's  total  assets  or  the  amount  necessary  to  bring  the
institution into capital  compliance as of the date it failed to comply with its
capital  restoration plan. A "significantly  undercapitalized"  institution,  as
well as any  undercapitalized  institution  that did not  submit  an  acceptable
capital   restoration   plan,   may  be  subject  to   regulatory   demands  for
recapitalization,  broader  application of  restrictions  on  transactions  with
affiliates,  limitations  on interest  rates paid on deposits,  asset growth and
other  activities,   possible   replacement  of  directors  and  officers,   and
restrictions on capital  distributions  by any bank holding company  controlling
the institution.  Any company controlling the institution could also be required
to divest the  institution or the  institution  could also be required to divest
subsidiaries.  The senior executive officers of a significantly undercapitalized
institution may not receive  bonuses or increases in compensation  without prior
approval and the  institution is prohibited from making payments of principal or
interest on its  subordinated  debt. In their  discretion,  the federal  banking
regulators  may also  impose  the  foregoing  sanctions  on an  undercapitalized
institution if the regulators determine that such actions are necessary to carry
out the purposes of the prompt corrective action provisions. If an institution's
ratio of  tangible  capital to total  assets  falls  below a  "critical  capital
level,"  the  institution  will be subject to  conservatorship  or  receivership
within 90 days unless periodic  determinations  are made that  forbearance  from
such action would better protect the deposit insurance fund. Unless  appropriate
findings and certifications are made by the appropriate  federal bank regulatory
agencies,   a  critically   undercapitalized   institution  must  be  placed  in
receivership  if it remains  critically  undercapitalized  on average during the
calendar  quarter  beginning  270  days  after  the  date it  became  critically
undercapitalized.  If a savings  association  is in compliance  with an approved
capital  plan on the  date of  enactment  of  FDICIA,  however,  it will  not be
required  to  submit a capital  restoration  plan if it is  undercapitalized  or
become subject to the statutory prompt corrective  action provisions  applicable
to significantly and critically  undercapitalized  institutions prior to July 1,
1995.

         Under FDICIA,  regulations  implementing the prompt  corrective  action
provisions  of a depository  institution's  capital  adequacy is measured on the
basis of the  institution's  total  risk-based  capital  ratio (the ratio of its
total capital to  risk-weighted  assets),  Tier 1 risk-based  capital ratio (the
ratio of its core capital to risk-weighted assets) and leverage ratio (the ratio
of its core capital to adjusted total assets). Under the regulations,  a savings
association  that is not  subject  to an order or written  directive  to meet or
maintain a specific  capital level will be deemed "well  capitalized" if it also
has:  (i) a total  risk-based  capital  ratio of 10% or  greater;  (ii) a Tier 1
risk-based capital ratio of 6.0% or greater;  and (iii) a leverage ratio of 5.0%
or  greater.  An  "adequately  capitalized"  savings  association  is a  savings
association that does not meet the definition of well capitalized and has: (i) a
total  risk-based  capital  ratio  of 8.0%  or  greater;  (ii) a Tier 1  capital
risk-based  ratio of 4.0% or  greater;  and  (iii) a  leverage  ratio of 4.0% or
greater (or 3.0% or greater if the  savings  association  has a  composite  of 1
MACRO rating). An  "undercapitalized  institution" is a savings association that
has (i) a total  risk-based  capital  ratio  less  than  8.0%;  or (ii) a Tier 1
risk-based  capital ratio of less than 4.0%;  or (iii) a leverage  ratio of less
than  4.0%  (or 3.0% if the  association  has a  composite  1 MACRO  rating).  A
"significantly undercapitalized" institution is defined as a savings association
that has: (i) a total risk-based capital ratio of less than 6.0%; or (ii) a Tier
1 risk-based  capital ratio of less than 3.0%; or (iii) a leverage ratio of less
than 3.0%. A  "critically  undercapitalized"  savings  association  defined as a
savings  association  that has a ratio of core  capital to total  assets of less
than 2.0%.  The OTS may  reclassify a well  capitalized  savings  association as
adequately   capitalized   and  may  require  an   adequately   capitalized   or
undercapitalized  association to comply with the supervisory  actions applicable
to  associations in the next lower  opportunity for a hearing,  that the savings
association  is in an unsafe or unsound  condition or that the  association  has
received and not corrected a less-than-satisfactory  rating for any MACRO rating
category.  First  Federal  is  classified  as "well  capitalized"  under the new
regulations.

                                       18

<PAGE>

DEPOSIT INSURANCE

         Under FDICIA,  the FDIC has established a risk-based  assessment system
for insured depository  institutions.  Under the system, the assessment rate for
an insured depository  institution depends on the assessment risk classification
assigned  to the  institution  by the  FDIC,  which  will be  determined  by the
institution's  capital  level  and  supervisory  evaluations.  Institutions  are
assigned  to  one  of  three  capital  groups;   well  capitalized,   adequately
capitalized  or  undercapitalized,  based on the data reported to regulators for
date  closest to the last day of the seventh  month  preceding  the  semi-annual
assessment period. Well-capitalized institutions are institutions satisfying the
following capital ratio standards;  (i) total risk-based  capital ratio of 10.0%
or greater;  (ii) Tier 1 risk-based capital ratio of 6.0% or greater;  and (iii)
Tier 1 leverage ratio of 5.0% or greater.  Adequately  capitalized  institutions
are   institutions   that  do  not  meet  the  standards  for  well  capitalized
institutions but which satisfy the following capital ratio standards:  (i) total
risk-based  capital  ratio of 8.0% or greater;  (ii) Tier 1  risk-based  capital
ratio of 4.0% or  greater;  and (iii) Tier 1 leverage  ratio of 4.0% or greater.

Undercapitalized  institutions  consist of  institutions  that do not qualify as
either  "well  capitalized"  or  "adequately  capitalized."  Within each capital
group,  institutions  are assigned to one of the three subgroups on the basis of
supervisory  evaluations by the institution's  primary supervisory authority and
such  other   information  as  the  FDIC   determines  to  be  relevant  to  the
institution's  financial  condition and the risk posed to the deposit  insurance
fund.  Subgroup A consists of  financially  sound  institutions  with only a few
minor   weaknesses.   Subgroup  B  consists  of  institutions  that  demonstrate
weaknesses,  which, if not corrected,  could result in significant deterioration
of the fund.  Subgroup  C  consists  of  institutions  that  pose a  substantial
probability of loss to the deposit  insurance fund unless  effective  corrective
action is taken.

FEDERAL RESERVE SYSTEM

         Pursuant  to  regulations  of  the  Federal  Reserve  Board,  a  thrift
institution  must maintain average daily reserves equal to 3% on the first $51.9
million of transaction accounts,  plus 10% on the remainder.  This percentage is
subject to adjustment by the Federal Reserve Board.  Because  required  reserves
must be  maintained  in the  form of  vault  cash or in a  non-interest  bearing
account at a Federal  Reserve Bank, the effect of the reserve  requirement is to
reduce the amount of the institution's  interest-earning  assets. As of June 30,
2000, the Bank met its reserve requirements.

         SAVINGS AND LOAN HOLDING COMPANY REGULATIONS.    The  Corporation  is a
savings and loan  holding  company  within the meaning of the Home  Owners' Loan
Act, as amended.  As such, it is  registered  with the OTS and is subject to OTS
regulations,   examinations,   supervision  and  reporting  requirements.  As  a
subsidiary  of a savings and loan holding  company,  First Federal is subject to
certain  restrictions  in its  dealings  with  the  Corporation  and  affiliates
thereof.

         The Home  Owners' Loan Act, as amended,  generally  prohibits a savings
and loan holding  company,  without prior  approval of the Director of OTS, from
(i)  acquiring  control of any other  savings  institution  or savings  and loan
holding company or controlling the assets thereof or (ii) acquiring or retaining
more than 5% of the voting shares of a savings  institution  or holding  company
thereof which is not a subsidiary.  Additionally, under certain circumstances, a
savings and loan holding  company is permitted to acquire,  with the approval of
the  Director  of OTS,  up to 15% of  previously  unissued  voting  shares of an
under-capitalized  savings association for cash without that savings association
being deemed  controlled by the holding company.  Except with the prior approval
of the  Director of OTS,  no  director or officer of a savings and loan  holding
company or person owning or  controlling  by proxy or otherwise more than 25% of
such company's stock may also acquire control of any savings institution,  other
than a subsidiary institution or any other savings and loan holding company.

         The  Bank  Holding  Company  Act of 1956  specifically  authorizes  the
Federal Reserve Board and the Director of the OTS to approve an application by a
bank holding company to acquire control of any savings institution.  Pursuant to
rules promulgated by the Federal Reserve Board, owning, controlling or operating
a savings institution is a permissible  activity for bank holding companies,  if
the savings  institution  engages only in deposit-taking  activities and lending
and other  activities that are permissible  for the bank holding  companies.  In
approving  such as  application,  the Federal  Reserve  Board may not impose any
restriction  on  transaction  between  the savings  institution  and its holding
company  affiliates  except as required  by Sections  23A and 23B of the Federal
Reserve Act.

         A bank holding company that controls a savings institution may merge or
consolidate  the assets and  liabilities  of the savings  institution  with,  or
transfer assets and liabilities  to, any subsidiary  bank,  which is a member of
the BIF with the  approval of the  appropriate  federal  banking  agency and the
Federal  Reserve  Board.  The resulting bank will be required to continue to pay
assessments to the SAIF at the rates prescribed for SAIF members on the deposits
attributable to the merged savings institution plus an annual growth increment.

                                       19
<PAGE>

         Transactions   between  savings  associations  and  any  affiliate  are
governed by Sections  23A and 23B of the Federal  Reserve Act. An affiliate of a
savings association is any company or entity,  which controls,  is controlled by
or is under common control with the savings  association.  In a holding  company
context,  the  parent  holding  company  of a savings  association  (such as the
Corporation)  and any companies,  which are  controlled,  by such parent holding
company are affiliates of the savings association.  Generally,  Sections 23A and
23B (i) limit the extent to which the savings  institution  or its  subsidiaries
may engage in "covered  transactions"  with any one affiliate to an amount equal
to 10% of such institution's capital stock and surplus, and contain an aggregate
limit on all such  transactions with all affiliates to an amount equal to 20% of
such capital stock and surplus and (ii) require that all such transactions be on
terms  substantially  the same, or at least as favorable,  to the institution or
subsidiary as those provided to a non-affiliate.  The term "covered transaction"
includes the making of loans,  purchase of assets,  issuance of a guarantee  and
similar  other  types  of  transactions.   Additionally,   in  addition  to  the
restrictions  imposed by Sections  23A and 23B, no savings  association  may (i)
loan or otherwise extend credit to an affiliate,  except for any affiliate which
engages only in activities which are permissible for bank holding companies,  or
(ii)  purchase  or invest in any  stocks,  bonds,  debentures,  notes or similar
obligations of any affiliate,  except for affiliates  which are  subsidiaries of
the savings association.

         Savings associations are also subject to the restrictions  contained in
Section  22 (h) of the  Federal  Reserve  Act on  loans to  executive  officers,
directors  and  principal  shareholders.  Under  Section  22  (h),  loans  to an
executive officer and to a greater than 10% shareholder of a savings association
(18% in the case of  institutions  located  in an area with less than  30,000 in
population),  and certain affiliated entities of either, may not exceed together
with all other  outstanding  loans to such person and  affiliated  entities  the
association's  loan to one borrower limit as  established  by FIRREA  (generally
equal to 15% of the  institution's  unimpaired  capital and  surplus,  for loans
fully secured by certain readily marketable collateral, an additional 10% of the
institution's  unimpaired  capital and surplus).  Section  22(h) also  prohibits
loans,  above amounts  prescribed by the appropriate  federal banking agency, to
directors,  executive  officers  and greater  than 10%  shareholders  of savings
association,  and their respective  affiliates,  unless such loan is approved in
advance by a majority  of the board of  directors  of the  association  with any
"interested" director not participating in the voting. The Federal Reserve Board
has prescribed the loan amount (which  includes all other  outstanding  loans to
such person), as to which such prior board of director approval if required,  as
being the  greater of $25,000 or 5% of capital  and  surplus  (up to  $500,000).
Further, the Federal Reserve Board pursuant to Section 22(h) requires that loans
to directors,  executive  officers and principal  shareholders  be made on terms
substantially the same as offered in comparable transactions to other persons.

         The Board of Directors of the Corporation  presently intends to operate
the  Corporation  as a  unitary  savings  and loan  holding  company.  There are
generally  no  restrictions  on the  activities  of a unitary  savings  and loan
company.  However,  if the director of OTS  determines  that there is reasonable
cause to believe that the  continuation by a savings and loan holding company of
an activity  constitutes  a serious risk to the financial  safety,  soundness or
stability of its subsidiary savings association,  the Director of OTS may impose
such  restrictions  as deemed  necessary  to address  such risk and limiting (i)
payment of dividends by the savings  association,  (ii) transactions between the
savings association and its affiliates,  and (iii) any activities of the savings
association that might create a serious risk that the liabilities of the holding
company and its affiliates may be imposed on the savings association.

         Notwithstanding  the above rules as to permissible  business activities
of unitary  savings  and loan  holding  companies,  if the  savings  association
subsidiary  of such a holding  company fails to meet (in three out to every four
quarters and two out of every three years) the QTL test, see  "Qualified  Thrift
Lender Test" above,  then such unitary holding company shall also become subject
to  the  activities   restrictions  applicable  to  multiple  holding  companies
(additional restrictions on securing advances from the FHLB also apply).

         If  the  Corporation   were  to  acquire  control  of  another  savings
institution other than through merger or other business  combinations with First
Federal,  the  Corporation  would thereupon  become a multiple  savings and loan
holding  company.  Except where such acquisition is pursuant to the authority to
approve  emergency  thrift   acquisitions  and  where  each  subsidiary  savings
institution meets the QTL test, the activities of the Corporation and any of its
subsidiaries (other than First Federal or other subsidiary savings institutions)
would thereafter be subject to further restrictions.  The Home Owners' Loan Act,
as amended,  provides  that,  among other things,  no multiple  savings and loan
holding company or subsidiary  thereof which is not a savings  institution shall

                                       20
<PAGE>

commence or  continue  for more than a limited  period of time after  becoming a
multiple  savings and loan holding company or subsidiary  thereof,  any business
activity  other than (i)  furnishing  or  performing  management  services for a
subsidiary  savings  institution,  (ii) conducting an insurance agency or escrow
business,  (iii) holding,  managing,  or liquidating assets owned by or acquired
from a subsidiary savings institution,  (iv) holding or managing properties used
or occupied by a subsidiary  savings  institution,  (v) acting as trustee  under
deeds of trust,  (vi) those  activities  previously  directly  authorized by the
FSLIC by  regulations  as of March 5, 1987 to be engaged in by multiple  holding
companies or (vii) those  activities  authorized by the Federal Reserve Board as
permissible for bank holding companies, unless the Director of OTS by regulation
prohibits  or limits such  activities  for savings and loan  holding  companies.
Those activities  described in (vii) above must also be approved by the Director
of OTS prior to being engaged in by a multiple holding company.

         The  Director of OTS may only  approve  acquisitions  resulting  in the
formation of a multiple  savings and loan holding company which controls savings
institutions  in more than one state,  if the multiple  savings and loan holding
company involved controls a savings  institution which operated a home or branch
office in the state of the institution to be acquired as of March 5, 1987, or if
the  laws of the  state in which  the  institution  to be  acquired  is  located
specifically  permit institution to be acquired by state-chartered  institutions
or savings and loan holding  companies  located in the state where the acquiring
entity is located (or by a holding  company that controls  such  state-chartered
savings institutions).  The Director of OTS may approve an acquisition resulting
in a multiple savings and loan holding company controlling savings  institutions
in more than one state in the case of certain emergency thrift acquisitions.

         No subsidiary savings association of a savings and loan holding company
may declare or pay a dividend on its permanent or  nonwithdrawable  stock unless
it first gives the Director of OTS 30 day advance notice of such declaration and
payment.  Any dividend declared during such period or without the giving of such
notice shall be invalid.

FEDERAL AND STATE TAXATION

         The Corporation and the Bank currently file consolidated federal income
tax returns based on a fiscal year ending June 30.

         Earnings  appropriated  to the Bank's bad debt reserve and claimed as a
tax  deduction  will not be allowable  for the payment of cash  dividends or for
distribution to  shareholders  (including  distributions  made on dissolution or
liquidation),  without  payment of federal  income  taxes on such  dividends  or
distributions  by the Bank at the then  current  tax rates on the amount  deemed
removed to the Bank would include not only the amount actually distributed,  but
would also be increased  (subject to certain  limitations)  by the amount of the
tax payable by reason of such distribution.

         The   Commonwealth  of  Kentucky  imposes  no  income  tax  on  savings
institutions.  Nonetheless,  First  Federal  must pay a Kentucky ad valorem tax.
This tax is 1/10th of 1% of First Federals total savings accounts, common stock,
capital and retained  income with  certain  deductions  for amounts  borrowed by
depositors  and for securities  guaranteed by the U.S.  Government or certain of
its agencies.  The Bank's  subsidiary  must pay a state income tax, as well as a
tax on capital. The tax on income is 4% for the first $25,000 of taxable income,
5% for the next $25,000,  6% for the next $50,000,  7% for the next $150,000 and
8.25% for all  income  over  $250,000.  The tax on  capital  is .0021  times the
capital  employed with a credit of .0014 times the first $350,000 of capital for
those corporations with gross income of under $500,000.

         For information regarding federal income taxes, see Note 8 of the Notes
to Consolidated Financial Statements in the Annual Report.

                                       21
<PAGE>

ITEM 2.     PROPERTIES

         The Corporation's executive offices,  principal support and operational
functions are located at 2323 Ring Road in Elizabethtown, Kentucky. All of First
Federals banking centers are located in Kentucky. The location of the 13 banking
centers, their form of occupancy and their respective approximate square footage
is set forth in the following table.
                                                                     Approximate
                                                                        Square
     Banking Centers                      Owned or Leased              Footage

ELIZABETHTOWN
2323 Ring Road                                  Owned                  55,000
325 West Dixie Avenue                           Owned                   1,764
101 Wal-Mart Drive                             Leased                     984

RADCLIFF, 475 West Lincoln Trail                Owned                   2,728

BARDSTOWN
401 East John Rowan Blvd.                      Leased                   4,500
315 North Third Street                          Owned                   1,271

MUNFORDVILLE, 925 Main Street                   Owned                   2,928

SHEPHERDSVILLE, 395 N. Buckman Street           Owned                   7,600

MT. WASHINGTON, 279 Bardstown Road              Owned                   2,500

BRANDENBURG
416 East Broadway                              Leased                   4,395
50 Old Mill Road                               Leased                     575

FLAHERTY, 4055 Flaherty Road                   Leased                   1,216

LOUISVILLE, 11901 Standiford Plaza Drive       Leased                     650


         As of June 30,  2000,  the net  book  value of  office  properties  and
equipment owned or leased by the Bank and its subsidiary was $11.7 million.  For
further  information,  see  Note  5  of  the  Notes  to  Consolidated  Financial
Statements in the Annual Report.

         The Bank utilizes the services of an outside data processing center for
most of its savings and loan  operations.  All  accounting  and internal  record
keeping functions are handled by the Bank's in-house computer system.

ITEM 3.     LEGAL PROCEEDINGS

         Although  the Bank is,  from time to time,  involved  in various  legal
proceedings  in the normal  course of  business,  there are no material  pending
legal  proceedings to which the Corporation,  the Bank, or its subsidiaries is a
party, or to which any of their property is subject.

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of the fiscal year ended June 30, 2000.

                                       22

<PAGE>

                                     PART II


ITEM 5.      MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
                              STOCKHOLDER MATTERS

         The Common Stock of First Federal Financial  Corporation of Kentucky is
traded  over the  counter  and quoted on The NASDAQ  National  Market  under the
symbol "FFKY." The registered  number of  stockholders as of September 15, 2000,
was 777. It is currently the policy of the  Corporation's  Board of Directors to
continue to pay quarterly dividends, but any future dividends are subject to the
Board's  discretion based on its  consideration of the  Corporation's  operating
results,  financial condition,  capital,  income tax considerations,  regulatory
restrictions and other factors.

QUARTERLY STOCK PRICES
                                                                        TWO
                                   QUARTER ENDED                    MONTHS ENDED
Fiscal 2000:          9/30       12/31         3/31         6/30      8/31/00
                      ----       -----         ----         ----      -------

High                $24.88       $24.50       $24.38       $20.50       $17.50
Low                  22.50        21.75        17.25        15.25        15.25
Cash dividends        0.18         0.18         0.18         0.18


Fiscal 1999:          9/30        12/31        3/31         6/30
                      ----        -----        ----         ----

High                $28.50       $29.75       $28.50       $24.94
Low                  23.13        23.36        23.25        19.88
Cash dividends        0.15         0.15         0.15         0.18


ITEM 6.     SELECTED FINANCIAL DATA

         Set forth below is selected  consolidated  financial  and other data of
the Corporation. This financial data is derived in part from, and should be read
in conjunction  with, the  Consolidated  Financial  Statements and Notes thereto
presented elsewhere in this report.

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
<TABLE>
<CAPTION>

                                                          AT JUNE 30,
                                 ----------------------------------------------------------
                                    2000        1999        1998        1997         1996
                                    ----        ----        ----        ----         ----
FINANCIAL CONDITION DATA:                          (Dollars in thousands)
<S>                             <C>         <C>         <C>         <C>          <C>
Total assets                     $560,785    $488,304    $409,651    $377,380     $352,671
Net loans outstanding             471,231     400,360     354,935     327,502      301,987
Investments                        45,182      47,340      26,574      22,677       16,742
Deposits                          423,759     399,443     306,703     281,342      264,946
Borrowings                         80,339      25,894      43,249      41,514       34,979
Stockholders' equity               51,681      57,862      54,688      51,665       49,946

Number of:
Real estate loans outstanding       7,154       6,968       6,709       6,380        5,914
Deposit accounts                   47,238      45,425      37,764      36,378       35,140
Offices                                13          12           8           8            8
</TABLE>

                                       23

<PAGE>

                                               YEAR ENDED JUNE 30,
                                ------------------------------------------------
                                  2000     1999      1998      1997       1996
                                  ----     ----      ----      ----       ----
OPERATIONS DATA:                             (Dollars in thousands)

Interest income                 $38.542  $35,496   $31,182   $28,782    $26,926
Interest expense                 20,873   18,481    16,059    14,375     13,676
Net interest income              17,669   17,015    15,123    14,407     13,250
Provision for loan losses           400      314       265       200          0
Non-interest income               3,877    3,954     2,860     2,468      2,648
Non-interest expense  (1)        12,691   11,706     8,082     9,472      7,547
Income tax expense                2,792    2,970     3,302     2,429      2,864
Net income                        5,663    5,979     6,334     4,774      5,487

Earnings per share: **
    Basic                          1.45     1.45      1.53      1.14       1.30
    Diluted                        1.44     1.44      1.52      1.13       1.29
Book value per share**            13.76    14.04     13.24     12.39      11.87
Dividends paid per share**         0.72     0.63      0.56      0.50       0.46
Dividend payout ratio                49%      43%       37%       44%        35%
Return on average assets           1.08%    1.25%     1.60%     1.30%      1.60%
Average equity to average
   assets                         10.28%   11.85%    13.55%    13.77%     14.27%
Return on average equity          10.52%   10.53%    11.81%     9.46%     11.22%


(1) Non-interest expense in 1997  includes  the non-recurring special assessment
paid to the FDIC in the amount of $1.7 million, pretax.  Non-interest expense in
1999  includes  one time  acquisition  and  conversion  costs in the  amount  of
$789,000, pretax.

** All per share  information  has been adjusted for a 2-for-1 stock split which
was effective June 10, 1996.

QUARTERLY FINANCIAL DATA
(Unaudited) (Dollars in thousands except per share data)

Fiscal 2000:                September 30   December 31   March 31    June 30
                            ------------   -----------   --------    -------

Total interest income          $9,100         $9,423       $9,744    $10,275
Total interest expense          4,633          4,992        5,368      5,880
Net interest income             4,467          4,431        4,376      4,395
Provision for loan losses          90             90           90        130
Net income                      1,573          1,464        1,403      1,223
Earnings per share:
    Basic                        0.39           0.37         0.36       0.33
    Diluted                      0.38           0.37         0.36       0.33

Fiscal 1999:                September 30   December 31   March 31    June 30
                            ------------   -----------   --------    -------

Total interest income          $8,711         $8,964       $8,967     $8,854
Total interest expense          4,626          4,791        4,556      4,508
Net interest income             4,085          4,173        4,411      4,346
Provision for loan losses          60             60           60        134
Net income                      1,373          1,538        1,476      1,592
Earnings per share:
    Basic                        0.33           0.37         0.36       0.39
    Diluted                      0.33           0.37         0.36       0.38


                                       24
<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                                   OF OPERATIONS

The  Corporation   conducts  its  banking  business  through  its  wholly  owned
subsidiary,  the Bank.  The Bank has  operations in the Kentucky  communities of
Elizabethtown,   Radcliff,   Bardstown,   Munfordville,    Shepherdsville,   Mt.
Washington,  Brandenburg,  Flaherty, and Hillview. The Bank's activities include
the  acceptance  of deposits for  checking,  savings and time deposit  accounts,
making secured and unsecured loans,  investing in securities and trust services.
The Bank's lending services  include the origination of real estate,  commercial
and consumer loans.  Operating  revenues are derived primarily from interest and
fees on domestic real estate,  commercial and consumer loans,  and from interest
on  securities  of the  United  States  Government  and  Agencies,  states,  and
municipalities. The primary regulator for First Federal is the OTS.

The following  discussion and analysis covers the primary factors  affecting the
Corporation's  performance  and  financial  condition.  It  should  be  read  in
conjunction  with the accompanying  audited  consolidated  financial  statements
included in this report.

All dollar  amounts  (except per share data) are  presented in thousands  unless
otherwise noted.

ACQUISITION

On July 24, 1998,  the Bank  completed  its  acquisition  of three bank branches
located in Meade  County,  Kentucky  from Bank One,  Kentucky,  N.A.  Two of the
branches  are  located  in  Brandenburg,  Kentucky  and the  third  branch is in
Flaherty, Kentucky.

In the  transaction,  the Bank  acquired  certain  assets  and  assumed  certain
liabilities associated with the acquisition of the Meade County banking centers.
The transaction  resulted in recording of  approximately  $11.0 million of loans
and $72.0  million of  deposits.  The net  deposits  assumed  exceeded  the cash
received  by $8.7  million.  Any  ratios  or  analysis  comparing  years  before
acquisition may not be comparable.

STOCK REPURCHASE PLAN

In  October  1999  the   Corporation's   Board  of  Directors   authorized   the
establishment of an additional stock repurchase program pursuant to which 10% of
the Corporation's  outstanding stock may be repurchased from time to time in the
open market.  The  programs,  which began in 1995,  have  repurchased a total of
611,681  shares.  The Board will  continue  to evaluate  earnings  per share and
monitor the success of the repurchase  plan to maintain an attractive  return to
stockholders.  The  current  plan  expires  in April  2001,  when the Board will
analyze the Bank's capital position and future earnings potential.

RESULTS OF OPERATIONS

Net income was $5.7  million or $1.44 per share  diluted in 2000  compared  with
$6.0 million or $1.44 per share  diluted in 1999.  Acquisition-related  costs in
connection  with the purchase of three banking  centers during the quarter ended
September  30,  1998,  in the  amount of $292  ($193,  net of tax) were  charged
against earnings.  Also, during the 1999 period,  the Corporation  incurred data
and  computer  conversion  costs  of $497  ($328,  net of tax)  relating  to its
conversion to a new data processor. In addition to these expenses,  amortization
of intangibles increased to $831 ($630, net of tax) in 2000 from $781 ($597, net
of tax) in 1999. The table on the following  page, in millions  except per share
data,  illustrates  the net of tax  impact of these  expenses  on  earnings  and
diluted earnings per share:

                                       25

<PAGE>

                                            June 30, 2000        June 30, 1999
                                         Amount   Per share   Amount   Per share
                                         ------   ---------   ------   ---------
Income before amortization of intangibles,
  acquisition and conversion expenses      $ 6.2     $ 1.58     $ 7.1    $ 1.71

Amortization of intangibles                 (0.6)     (0.14)     (0.6)    (0.15)

Acquisition expenses                          -         -        (0.2)    (0.05)

Conversion expenses                           -         -        (0.3)    (0.07)
                                           -----     ------     -----     -----

Net Income                                 $ 5.6     $ 1.44     $ 6.0    $ 1.44
                                           =====     ======     =====    ======


Net Interest Income - Net interest income increased by $654 during 2000 to $17.7
million  as  compared  to $17.0  million  in 1999 in spite  of a  declining  net
interest  margin.  The Bank's net interest margin declined to 3.61% for the year
ended June 30, 2000  compared to 3.84% for the 1999 period.  This decline in net
interest margin can be largely  attributed to the rise in certificate of deposit
rates on specials offered by the Bank over the past eight months.  To maintain a
customer  base in the midst of fierce rate  competition,  the Bank  offered both
short and long term certificate specials to retain maturing accounts renewing at
much lower rates.
 These  promotions  were also  necessary to assist in funding the loan growth in
the Bank driven by the transition to a sales culture for retail associates. Home
equity lines of credit at low introductory rates were also a focus of the retail
promotions for increasing loan  relationships  with our home mortgage  portfolio
customers.  For the short term,  these  introductory  rates  contributed  to the
margin declines.  If interest rates continue to increase,  the Bank's margin may
continue to narrow.  Maintaining  a growth in net  interest  margin will only be
achieved by increasing the current  lending  practices of focusing on commercial
and consumer lending.

In order to offset  the  narrowing  margin,  the Bank  developed  a dealer  loan
program in our Meade  County  banking  center  that would serve all the areas of
operation  for the Bank.  The program is  producing  a large  volume of consumer
loans at higher  yields than our mortgage  portfolio.  At June 30,  2000,  total
loans under the dealer loan program  totaled $15.2  million.  A commercial  loan
program  composed of  shorter-term  fixed and variable rate loans is responsible
for much of the Bank's loan growth and enables  management  to more  effectively
manage rate risk during the rising rate  environment.  Realizing that both these
programs  represent  products with added credit risk, the Bank has in place loan
processing review procedures to monitor loan underwriting and  documentation.  A
formal process of application  presentation  to the Executive Loan Committee has
been developed to insure  compliance with lending  policies.  Monthly  reporting
requirements  and internal  auditing  practices  have been  developed to provide
additional  control  over  delinquencies  and  foreclosures,  which to date have
continued to be minimal.

Average  interest  earning assets increased by $46.3 million from $443.2 million
for the 1999  period to $489.5  million for the 2000 period due to the growth of
the Bank's  loan  portfolio.  Average  loans,  which  comprise  89% of the total
interest  earning assets,  were $51.5 million higher and averaged $437.6 million
during 2000,  while the average  yield on loans  decreased by 19 basis points to
8.07%.

Average  interest-bearing  liabilities  increased by $45.8 million to an average
balance of $446.7 million for 2000.  Customer  deposits  averaged $394.3 million
during 2000, a $17.0 million  increase  from the 1999 average  balance of $377.3
million. Average Federal Home Loan Bank advances increased $28.8 million for the
2000 period to fund the Bank's  increased  lending  activity  that  exceeded its
deposit  growth.  This same lending  growth will impact the level of future Bank
investments  that will be  decreasing  in balance in the near future,  given the
need for all deposit dollars to fund lending activity.  The Bank's cost of funds
averaged 4.67% during 2000 which was an increase of 6 basis points from the 1999
average cost of funds of 4.61% due to higher rates paid on  short-term  customer
deposits.

                                       26
<PAGE>

Provision  for Loan Losses - Management  periodically  evaluates the adequacy of
the  allowance  for loan losses  based on the Bank's past loan loss  experience,
known and inherent risks in the portfolio,  adverse  situations  that may affect
the borrower's ability to repay and other factors. The provision for loan losses
was $400 for 2000 as compared to $314 for 1999. Net charge-offs were $256 during
2000 as compared to $264 during 1999.  The Bank's  allowance for loan losses was
$2.3  million or .48% of loans  outstanding  at June 30,  2000  compared to $2.1
million or .52% of loans  outstanding  at June 30,  1999.  Non-performing  loans
represented  .33% of the loans  outstanding at June 30, 2000. As demonstrated in
the  summary  table  below,  63%  of  the  Bank's   non-performing   assets  are
collateralized  by  one-to-four  family  residential  mortgages  on real  estate
located in central Kentucky.

                                                         Year Ended June 30,
                                                         ------------------
                                                    2000       1999       1998
                                                    ----       ----       ----
                                                       (Dollars in thousands)
Allowance for loan losses:
   Balance, July 1                              $  2,108    $  1,853   $  1,715
   Provision for loan losses                         400         314        265
   Acquired                                           -          205         -
   Charge-offs                                      (265)       (290)      (148)
   Recoveries                                          9          26         21
                                                --------    --------   --------
   Balance, June 30                             $  2,252    $  2,108   $  1,853
                                                ========    ========   ========

Loans outstanding at year end                   $473,483    $402,468   $356,788
Non-performing loans at year end:
   Collateralized by one-to-four family homes   $    977     $ 1,633    $ 1,487
   Other non-performing loans                        585         896        641
                                                 -------    --------   --------
       Total non-performing loans                  1,562       2,529      2,128
   Real estate acquired through foreclosure          -           109        134
                                                 -------     -------    -------
       Total non-performing assets              $  1,562     $ 2,638    $ 2,262
                                                ========     =======    =======

Ratios: Non-performing loans to loans                .33%        .63%       .60%
        Allowance for loan losses to
         non-performing loans                        144%         83%        87%
        Allowance for loan losses to net loans       .48%        .52%       .52%
        Non-performing assets to total assets        .28%        .54%       .55%


Non-Interest  Income and Expense - Non-interest income was $3.9 million in 2000,
a decrease of $77 or 2% over 1999.  Gains on investment  sales were $457 in 2000
compared to $352 for 1999, an increase of $105. Fee income from secondary market
lending operations decreased by $284 or 45% during the fiscal year due to rising
mortgage rates that slowed the new originations and refinancing activity in home
loans.  Customer service fees charged on deposit  accounts  increased by $237 or
14% during  2000 due to growth in  customer  accounts.  Fee income  from  trust,
brokerage  and  other   services  also   increased  due  to  growth  in  deposit
relationships with existing  customers.  Through a subsidiary of the Bank, gains
on sales of real estate held for development  were $6 for 2000 compared to gains
of $255 for 1999.  Three  commercial  lots in an  office  park  currently  under
development were sold in 1999.

Non-interest  expense  (excluding the one-time  acquisition  related charges and
information technology upgrades in 1999) increased by $1.8 million or 15% during
2000 as compared to 1999.  Factors  contributing  to the  increase  are expenses
relating to the Bank's transition to a sales and service culture, the re-opening
of a banking center located in Bardstown,  Kentucky and a full year of operating
expenses related to the Hillview Wal-Mart banking center.

                                       27
<PAGE>

Compensation  and  employee  benefits,  the largest  component  of  non-interest
expense, increased by $1.1 million or 25% in 2000 compared to 1999. The increase
includes  salary  increases  and  reflects  increases in the number of full time
equivalent  employees  from 155 at June 30, 1999,  to 170 at June 30, 2000.  The
increased  staffing is a result of the Bank adopting a strategic plan to develop
a sales and service  culture to promote  retail growth which added an additional
seven  employees  and the  opening of the new  Hillview  and  Bardstown  banking
centers which also added seven new full time employees.

Beyond  compensation  and benefits,  office  occupancy  and  equipment  expenses
increased  by $88 in 2000  compared to 1999 due to the opening of an  additional
in-store  facility,  remodeling an existing office, and installing three new ATM
machines.  All  other  expenses  increased  by  $549 in  2000  compared  to 1999
including  postage,  telephone,  data processing,  supplies and customer account
expenses.

LIQUIDITY AND CAPITAL RESOURCES

The Bank is required to maintain  minimum  specific  levels of liquid  assets as
defined by the Office of Thrift Supervision's  regulations.  This requirement is
based  on a  percentage  of  cash  and  eligible  investments  to  deposits  and
short-term  borrowings  and is currently 4%. At June 30, 2000, the Bank's liquid
assets were 6.01% of its liquidity  base. The Bank's primary source of funds for
meeting its liquidity needs are customer  deposits,  borrowings from the Federal
Home Loan Bank,  principal and interest payments from loans and  mortgage-backed
securities, and earnings from operations retained by the Bank.

Loan demand  continued to be strong  during the fiscal year ended June 30, 2000,
as net loans  increased  from $400.4 million at June 30, 1999, to $471.2 million
at June 30,  2000,  an 18% growth rate.  The  increase in lending was  primarily
attributable  to a newly  developed  dealer loan  program,  which  totaled $15.2
million  at  June  30,  2000  and an  increase  in the  Bank's  commercial  loan
portfolio, which increased by $36.6 million for 2000.

The Bank intends to continue to fund loan growth  (outstanding  loan commitments
were $5.1  million  at June 30,  2000) with  customer  deposits  and  additional
advances from the FHLB. At June 30, 2000,  the Bank had an unused  approved line
of credit in the amount of $28.0 million and sufficient  collateral to borrow an
additional $200 million in advances from the FHLB.

The  Office  of  Thrift   Supervision's   capital  regulations  require  savings
institutions to meet three capital  standards:  a 4% Tier I leverage ratio; a 4%
Tier I capital  ratio;  and an 8% risk-based  capital  standard.  As of June 30,
2000, the Bank's actual capital  percentages for Tier I leverage of 7.8%, Tier I
capital of 10.8%, and current risk-based capital of 11.4%,  significantly exceed
the regulatory requirement for each category.

IMPACT OF INFLATION & CHANGING PRICES

The financial statements and related data presented herein have been prepared in
accordance  with generally  accepted  accounting  principles,  which require the
measurement of financial  position and operating  results in historical  dollars
without  considering changes in the relative purchasing power of money over time
due to inflation.

The Bank has an asset and liability  structure that is  essentially  monetary in
nature. As a result interest rates have a more significant  impact on the Bank's
performance  than the effects of general  levels of  inflation.  Periods of high
inflation are often  accompanied by relatively higher interest rates and periods
of low inflation are  accompanied by relatively  lower interest rates. As market
interest  rates rise or fall in relation to the rates earned on the Bank's loans
and investments, the value of these assets decreases or increases respectively.

COMPARISON OF FISCAL 1999 TO 1998

Net income for the fiscal year ended June 30,  1999,  was $6.0  million or $1.44
per share  diluted as compared to net income of $6.3  million or $1.52 per share
diluted for the same  period in 1998.  Acquisition-related  costs in  connection
with the purchase of three banking  centers  during the quarter ended  September
30,  1998,  in the  amount  of $292  ($193,  net of tax)  were  charged  against
earnings.  Also, the Corporation  incurred data and computer conversion costs of

                                       28
<PAGE>

$497 ($328,  net of tax) relating to its conversion to a new data processor.  In
addition to these expenses, amortization of intangibles increased to $781 ($597,
net of tax) in 1999  from  $240  ($240,  net of tax) in  1998.  Excluding  these
acquisition and conversion costs and  amortization of intangibles,  net earnings
for the 1999 period would have increased  approximately  $523 to $7.1 million or
$1.71 per share  diluted  for the  fiscal  year  ended  June 30,  1999 from $6.6
million or $1.57 per share diluted for the fiscal year ending June 30, 1998.

Total interest income  increased by $4.3 million from fiscal 1998 to 1999 due to
the strong growth of the Bank's loan portfolio and the  interest-earning  assets
acquired from the three Meade County banking  centers.  Interest income on loans
accounts  for the  majority  of the  Bank's  interest  income  as  average  loan
balances,  which comprise 88% of the total interest earning assets,  were $386.1
million during 1999 as compared to $343.8 million during 1998, or an increase of
$42.3 million.  The average yield on loans decreased by 27 basis points to 8.26%
during 1999 as compared to 8.53% during 1998.

Total interest  expense  increased by $2.4 million from fiscal 1998 to 1999. The
weighted average interest rate paid on customer  deposits  averaged 4.38% during
1999,  which was a decrease  of 28 basis  points from the 1998  average  cost of
funds of 4.66%.  The decrease was attributable to lower rates paid on short-term
customer  deposits.  Customer  deposit  balances  averaged $377.3 million during
1999, a $95.7 million  increase from the 1998 average balance of $281.6 million.
The  acquisition  contributed  approximately  $72.0 million to the total deposit
growth.

As a result of the foregoing  discussion,  net interest income increased by $1.9
million  to $17.0  million  in 1999 from  $15.1  million in 1998 in spite of the
declining net interest margin.  The Bank's net interest margin declined to 3.86%
for the year ended June 30,  1999  compared  to 4.04% for the 1998  period.  The
acquisition contributed  approximately $1.1 million to the total increase in net
interest income for the 1999 period.

Management  periodically evaluates the adequacy of the allowance for loan losses
based on the Bank's past loan loss  experience,  known and inherent risks in the
portfolio,  adverse  situations that may affect the borrower's  ability to repay
and other factors.  During fiscal 1999, the Bank's provision for loan losses was
$314 as  compared  to $265 for 1998.  The  allowance  for loan  losses  was $1.9
million or .52% of loans outstanding at June 30, 1999,  compared to $2.1 million
or .52% of loans  outstanding at June 30, 1998. Net loan  charge-offs  have been
$264 and $127 for fiscal 1999 and 1998, respectively.

Non-interest income was $4.0 million in 1999, an increase of $1.1 million or 38%
over 1998.  The 23% growth in deposits  resulting from the  acquisition  was the
largest  contributing  factor to the  increase  in other  income.  Fee income in
connection with loans  originated for the secondary  market increased by $153 or
31% during the fiscal  year due to a better  market  penetration,  as opposed to
higher refinancing activity. Fee income from trust, brokerage and other services
also increased due to growth in deposit  relationships with existing  customers.
Through  a  subsidiary  of the  Bank,  gains on sales  of real  estate  held for
development  of $255  were  reported  due to the sale of  commercial  lots in an
office park currently under development.

Non-interest  expense  (excluding the one-time  acquisition  related charges and
information technology upgrades) increased by $2.8 million or 35% during 1999 as
compared to 1998.  The largest  contributing  factor to higher  expenses was the
operating costs of the three acquired  branches coupled with a $541 amortization
charge  on  the  intangible  assets  associated  with  the  acquisition.   Other
contributing  factors are expenses  resulting from higher loan  originations and
the opening of a new  banking  center  located in the  Wal-Mart  Supercenter  in
Hillview, Kentucky.

Compensation  and  employee  benefits,  the largest  component  of  non-interest
expense,  increased  by $801 or 22% in  1999  compared  to  1998.  The  increase
includes  salary  increases  and  reflects  increases in the number of full time
equivalent  employees from 110 at June 30, 1998, to 155 at June 30, 1999, due to
acquisitions and expansion of the Bank's business activity.

Occupancy and equipment  expense increased by $339 or 36% in 1999 as compared to
1998 primarily due to the expansion in the number of banking locations from 8 at
June 30, 1998, to 12 at June 30, 1999.

                                       29
<PAGE>

Marketing and advertising  expense  increased by $150 or 40% in 1999 compared to
1998 due to the increase in marketing  activities  associated with the expansion
in the  number of  banking  centers  and the  development  of new  products  and
services.

All  other  non-interest  expenses  increased  by  $1.0  million  or 36% in 1999
compared to 1998.  This increase  includes the  acquisition  of the Meade County
banking centers and their respective operating expenses.  The increase is also a
result of asset growth, new services provided by the Bank and general inflation.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         To minimize  the  volatility  of net  interest  income and  exposure to
economic loss that may result from fluctuating  interest rates, the Bank manages
its exposure to adverse  changes in interest  rates  through asset and liability
management  activities  within  guidelines  established  by its Asset  Liability
Committee ("ALOC"). The ALCO, which includes senior management  representatives,
has  the   responsibility   for   approving   and   ensuring   compliance   with
asset/liability  management policies of the Corporation,  which include managing
the  sensitivity  repricing  characteristics  of the  balance  sheet  components
consistent with maintaining  acceptable levels of changes in net portfolio value
("NPV") and net interest income. A primary purpose of the Corporation's  ALCO is
to manage interest rate risk to effectively invest the Corporation's capital and
to preserve the value created by its core business operations.  As such, certain
management  monitoring  processes  are designed to minimize the impact of sudden
and sustained changes in interest rates on NPV and net interest income.

         The  Corporation's  exposure  to  interest  rate risk is reviewed on at
least a quarterly  basis by the Board of Directors  and the ALCO.  Interest rate
risk exposure is measured using interest rate sensitivity  analysis to determine
the Corporation's change in NPV in the event of hypothetical changes in interest
rates and  interest  rate  sensitivity  gap  analysis is used to  determine  the
repricing  characteristics  of the  Bank's  assets and  liabilities.  The table,
presented on page 17, under Item 1 "Regulatory Capital  Requirements",  presents
the  Corporation's  projected change in NPV for the various rate shock levels as
of June 30, 2000. All market risk sensitive  instruments presented in this table
are held to maturity  or  available  for sale.  The  Corporation  has no trading
securities.

         NPV is calculated by the Corporation  pursuant to guidelines  estimated
by the OTS.  The  calculation  is based on the net  present  value of  estimated
discounted cash flows utilizing market  prepayment  assumptions and market rates
of interest  provided by independent  broker quotations and other public sources
as of June 30, 2000, with  adjustments made to reflect the shift in the Treasury
yield curve as appropriate.  Computation of prospective  effects of hypothetical
interest  rate  changes are based on numerous  assumptions,  including  relative
levels of market  interest rates,  loan  prepayments,  and deposits  decay,  and
should  not be  relied  upon as  indicative  of  actual  results.  Further,  the
computations do not contemplate any actions the ALCO could undertake in response
to changes in interest rates.

         Certain  shortcomings are inherent in the method of analysis  presented
in the  computation  of NPV.  Actual  values may differ  from those  projections
presented,   should  market   conditions  vary  from  assumptions  used  in  the
calculation of the NPV.  Certain assets,  such as adjustable  rate loans,  which
represent one of the  Corporation's  primary loan  products,  have features that
restrict  changes in interest  rates on a short-term  basis and over the life of
the  assets.  In  addition,  the  proportion  of  adjustable  rate  loans in the
Corporation's  portfolio  could  decrease in future  periods if market  interest
rates remain at or decrease  below  current  levels due to  refinance  activity.
Further,  in the  event of a change  in  interest  rates,  prepayment  and early
withdrawal levels would likely deviate  significantly  from those assumed in the
NPV.  Finally,  the ability of many  borrowers  to repay  their  adjustable-rate
mortgage loans may decrease in the event of interest rate increases.

         Another  tool  of  evaluating  the  institution's  sensitivity  to  net
interest  income to changes in interest  rates is to examine the extent to which
its assets and  liabilities  are "interest rate  sensitive" and by monitoring an
institution's  interest rate sensitivity "gap". An asset or liability is said to
be interest  rate  sensitive  within a specific time period if it will mature or
reprice within that time period. The interest rate sensitivity gap is defined as
the  difference  between  the  amount of  interest-earning  assets  maturing  or
repricing  within a specific  time  period  and the  amount of  interest-bearing
liabilities maturing or repricing within that same time period.

The   following   interest  rate   sensitivity   table  sets  forth  the  Bank's
interest-earning assets and interest-bearing liabilities at June 30, 2000, which
are anticipated to reprice or mature in each of the future time periods shown.

                                       30

<PAGE>
<TABLE>
<CAPTION>

                    Interest Rate Sensitivity (Gap Analysis)
                               As of June 30, 2000
                             (Dollars in thousands)

                                          0-3         4-12        1-5         Over 5
                                         Months      Months      Years        Years        Total
                                         ------      ------      -----        -----        -----
<S>                                    <C>        <C>          <C>         <C>          <C>
Interest earning assets:
   Loans                                $ 66,914    $121,661    $185,552    $101,981     $476,108
   Securities                             24,896       7,118      13,562       6,549       52,125
                                         -------    --------    --------    --------     --------
      Total rate sensitive assets         91,810     128,779     199,114     108,530      528,233
                                         -------    --------    --------    --------     --------
Interest bearing liabilities:
   NOW, money market and
      savings                             19,856      59,568      38,499      16,824      134,747
   Time deposits                          45,128     158,102      86,614       1,270      291,114
   Borrowed funds                         79,018          54         328         941       80,341
                                         -------    --------    --------     -------    ---------
      Total rate sensitive liabilities   144,002     217,724     125,441      19,035      506,202
                                         -------    --------    --------     -------    ---------
Interest sensitivity gap                $(52,192)  $ (88,945)   $ 73,673    $ 89,495    $  22,031
                                        ========   =========    ========     =======    =========

Cumulative interest sensitivity gap     $(52,192)  $(141,137)  $ (67,464)   $ 22,031
                                        ========    ========   =========     =======
Cumulative interest sensitivity gap
   as a percentage of total assets       (9.31)%     (25.17)%   (12.03)%       3.93%
                                         =====       ======     ======        =====
</TABLE>


         As the preceding table  indicates,  the Bank has a negative  cumulative
gap for assets and  liabilities  maturing  or  repricing  within one year in the
amount of  ($141,137)  million or 25.17% of total  assets.  Thus,  decreases  in
interest  rates  during this time period would  generally  increase net interest
income,  while increases in interest rates would generally decrease net interest
income.  However, even though the periodic gap analysis provides management with
a method  of  measuring  current  interest  rate  risk,  it only  measures  rate
sensitivity  at a  specific  point  in time.  Gap  analysis  does not take  into
consideration that assets and liabilities with similar repricing characteristics
may not reprice at the same time or to the same degree and, therefore,  does not
necessarily predict the impact of changes in general levels of interest rates on
net  interest  income.  Additionally,  certain  assets such as  adjustable  rate
mortgage  loans have  features,  which  restrict  changes in interest rates on a
short-term  basis  and over  the life of the  asset.  Further,  in the  event of
changes in interest rates,  prepayment and decay rates may deviate significantly
from  those  assumed in  calculating  the table.  Finally,  the  ability of many
borrowers to afford the payments on their  adjustable  rate  mortgage  loans may
decrease in the event of an interest rate increase.

                                       31


<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY AND SUBSIDIARY

                                Table of Contents



                                                                         Page
Audited Consolidated Financial Statements:
         Report of Independent Auditors-Crowe, Chizek and Company LLP      33
         Report of Independent Auditors-Whelan, Doerr & Company PSC        34
         Consolidated Statements of Financial Condition                    35
         Consolidated Statements of Income                                 36
         Consolidated Statements of Comprehensive Income                   37
         Consolidated Statements of Changes in Stockholders' Equity        38
         Consolidated Statements of Cash Flows                             39
         Notes to Consolidated Financial Statements                      40-55


                                       32

<PAGE>




                         REPORT OF INDEPENDENT AUDITORS



Board of Directors and Stockholders
First Federal Financial Corporation of Kentucky
Elizabethtown, Kentucky

We have audited the accompanying  consolidated statements of financial condition
of First Federal Financial Corporation of Kentucky as of June 30, 2000 and 1999,
and the related consolidated statements of income, comprehensive income, changes
in stockholders' equity and cash flows for the years then ended. These financial
statements  are  the  responsibility  of  the  Corporation's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.  The consolidated  financial  statements of First Federal  Financial
Corporation  of Kentucky  for the year ended June 30, 1998 were audited by other
auditors whose report dated August 17, 1998 expressed an unqualified  opinion on
those statements.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position of First  Federal
Financial  Corporation of Kentucky as of June 30, 2000 and 1999, and the results
of their  operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.




                                                   Crowe, Chizek and Company LLP

Louisville, Kentucky
July 28, 2000


                                       33

<PAGE>


                         REPORT OF INDEPENDENT AUDITORS



Board of Directors
First Federal Financial Corporation of Kentucky
Elizabethtown, Kentucky

We  have   audited  the   accompanying   consolidated   statements   of  income,
stockholders'  equity, and cash flows for First Federal Financial Corporation of
Kentucky  and  Subsidiaries  for the year ended June 30, 1998.  These  financial
statements are the responsibility of the Bank's  management.  Our responsibility
is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of First  Federal  Financial
Corporation of Kentucky and  Subsidiaries as of June 30, 1998 and the results of
its  operations  and its cash  flows for the  period  ended  June 30,  1998,  in
conformity with generally accepted accounting principles.



Whelan, Doerr & Company PSC
Elizabethtown, Kentucky
August 17, 1998


                                       34
<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
                 Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>

                                                                 June 30,
                                         ASSETS             2000          1999
                                                            ----          ----
<S>                                                 <C>             <C>
Cash and due from banks                              $  11,310,438   $ 10,257,162
Interest bearing deposits                                3,668,498      1,634,475
                                                        ----------     ----------
           Total cash and cash equivalents              14,978,936     11,891,637
Securities available-for-sale                            2,047,642      2,935,979
Securities held-to-maturity (fair value of $41,194,541
   and $43,524,986 at June 30, 2000 and 1999)           43,133,967     44,404,392
Loans receivable, less allowance for loan losses
   of $2,252,062 (2000) and $2,107,994 (1999)          471,231,319    400,360,402
Federal Home Loan Bank stock                             4,080,800      3,200,000
Premises and equipment                                  11,709,268     11,594,369
Real estate owned:
  Acquired through foreclosure                               -            108,610
  Held for development                                     445,683        445,683
Excess of cost over net assets acquired                 10,047,173     10,878,972
Accrued interest receivable                              2,031,877      1,603,514
Other assets                                             1,078,157        880,216
                                                       -----------    -----------

         TOTAL ASSETS                                 $560,784,822   $488,303,774
                                                      ============   ============

                          LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Deposits:
   Non-interest bearing                             $  16,821,604    $ 15,223,267
   Interest bearing                                   406,937,351     384,220,172
                                                      -----------     -----------
             Total Deposits                           423,758,955     399,443,439
Advances from Federal Home Loan Bank                   80,338,550      25,894,127
Accrued interest payable                                1,128,790         868,840
Accounts payable and other liabilities                  1,962,543       2,336,503
Deferred income taxes                                   1,914,903       1,898,703
                                                      -----------     -----------

         TOTAL LIABILITIES                            509,103,741     430,441,612
                                                      -----------     -----------

STOCKHOLDERS' EQUITY:
 Serial preferred stock, 5,000,000 shares
     authorized and unissued                               -               -
 Common stock, $1 par value per share;
      authorized 10,000,000 shares; issued and
      outstanding, 3,755,761 shares in 2000 and
      4,121,112 shares in 1999                          3,755,761       4,121,112
 Additional paid-in capital                                  -          3,055,644
 Retained earnings                                     47,481,149      49,587,422
 Accumulated other comprehensive
      income, net of tax                                  444,171       1,097,984
                                                     ------------    ------------

         TOTAL STOCKHOLDERS' EQUITY                    51,681,081      57,862,162
                                                     ------------    ------------

         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $560,784,822    $488,303,774
                                                     ============    ============
</TABLE>

                 See notes to consolidated financial statements.

                                       35

<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
                        Consolidated Statements of Income
<TABLE>
<CAPTION>


                                                                   Year Ended June 30,
                                                       ------------------------------------------
                                                          2000           1999             1998
                                                          ----           ----             ----
<S>                                                   <C>             <C>            <C>
Interest Income:
  Interest and fees on loans                           $35,316,819    $31,895,805    $29,338,526
  Interest and dividends on investments and deposits     3,225,633      3,600,283      1,843,413
                                                       -----------     ----------     ----------
          Total interest income                         38,542,452     35,496,088     31,181,939
                                                       -----------     ----------     ----------
Interest Expense:
  Deposits                                              18,073,392     17,180,146     13,676,525
  Federal Home Loan Bank advances                        2,800,076      1,301,096      2,382,084
                                                       -----------     ----------     ----------
          Total interest expense                        20,873,468     18,481,242     16,058,609
                                                       -----------     ----------     ----------
Net interest income                                     17,668,984     17,014,846     15,123,330
Provision for loan losses                                  399,500        314,000        265,000
                                                       -----------     ----------     ----------
Net interest income after provision for loan losses     17,269,484     16,700,846     14,858,330
                                                       -----------     ----------     ----------
Non-interest Income:
  Customer service fees on deposit accounts              1,957,445      1,720,542      1,274,298
  Secondary mortgage market closing fees                   354,391        638,877        485,564
  Gain on sale of investments                              456,926        351,753        375,356
  Brokerage and insurance commissions                      464,388        394,070        402,986
  Gain on sale of real estate held for development           6,194        254,688           -
  Other income                                             637,779        594,364        322,166
                                                       -----------     ----------      ---------
          Total non-interest income                      3,877,123      3,954,294      2,860,370
                                                       -----------     ----------      ---------
Non-interest Expense:
  Employee compensation and benefits                     5,644,270      4,506,758      3,706,255
  Office occupancy expense and equipment                 1,362,424      1,274,885        935,972
  FDIC insurance premiums                                  158,117        207,298        178,476
  Marketing and advertising                                524,349        527,110        377,135
  Outside services and data processing                   1,259,148      1,001,612        663,667
  State franchise tax                                      403,869        357,776        308,691
  Acquisition related expense                                 -           291,869           -
  Data and equipment conversion expense                       -           497,368           -
  Amortization of intangibles                              831,799        781,347        240,071
  Other expense                                          2,506,928      2,260,025      1,672,219
                                                         ---------     ----------      ---------
          Total non-interest expense                    12,690,904     11,706,048      8,082,486
                                                        ----------     ----------      ---------
  Income before income taxes                             8,455,703      8,949,092      9,636,214
  Income taxes                                           2,792,361      2,970,291      3,301,997
                                                        ----------     ----------      ---------
Net Income                                              $5,663,342     $5,978,801     $6,334,217
                                                        ==========     ==========     ==========
Earnings per share:
          Basic                                             $ 1.45        $  1.45         $ 1.53
          Diluted                                           $ 1.44        $  1.44         $ 1.52
</TABLE>


                 See notes to consolidated financial statements.

                                       36
<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
                 Consolidated Statements of Comprehensive Income

<TABLE>
<CAPTION>

                                                          Year Ended June 30,

                                                  2000          1999         1998
                                                  ----          ----         ----
<S>                                           <C>           <C>          <C>
Net Income                                     $5,663,342    $5,978,801   $6,334,217
Other comprehensive income (loss), net of tax:
  Change in unrealized gain (loss)
    on securities                                (352,242)      233,837      373,449
  Reclassification of realized amount            (301,571)     (232,157)    (247,735)
                                                 --------     ---------   ----------
  Net unrealized gain (loss) recognized in
    comprehensive income                         (653,813)        1,680      125,714
                                                 --------     ---------   ----------
Comprehensive Income                           $5,009,529    $5,980,481   $6,459,931
                                               ==========    ==========   ==========
</TABLE>


                 See notes to consolidated financial statements.

                                       36

<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
           Consolidated Statements of Changes in Stockholders' Equity
                   Years Ending June 30, 2000, 1999, and 1998

<TABLE>
<CAPTION>                                                                                 Accumulated Other
                                                            Additional                      Comprehensive
                                  Common Stock              Paid - in      Retained            Income,
                               Shares       Amount           Capital       Earnings          Net of Tax        Total
                               ------       ------           -------       --------          ----------        -----
<S>                         <C>           <C>             <C>            <C>                <C>            <C>
Balance, June 30, 1997       4,170,003     $4,170,003      $4,330,548     $42,193,609        $970,590       $51,664,750
Net income                       -              -               -           6,334,217           -             6,334,217
Exercise of stock
  options                       21,000         21,000         220,875           -               -               241,875
Stock tendered as
  payment for options
  exercised                    (10,994)       (10,994)       (230,841)          -               -              (241,835)
   Net change in unrealized
  gains (losses) on
  securities available-
  for-sale, net of tax           -              -               -               -             125,714           125,714
Cash dividends declared
   ($.56 per share)              -              -               -                               -            (2,319,019)
                                                                           (2,319,019)
Stock repurchased              (50,397)       (50,397)     (1,066,918)          -               -            (1,117,315)
                             ---------      ---------      ----------      ----------       ---------       -----------
Balance, June 30, 1998       4,129,612      4,129,612       3,253,664      46,208,807       1,096,304        54,688,387
Net income                       -              -               -           5,978,801           -             5,978,801
Net change in unrealized
  gains  (losses) on
  securities available-
  for-sale, net of tax           -              -               -               -               1,680             1,680
Cash dividends declared
   ($.63 per share)              -              -               -          (2,600,186)          -            (2,600,186)
Stock repurchased               (8,500)        (8,500)       (198,020)          -               -              (206,520)
                             ---------      ---------       ---------      ----------       ---------        ----------
Balance, June 30, 1999       4,121,112      4,121,112       3,055,644      49,587,422       1,097,984        57,862,162
Net income                       -              -               -           5,663,342           -             5,663,342
Exercise of stock
   options                       4,834          4,834          68,150           -               -                72,984
Stock tendered as
   payment for options
   exercised                    (3,281)        (3,281)        (63,941)          -               -               (67,222)
Net change in unrealized
  gains (losses) on
  securities available-          -
  for-sale, net of tax                          -               -               -            (653,813)         (653,813)
Cash dividends declared
   ($.72 per share)              -              -               -          (2,802,833)          -            (2,802,833)
Stock repurchased             (366,904)      (366,904)     (3,059,853)     (4,966,782)          -            (8,393,539)
                              --------    -----------     -----------    ------------     -----------      ------------
Balance, June 30, 2000        3,755,761   $ 3,755,761     $     -        $ 47,481,149     $   444,171      $ 51,681,081
                              =========   ===========     ===========    ============     ===========      ============
</TABLE>


                 See notes to consolidated financial statements.

                                       38
<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
                      Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                     Year Ended June 30,
                                                            2000           1999           1998
                                                            ----           ----           ----
<S>                                                    <C>             <C>             <C>
Operating Activities:
 Net income                                             $5,663,342      $5,978,801      $6,334,217
 Adjustments to reconcile net income to net
  cash provided by operating activities:
    Provision for loan losses                              399,500         314,000         265,000
    Depreciation of premises and equipment               1,022,327         825,483         605,955
    Net change in deferred loan fees and costs             226,177         238,711         195,066
    Federal Home Loan Bank stock dividends                (237,300)       (216,200)       (206,600)
    Amortization of acquired intangible assets             831,799         781,347         240,071
    Amortization and accretion on securities               (61,435)       (137,369)       (147,972)
    Gain on sale of investments available-for-sale        (456,926)       (351,753)       (375,356)
    Gain on sale of real estate held for development        (6,194)       (254,688)          -
    Deferred taxes                                         353,014        (178,266)        126,743
    Changes in:
      Interest receivable                                 (428,363)       (769,462)       (198,960)
      Other assets                                        (197,941)          3,293        (370,482)
      Interest payable                                     259,950        (328,249)        350,166
      Accounts payable and other liabilities              (367,766)       (286,766)      1,675,234
                                                         ---------       ---------      ----------
Net cash provided by operating activities                7,000,184       5,618,882       8,493,082
                                                         ---------       ---------      ----------
Investing Activities:
  Sales of securities available-for-sale                   461,782         362,459       3,808,207
  Purchases of securities available-for-sale              (107,300)     (1,010,000)        (36,082)
  Purchases of securities held-to-maturity              (5,000,000)    (49,855,000)    (14,000,000)
  Maturities of securities held-to-maturity              6,332,014      30,227,733       6,979,771
  Net increase in loans                                (71,387,984)    (34,934,161)    (27,853,848)
  Purchase of Federal Home Loan Bank stock                (643,500)          -               -
  Net purchases of premises and equipment               (1,137,226)     (1,545,933)     (1,131,872)
  Sales of real estate held for development                  -             451,496          44,770
  Net cash received in acquisition                           -          52,456,754           -
                                                       -----------     -----------     -----------
Net cash used in investing activities                  (71,482,214)     (3,846,652)    (32,189,054)
                                                       -----------     -----------     -----------
Financing Activities:
  Net increase in deposits                              24,315,516      21,131,129      25,360,475
  Advances from Federal Home Loan Bank                  79,647,360       5,000,000       2,000,000
  Repayments to Federal Home Loan Bank                 (25,202,937)    (22,354,728)       (265,339)
  Proceeds from stock options exercised                      5,762           -                  40
  Dividends paid                                        (2,802,833)     (2,600,186)     (2,319,019)
  Common stock repurchased                              (8,393,539)       (206,520)     (1,117,315)
  Collection on advance to ESOP                              -               -              11,129
                                                        ----------      ----------      ----------
Net cash provided by financing activities               67,569,329         969,695      23,669,971
                                                        ----------      ----------      ----------
Increase (decrease) in cash and cash equivalents         3,087,299       2,741,925         (26,001)
Cash and cash equivalents, beginning of year            11,891,637       9,149,712       9,175,713
                                                        ----------     -----------      ----------
Cash and cash equivalents, end of year                 $14,978,936     $11,891,637      $9,149,712
                                                       ===========     ===========      ==========
</TABLE>

                 See notes to consolidated financial statements.

                                       39
<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The following is a description of the significant  accounting  policies
         which  First  Federal  Financial  Corporation  of  Kentucky  follows in
         preparing and presenting its consolidated financial statements:

                  Principles of  Consolidation  and Business - The  consolidated
                  financial  statements  include the  accounts of First  Federal
                  Financial  Corporation of Kentucky (the  Corporation)  and its
                  wholly-owned   subsidiary,   First  Federal  Savings  Bank  of
                  Elizabethtown  (the Bank), and its wholly-owned  subsidiaries,
                  First  Service  Corp.  of  Elizabethtown  and First  Heartland
                  Mortgage.  All  significant   intercompany   transactions  and
                  balances have been eliminated.

                  The  business of the Bank  consists  primarily  of  attracting
                  deposits  from the  general  public and  originating  mortgage
                  loans on  single-family  residences.  To a lesser extent,  the
                  Bank  also  originates  loans  on  multi-family   housing  and
                  commercial  property.  The Bank also  makes  home  improvement
                  loans,  consumer  loans and  commercial  business  loans.  The
                  Bank's  primary  lending area is a region within North Central
                  Kentucky.   The  economy   within  this  region  is  based  on
                  agriculture,  a variety of  manufacturing  industries  and Ft.
                  Knox, a military installation.

                  The  principal  sources  of funds for the Bank's  lending  and
                  investment  activities  are  deposits,  repayment of loans and
                  Federal Home Loan Bank advances.  The Bank's  principal source
                  of income is interest on loans.  In addition,  other income is
                  derived from loan origination fees,  service charges,  returns
                  on investment  securities,  and trust department and brokerage
                  services.

                  Estimates and  Assumptions - The  preparation of  consolidated
                  financial  statements in conformity  with  generally  accepted
                  accounting  principles  requires  management to make estimates
                  and assumptions that affect the reported amounts of assets and
                  liabilities   and   disclosure   of   contingent   assets  and
                  liabilities  at  the  date  of  the   consolidated   financial
                  statements  and the reported  amounts of revenues and expenses
                  during the reporting period.  Actual results could differ from
                  those  estimates.  The  allowance for loan losses and the fair
                  value of financial  instruments  are  particularly  subject to
                  change.

                  Cash Flows - For purposes of the statement of cash flows,  the
                  Corporation  considers  all  highly  liquid  debt  instruments
                  purchased  with a maturity of three  months or less to be cash
                  equivalents.  Cash and cash equivalents  include cash on hand,
                  amounts due from banks,  and interest  bearing  deposits.  Net
                  cash flows are reported for loans and deposits.

                  Securities - The Corporation  classifies its investments  into
                  held-to-maturity and available-for-sale. Based upon a periodic
                  review of the investment  portfolio,  debt securities in which
                  the  Corporation has a positive intent and ability to hold are
                  classified  as  held-to-maturity   and  are  carried  at  cost
                  adjusted for the  amortization of premiums and discounts using
                  the interest method over the terms of the securities.

                  Debt  and  equity  securities,  which do not  fall  into  this
                  category,  nor held for the  purpose  of  selling  in the near
                  term, are classified as available-for-sale. Unrealized holding
                  gains and losses, net of tax, on available-for-sale securities
                  are  reported  as a net  amount  in a  separate  component  of
                  stockholders' equity until realized.

                                       40

<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)


                  Loans  Receivable  - Loans  receivable  are  stated  at unpaid
                  principal balances, less undistributed construction loans, net
                  deferred loan  origination fees and allowance for loan losses.
                  The Bank defers loan  origination  fees and  discounts  net of
                  certain direct  origination costs. These net deferred fees are
                  amortized using the level yield method on a loan-by-loan basis
                  over the lives of the underlying loans.  Unearned discounts on
                  consumer  loans  are  recognized  over the  lives of the loans
                  using methods that approximate the interest method.

                  The  allowance  for loan  losses is  increased  by  charges to
                  income  and  decreased  by  charge-offs  (net of  recoveries).
                  Management's  periodic  evaluation  of  the  adequacy  of  the
                  allowance  is based on the Bank's  past loan loss  experience,
                  known and inherent risks in the portfolio,  adverse situations
                  that may affect  the  borrower's  ability to repay,  estimated
                  value  of any  underlying  collateral,  and  current  economic
                  conditions.

                  Loans are  considered  impaired if full  principal or interest
                  payments  are  not   anticipated   in   accordance   with  the
                  contractual  loan  terms.  Impaired  loans are  carried at the
                  present value of expected future cash flows  discounted at the
                  loan's  effective  interest  rate or at the fair  value of the
                  collateral if the loan is collateral  dependent.  A portion of
                  the allowance  for loan losses is allocated to impaired  loans
                  if the value of such loans is less than the unpaid balance. If
                  these  allocations  cause  the  allowance  for loan  losses to
                  require  an  increase,   such  increase  is  reported  in  the
                  provision for loan losses.

                  Interest  income on loans is  recognized  on the accrual basis
                  except for those loans in a nonaccrual of income  status.  The
                  accrual of  interest on impaired  loans is  discontinued  when
                  management  believes,  after  consideration  of  economic  and
                  business conditions and collection efforts that the borrowers'
                  financial  condition  is such that  collection  of interest is
                  doubtful.  When  interest  accrual is  discontinued,  interest
                  income is  subsequently  recognized  only to the  extent  cash
                  payments are received.

                  Premises and  Equipment - Premises and equipment are stated at
                  cost less accumulated  depreciation.  Depreciation is computed
                  by the straight-line method for buildings and improvements and
                  furniture and fixtures, over the estimated useful lives of the
                  related assets.

                  Real Estate Owned - Real estate  properties  acquired  through
                  foreclosure  and in settlement of loans are stated at lower of
                  cost or fair value less estimated selling costs at the date of
                  foreclosure.  The  excess  of cost over  fair  value  less the
                  estimated  costs to sell at the time of foreclosure is charged
                  to  the   allowance  for  loan  losses.   Costs   relating  to
                  development  and  improvement  of  property  are  capitalized,
                  whereas costs relating to holding property are not capitalized
                  and are charged against operations in the current period.

                  Real  estate  properties  held  for  development  and sale are
                  carried at the lower of cost,  including  cost of  development
                  and improvement subsequent to acquisition,  or fair value less
                  estimated   selling  costs.  The  portion  of  interest  costs
                  relating to the development of real estate is capitalized.

                  Goodwill - The  unamortized  costs in excess of the fair value
                  of acquired  net  tangible  assets are  included in  goodwill.
                  Goodwill is amortized on a straight-line basis over 15 years.

                                       41
<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)


                  Stock Option Plans - Although the Corporation  applies APB No.
                  25, SFAS No. 123,  "Accounting  for Stock Based  Compensation"
                  requires  pro-forma  disclosure of net income and earnings per
                  share as if the  Corporation  had  accounted  for its employee
                  stock  options  under that  Statement.  The fair value of each
                  option  grant  was  estimated  on  the  grant  date  using  an
                  option-pricing model. Under SFAS No. 123, compensation cost is
                  recognized  in the amount of the  estimated  fair value of the
                  options and  amortized to expense  over the  options'  vesting
                  period.

                  Income Taxes - Deferred  income tax assets and liabilities are
                  determined using the liability method.  Under this method, the
                  net deferred tax asset or liability is determined based on the
                  tax effects of the differences  between the book and tax basis
                  of the various balance sheet assets and liabilities.

                  Earnings Per Common Share - Basic earnings per common share is
                  net income  divided by the weighted  average  number of common
                  shares  outstanding  during the period.  Diluted  earnings per
                  common  share  include  the  dilutive   effect  of  additional
                  potential common shares issuable under stock options. Earnings
                  and  dividends  per share are  restated  for all stock  splits
                  through the date of issuance of the financial statements.

                  Comprehensive  Income -  Comprehensive  income consists of net
                  income and other  comprehensive  income.  Other  comprehensive
                  income  includes  unrealized  gains and  losses on  securities
                  available  for sale,  which are also  recognized as a separate
                  component of equity.

                  New  Accounting   Pronouncements   -  On  July  1,  2000,  the
                  Corporation  adopted  a  new  accounting  standard  that  will
                  require all  derivatives to be recorded at fair value.  Unless
                  designated  as hedges,  changes in these fair  values  will be
                  recorded in the income statement. Fair value changes involving
                  hedges will  generally  be recorded  by  offsetting  gains and
                  losses on the hedge and on the hedged  item,  even if the fair
                  value  of the  hedged  item  is not  otherwise  recorded.  The
                  adoption of this new standard  did not have a material  effect
                  on the Corporation's financial statements.

                  Industry  Segments - All of the  Corporation's  operations are
                  considered by management to be aggregated  into one reportable
                  operating segment.

                  Reclassifications  -  Certain  amounts  for 1999 and 1998 have
                  been reclassified to conform to the presentation for 2000.


2.       BRANCH ACQUISITIONS

                  On July 24, 1998, the Bank completed its  acquisition of three
                  Bank  One  banking  centers.  Included  in the  purchase  were
                  approximately   $11,000,000   of  loans  and   $72,000,000  of
                  deposits.  The net deposits assumed exceeded the cash received
                  by $8,670,000.

                                       42

<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)

3.       SECURITIES

         The  amortized  cost basis and fair values of securities at June 30 are
         as follows:
<TABLE>
<CAPTION>
                                                              Gross         Gross
                                                            Unrealized    Unrealized
                                          Amortized Cost      Gains         Losses      Fair Value
                                         ---------------    ----------    ----------    ----------
<S>                                     <C>              <C>           <C>             <C>
Securities available-for-sale:
  June 30, 2000:
      Equity securities                   $  364,725       $ 807,396     $ (67,187)     $1,104,934
      Obligation of states and political
         subdivisions                      1,009,928           -           (67,220)        942,708
                                          ----------       ---------     ---------      ----------
           Total available-for-sale       $1,374,653       $ 807,396     $(134,407)     $2,047,642
                                          ==========       =========     =========      ==========

  June 30, 1999:
     Equity securities                    $  262,281      $1,723,650     $ (37,569)     $1,948,362
     Obligation of states and political
        subdivisions                       1,010,082           -           (22,465)        987,617
                                          ----------      ----------     ---------      ----------
          Total available-for-sale        $1,272,363      $1,723,650     $ (60,034)     $2,935,979
                                          ==========      ==========     =========      ==========

Securities held-to-maturity:
  June 30, 2000:
     U.S. Treasury and agencies          $41,860,127      $   65,220   $(1,989,224)    $39,936,123
     Mortgage-backed securities            1,273,840           7,493       (22,915)      1,258,418
                                         -----------      ----------   -----------     -----------
          Total held-to-maturity
            securities                   $43,133,967      $   72,713   $(2,012,139)    $41,194,541
                                         ===========      ==========   ===========     ===========

  June 30, 1999:
     U.S. Treasury and agencies          $42,814,330      $  106,164   $(1,006,244)    $41,914,250
     Mortgage-backed securities            1,590,062          22,979        (2,305)      1,610,736
                                          ----------      ----------   -----------     -----------
        Total held-to-maturity
          securities                     $44,404,392      $  129,143   $(1,008,549)    $43,524,986
                                         ===========      ==========   ===========     ===========
</TABLE>

         The  amortized  cost and fair value of  securities at June 30, 2000, by
         contractual maturity, are shown below.
<TABLE>
<CAPTION>

                                              Available-for-Sale              Held-to-Maturity
                                        -----------------------------    --------------------------
                                          Amortized          Fair          Amortized        Fair
                                             Cost            Value            Cost          Value
                                             ----            -----            ----          -----
<S>                                     <C>              <C>            <C>            <C>
Due after one year through five years    $   75,000       $   71,016     $19,877,600    $19,394,233
Due after five years through ten years      820,911          770,514      20,982,527     19,630,020
Due after ten years                         114,017          101,178       1,000,000        911,870
Mortgage-backed securities                     -                -          1,273,840      1,258,418
Equity securities                           364,725        1,104,934            -              -
                                         ----------       ----------     -----------    -----------
                                         $1,374,653       $2,047,642     $43,133,967    $41,194,541
                                         ==========       ==========     ===========    ===========
</TABLE>


                                       43

<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)


3.       SECURITIES - (Continued)

         The   following   schedule  sets  forth  the  proceeds  from  sales  of
         available-for-sale  securities  and the gross  realized  gains on those
         sales for the fiscal years ended June 30:

                                           2000        1999        1998
                                           ----        ----        ----

          Proceeds from sales            $461,782    $362,459   $3,808,207
          Gross realized gains            456,926     351,753      375,356
          Realized gains, net of tax      301,571     232,157      247,735

         Investment  securities having an amortized cost of $33,544,733 and fair
         value of  $31,973,783  at June 30, 2000 were  pledged to secure  public
         deposits.

4.                LOANS RECEIVABLE:
                  -----------------

         Loans receivable at June 30 are summarized as follows:

                                                   2000               1999
                                                   ----               ----

      Commercial                               $ 15,768,738       $ 11,691,672
      Real estate commercial                     65,244,183         32,729,756
      Real estate construction                   15,257,396         18,104,220
      Real estate mortgage                      311,756,211        300,325,677
      Consumer and home equity                   59,744,028         48,280,723
      Indirect consumer                          15,185,698            761,955
                                                -----------        -----------
                                                482,956,254        411,894,003
      Less:
        Undisbursed construction loans           (6,889,437)        (6,674,224)
        Net deferred loan origination fees       (2,583,436)        (2,751,383)
        Allowance for loan losses                (2,252,062)        (2,107,994)
                                               ------------       ------------
                                                (11,724,935)       (11,533,601)
                                               ------------       ------------
                                               $471,231,319       $400,360,402
                                               ============       ============

         The Bank did not service loans for others on any of the dates presented
         in these financial statements.

         The allowance for losses on loans is summarized as follows:

                                                   Year Ended June 30,
                                       -----------------------------------------
                                          2000           1999          1998
                                          ----           ----          ----

         Balance, beginning of year    $2,107,994     $1,852,576    $1,714,512
         Provision for loan losses        399,500        314,000       265,000
         Acquired                            -           205,400          -
         Charge-offs                     (265,302)      (290,049)     (147,985)
         Recoveries                         9,870         26,067        21,049
                                       ----------     ----------    ----------
         Balance, end of year          $2,252,062     $2,107,994    $1,852,576
                                       ==========     ==========    ==========

                                       44
<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)


4.             LOANS RECEIVABLE - (Continued)

         Investment  in  impaired  loans  is  summarized  below.  There  were no
         impaired  loans  for  the  periods   presented   without  an  allowance
         allocation.
                                                     June 30,
                                      --------------------------------------
                                        2000           1999          1998
                                        ----           ----          ----

 Year-end impaired loans             $1,562,000   $ 2,529,000    $2,128,000
 Amount of allowance for loan
   loss allocated                       117,000       135,000       128,000
 Average impaired loans outstanding   2,764,000     2,382,000     1,934,000
 Interest income recognized             223,000       197,000       157,000
 Interest income received               223,000       197,000       157,000

         Non-performing loans, including impaired loans, are as follows:
                                                          June 30,
                                           ------------------------------------
                                              2000         1999        1998
                                              ----         ----        ----
      Past due 90 days still on accrual   $    -        $   -        $   -
      Nonaccrual                           1,307,000     2,381,000    2,057,000


5.       PREMISES AND EQUIPMENT

         Premises and equipment consist of the following:
                                                             June 30,
                                                  ----------------------------
                                                     2000              1999
                                                     ----              ----

         Land                                    $   816,265       $   816,265
         Buildings                                 9,962,447         9,391,174
         Furniture, fixtures and equipment         5,746,366         5,180,745
                                                  ----------        ----------
                                                  16,525,078        15,388,184
         Less accumulated depreciation            (4,815,810)       (3,793,815)
                                                  ----------        ----------
                                                 $11,709,268       $11,594,369
                                                 ===========       ===========

         Certain  premises are leased under  various  operating  leases.  Rental
         expense was $259,600, $233,318 and $63,200 for the years ended June 30,
         2000, 1999, and 1998,  respectively.  Future minimum  commitments under
         these leases are:

                         Year Ended
                           June 30,
                         ----------
                            2001          $  256,000
                            2002             198,067
                            2003             195,633
                            2004             198,833
                         Thereafter        1,562,817
                                           ---------
                                          $2,411,350
                                          ==========

                                       45
<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)

6.       DEPOSITS

         Time Deposits of $100,000 or more were  $87,941,000  and $75,012,000 at
         June 30,  2000 and  1999,  respectively.  At June 30,  2000,  scheduled
         maturities of time deposits are as follows:

                                                 Amount
                                                 ------
                   2001                       $181,636,792
                   2002                         85,517,574
                   2003                         11,547,531
                   2004                          6,832,770
                   Thereafter                    5,578,228
                                              ------------
                                              $291,112,895
                                              ============

7.       ADVANCES FROM FEDERAL HOME LOAN BANK

         Advances   from  the  Federal   Home  Loan  Bank  of   Cincinnati   are
         collateralized  by Federal Home Loan Bank stock and a blanket pledge of
         one-to-four family residential mortgage loans equivalent to 150 percent
         of the outstanding  advances.  At June 30, 2000, the Bank has available
         collateral to borrow an  additional  $200 million from the Federal Home
         Loan Bank.
<TABLE>
<CAPTION>
                                                               June 30,
                                                    2000                       1999
                                                    ----                       ----
                                         ---------------------------------------------------
                                         Weighted-                   Weighted-
                                          Average                     Average
                                           Rate         Amount         Rate        Amount
                                           ----         ------         ----        ------
    <S>                                  <C>        <C>               <C>       <C>
     Variable rate advances                 - %      $     -           5.19%     $25,000,000
     Fixed rate advances:
       Mortgage  matched  advances
       payable monthly through
       May, 2009 with interest
       rates from 5.30% to 7.80%           6.54%         691,190       6.59%         894,127
       Overnight repo advance              7.20%      44,000,000         -             -
       One month repo advance              6.55%      35,000,000         -             -
       Other fixed rate advances           7.53%         647,360         -             -
      Lines of credit in the amount
        of $28 million (2000) and $21
        million (1999) maturing in 2004
        through 2006                       8.69%           -           8.40%           -
                                                     -----------                 -----------
     Total borrowings                                $80,338,550                 $25,894,127
                                                     ===========                 ===========
</TABLE>

         The aggregate  minimum  annual  repayments of borrowings as of June 30,
         2000 is as follows:

           2001                             $79,091,645
           2002                                  96,468
           2003                                 101,625
           2004                                 107,140
           2005                                 113,039
           Thereafter                           828,633
                                            -----------
                                            $80,338,550
                                            ===========

                                       46
<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)


8.       INCOME TAXES

         The Corporation and its subsidiaries file a consolidated federal income
         tax return and income tax is apportioned  among all companies  based on
         their taxable income or loss.

         Provision for income taxes for the years ended June 30, are as follows:

                                        2000         1999         1998
                                        ----         ----         ----

         Current                     $2,439,347   $3,148,557   $3,175,254
         Deferred                       353,014     (178,266)     126,743
                                     ----------   ----------   ----------

         Total income tax expense    $2,792,361   $2,970,291   $3,301,997
                                     ==========   ==========   ==========

         The provision for income taxes differs from the amount  computed at the
         statutory rates as follows:

                                             2000         1999         1998
                                             ----         ----         ----

         Federal statutory rate              34.0%        34.0%       34.0%
              Tax-exempt interest income      (.2)         (.2)        (.2)
              Purchase Accounting             1.0           .9         1.4
              Dividends to ESOP               (.6)         (.5)        (.5)
              Other                          (1.2)        (1.0)        (.4)
                                             ----         ----        ----
         Effective rate                      33.0%        33.2%       34.3%
                                             =====        =====       =====

         Temporary differences between the financial statements carrying amounts
         and tax bases of assets and  liabilities  that give rise to significant
         portions of deferred income taxes at June 30, relate to the following:

                                                    2000            1999
                                                    ----            ----

         Deferred tax assets:
            Allowance for loan losses            $ 158,344       $ 261,200
            Loan fees                                  -           114,839
            Investment securities                  107,426         127,481
            Accrued liabilities and other          211,400         216,048
                                                   -------         -------
                                                   477,170         719,568
                                                   -------         -------
         Deferred tax liabilities:
            Depreciation                           890,335         837,234
            Net unrealized gain on securities
               available-for-sale                  228,818         565,632
            Federal Home Loan Bank stock           714,155         633,473
            Other                                  558,765         581,932
                                                   -------       ---------
                                                 2,392,073       2,618,271
                                                 ---------       ---------
         Net deferred tax liability             $1,914,903      $1,898,703
                                                ==========      ==========

                                       47
<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)


8.       INCOME TAXES - (Continued)

         Federal income tax laws provided savings banks with additional bad debt
         deductions through 1987, totaling $9.3 million for the Bank. Accounting
         standards  do not require a deferred  tax  liability  to be recorded on
         this amount, which liability otherwise would total $3.2 million at June
         30, 2000 and 1999. If the Bank was liquidated or otherwise ceased to be
         a bank or if tax  laws  were to  change,  the  $3.2  million  would  be
         recorded as expense.

9.       STOCKHOLDERS' EQUITY

           (a)    Liquidation Account - In connection with the Bank's conversion
                  from mutual to stock form of ownership  during 1987,  the Bank
                  established a "liquidation  account",  currently in the amount
                  of $650,000  for the  purpose of granting to eligible  savings
                  account holders a priority in the event of future liquidation.
                  Only  in  such  an  event,  an  eligible  account  holder  who
                  continues  to maintain a savings  account  will be entitled to
                  receive a distribution from the liquidation account. The total
                  amount  of the  liquidation  account  decreases  in an  amount
                  proportionately  corresponding  to  decreases  in the  savings
                  account balances of the eligible account holders.

           (b)    Regulatory Capital Requirements - Savings institutions insured
                  by the FDIC must meet various regulatory capital requirements.
                  If a requirement is not met,  regulatory  authorities may take
                  legal or  administrative  actions,  including  restrictions on
                  growth or operations or, in extreme cases, seizure.

                  As of  June  30,  2000,  the  Bank  was  categorized  as  well
                  capitalized.  The Bank's actual and required  capital  amounts
                  and ratios are presented below:
<TABLE>
<CAPTION>
                                                                                      To Be Considered
                                                                                      Well Capitalized
                                                                                        Under Prompt
                                                                   For Capital           Correction
                                                Actual          Adequacy Purposes    Action Provisions
                                         -------------------------------------------------------------
 As of June 30, 2000:                      Amount     Ratio      Amount    Ratio     Amount     Ratio
                                           ------     -----      ------    -----     ------     -----
<S>                                     <C>          <C>     <C>           <C>    <C>           <C>
   Total risk-based capital (to risk-
     weighted assets)                   $44,606,000   11.4%   $31,262,000   8.0%  $39,078,000    10.0%
   Tier I capital (to risk-weighted
    assets)                              42,354,000   10.8     15,631,000   4.0    23,447,000     6.0
   Tier I capital (to average assets)    42,354,000    7.8     21,865,000   4.0    27,331,000     5.0

 As of June 30, 1999
   Total risk-based capital (to risk-
     weighted assets)                   $44,678,000   14.6%   $24,562,000   8.0%  $30,703,000    10.0
   Tier I capital (to risk-weighted
    assets)                              42,570,000   13.9     12,281,000   4.0    18,422,000     6.0
   Tier I capital (to average assets)    42,570,000    8.9     19,152,000   4.0    23,940,000     5.0

</TABLE>

            (c)   Dividend  Restrictions  - Under OTS  regulations,  limitations
                  have been  imposed on all "capital  distributions"  by savings
                  institutions,   including  cash   dividends.   The  regulation
                  establishes a three-tiered  system of  restrictions,  with the
                  greatest  flexibility  afforded  to  thrifts  which  are  both
                  well-capitalized and given favorable  qualitative  examination
                  ratings by the OTS.For example, a thrift which is given one of

                                       48
<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)


9.       STOCKHOLDERS' EQUITY - (Continued)

                  the two highest examination ratings and has "capital" equal to
                  its fully phased-in regulatory capital requirements (a "tier 1
                  institution")  could,  if a subsidiary  of a holding  company,
                  after prior notice but without the prior  approval of the OTS,
                  make  capital  distributions  in any year to the extent not in
                  excess of its net income for the  calendar  year-to-date  plus
                  retained net income for the previous two calendar  years (less
                  any  dividends  previously  paid),  provided  that the  thrift
                  remains  adequately  capitalized  following the  distribution.
                  Other  thrifts would be subject to more  stringent  procedural
                  and substantive requirements, the most restrictive being prior
                  OTS approval of any capital  distribution.  The Bank is a tier
                  one  institution.  Under the most  restrictive of the dividend
                  limitations  described  above,  at June 30, 2000, the Bank was
                  able to declare  $8.4 million in  additional  dividends to the
                  holding  company  without  obtaining the prior approval of the
                  OTS.

            (d)   Qualified  Thrift Lender - The Qualified Thrift Lender ("QTL")
                  test requires that  approximately  65% of assets be maintained
                  in  housing-related  finance and other specified areas. If the
                  QTL test is not met,  limits are placed on growth,  branching,
                  new investments, FHLB advances and dividends, or the Bank must
                  convert to a commercial bank charter. Management believes that
                  the QTL test has been meet.

10.      EARNINGS PER SHARE

                  The  reconciliation  of the numerators and denominators of the
                  basic and diluted EPS is as follows:

                                                   Year Ended June 30,
                                          2000            1999          1998
                                          ----            ----          ----
    Net income available to common
      shareholders                     $5,663,342      $5,978,801    $6,334,217
                                       ==========      ==========    ==========

    Basic EPS:
      Weighted average common shares    3,906,197       4,127,804     4,145,039
                                        =========       =========     =========

    Diluted EPS:
      Weighted average common shares    3,906,197       4,127,804     4,145,039
      Dilutive effect of stock options     16,766          20,419        29,114
                                        ---------       ---------     ---------
      Weighted average common and
        incremental shares              3,922,963       4,148,223     4,174,153
                                        =========       =========     =========

    Earnings Per Share:
      Basic                                 $1.45           $1.45         $1.53
                                            =====           =====         =====

                                            $1.44           $1.44         $1.52
                                            =====           =====         =====


                  Stock  options  for  65,000  shares of common  stock  were not
                  included in the 2000  computation of diluted earning per share
                  because their impact was anti-dilutive.

                                       49


<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)

11.      EMPLOYEE BENEFIT PLANS:

            (a)   Pension  Plans - The Bank is a  participant  in the  Financial
                  Institutions  Retirement  Fund,  a  multiple-employer  defined
                  benefit  pension plan covering  substantially  all  employees.
                  Employees  are 100% vested at the  completion of five years of
                  participation  in the plan. The Bank's policy is to contribute
                  annually the minimum funding amounts.  Employer  contributions
                  and  administrative  expenses  charged to operations for 2000,
                  1999  and   1998   totaled   $5,418,   $4,486,   and   $4,438,
                  respectively.

                  The  Bank  has  a  contributory   thrift  plan,  which  covers
                  substantially  all of the  employees.  Under  the terms of the
                  plan, voluntary employee contributions are matched by up to 6%
                  of the employee base pay and employees are immediately vested.
                  Employer  contributions  charged to operations for 2000,  1999
                  and 1998 were $166,577, $142,465, and $116,367, respectively.

            (b)   Employee  Stock   Ownership  Plan  -  The  Corporation  has  a
                  non-contributory employee stock ownership plan (ESOP) in which
                  employees are eligible to participate  upon  completion of one
                  year of service.  Employees  are vested in  accordance  with a
                  schedule,  which provides for 100% vesting upon  completion of
                  seven years of service.

                  Shares of the  Corporation's  common stock were  acquired in a
                  non-leveraged transaction. At the time of purchase, the shares
                  are released and allocated to eligible employees determined by
                  a formula specified in the plan agreement.  Shares in the plan
                  at June 30 and contributions  charged to compensation  expense
                  during the year were as follows:

                                             2000          1999         1998
                                             ----          ----         ----
                  Allocated ESOP shares     211,503      225,889       230,213
                  Contributions to ESOP     $66,000      $50,000       $30,000

            (c)   Stock Option Plan - Under the 1998 Stock Option and  Incentive
                  Plan,   the   Corporation   may  grant  either   incentive  or
                  non-qualified  stock options to key employees for an aggregate
                  of 166,000  shares of the  Corporation's  common  stock at not
                  less  than fair  market  value at the date  such  options  are
                  granted. The option to purchase shares expires ten years after
                  the date of grant.  A summary  of  option  transactions  is as
                  follows:
<TABLE>
<CAPTION>
                                                                      June 30,
                                      ------------------------------------------------------------------
                                               2000                   1999                 1998
                                               ----                   ----                 ----
                                                    Weighted               Weighted             Weighted
                                                    Average                Average              Average
                                       Number of    Exercise   Number of   Exercise  Number of  Exercise
                                        Options      Price      Options     Price     Options    Price
                                        -------      -----      -------     -----     -------    -----
  <S>                                  <C>         <C>         <C>        <C>       <C>         <C>
   Outstanding, beginning of year        55,064     $15.52      42,564     $12.88     71,314     $12.77
   Granted during year                   52,500      22.53      12,500      24.50        -          -
   Forfeited during year                   (500)     17.13         -          -       (7,750)     15.60
   Exercised during the year             (4,834)     15.10         -          -      (21,000)     11.52
                                        -------                 ------               -------

   Outstanding, end of year             102,230      19.13      55,064      15.52     42,564      12.88
                                        =======                 ======                ======

   Eligible for exercise at year end     32,230                 26,564                26,564
   Weighted average fair value of
     options granted during the year    $  7.06                $  8.79               $   -

</TABLE>

                                       50
<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)


11.      EMPLOYEE BENEFIT PLANS - (Continued)

                  The following table summarizes information about stock options
                  outstanding at June 30, 2000:
<TABLE>
<CAPTION>

                                     Options Outstanding                  Options Exercisable
                                     -------------------                  -------------------
                                                          Weighted                    Weighted
                                     Weighted Average      Average                    Average
 Range of Exercise       Number          Remaining        Exercise       Number       Exercise
       Prices         Outstanding    Contractual Life       Price     Exercisable      Price
       ------         -----------    ----------------       -----     -----------      -----
 <S>                   <C>                 <C>             <C>          <C>           <C>
       $ 6.88             4,730             1.4 years       $ 6.88        4,730        $ 6.88
       $12.50            25,000             3.7              12.50       20,000         12.50
  $16.00 to $16.63        7,500             4.8              16.21          -             -
  $22.38 to $24.50       65,000             9.4              22.91        7,500         23.25
                         ------                                           -----

                        102,230             7.3             $19.13       32,230        $14.18
                        =======                                          ======
</TABLE>

                  The  pro-forma  effect on net income and earnings per share is
                  as follows:

                                                      Year Ended
                                                       June 30,
                                          2000           1999           1998
                                          ----           ----           ----

    Net income:  As reported           $5,663,342     $5,978,801     $6,334,217
                 Pro-forma              5,600,975      5,968,780      6,332,502

    Earnings per share:
                 Basic    As reported      $ 1.45         $ 1.45         $ 1.53
                          Pro-forma          1.43           1.45           1.53

                 Diluted  As reported      $ 1.44         $ 1.44         $ 1.52
                          Pro-forma          1.43           1.44           1.52

                  The fair value of each stock  option  granted is  estimated on
                  the date of grant using the Black-Scholes option-pricing model
                  with the following assumptions for grants in 2000: 1) expected
                  dividend yields at 3.2%, 2) risk-free interest rates at 6.20%,
                  3) expected volatility at 27%, and 4) expected life of options
                  at 10 years.  Future  pro-forma  net income will be negatively
                  impacted to the extent more options are granted.

12.      CASH FLOW ACTIVITIES

                  The  following   information  is  presented  as   supplemental
                  disclosures to the statement of cash flows.

                    (a)  Cash paid during the year ended June 30 for:

                                           2000          1999         1998
                                           ----          ----         ----

                     Interest expense  $20,613,518   $18,165,549    $15,903,156
                                       ===========   ===========    ===========

                     Income taxes      $ 2,973,347   $ 2,946,000    $ 1,461,000
                                        ==========   ===========    ===========

                                       51
<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)

12.      CASH FLOW ACTIVITIES - (Continued)

                     (b)  Supplemental disclosure of non-cash activities:

                                                     2000      1999      1998
                                                     ----      ----      ----
                      Loans to facilitate sales of
                      real estate owned            $783,075  $320,688  $716,448
                                                   ========  ========  ========

                      Transfers from loans to real
                      estate acquired through
                      foreclosure                  $674,465  $295,714  $666,463
                                                   ========  ========  ========


13.      CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)

         The following  condensed  statements  summarize the financial position,
         operating results and cash flows of First Federal Financial Corporation
         of Kentucky (Parent Company only).

                   Condensed Statements of Financial Condition
                                                               June 30,
                                                   ----------------------------
                                                       2000           1999
                                                       ----           ----
                              Assets
   Cash and interest bearing deposits             $   211,100    $   595,638
   Investment in subsidiary                        53,302,018     55,255,823
   Securities available-for-sale                      279,301        199,894
   Receivable from Bank                                  -         1,787,705
   Other assets                                        10,241         23,102
                                                  -----------    -----------
                                                  $53,802,660    $57,862,162
                                                  ===========    ===========

               Liabilities and Stockholders' Equity
   Payable to Bank                                $ 1,985,835    $     -
   Other liabilities                                  135,744          -
   Stockholders' equity                            51,681,081     57,862,162
                                                   ----------     ----------
                                                  $53,802,660    $57,862,162
                                                  ===========    ===========

                         Condensed Statements of Income
                                                     Year Ended June 30,
                                            ------------------------------------
                                               2000         1999        1998
                                               ----         ----        ----
    Dividend from subsidiary                $7,000,000   $4,000,000  $4,000,000
    Interest income                             52,695       34,681      35,188
    Gain on sale of investments                   -             -        51,620
    Other expenses                            (164,893)    (547,656)    (65,329)
                                            ----------    ---------   ---------
    Income before income tax benefit         6,887,802    3,487,025   4,021,479
    Income tax benefit                          93,942      222,473      56,535
                                            ----------    ---------   ---------
    Income before equity in undistributed
      net income of subsidiary               6,981,744    3,709,498   4,078,014
    Equity in undistributed net income of
      subsidiaries (distributions in excess
      of net income)                        (1,318,402)   2,269,303   2,256,203
                                            ----------   ----------  ----------
    Net income                              $5,663,342   $5,978,801  $6,334,217
                                            ==========   ==========  ==========

                                       52

<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)


13.      CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) - (Continued)

                       Condensed Statements of Cash Flows
<TABLE>
<CAPTION>
                                                              Year Ended June 30,
                                                   ---------------------------------------
                                                      2000          1999          1998
                                                      ----          ----          ----
<S>                                               <C>           <C>           <C>
 Operating Activities:
   Net income                                      $5,663,342    $5,978,801    $6,334,217
   Adjustments to reconcile net income to
     cash provided by operating activities:
      (Equity in undistributed net income
        from subsidiary) distributions in
        excess of net income                        1,318,402    (2,269,303)   (2,256,203)
      Gain on sale of investments available
         for-sale                                       -             -           (51,620)
      Decrease (increase) in other assets              22,344        (5,265)      150,908
      (Decrease) increase in other
        liabilities                                   135,744         -           (51,620)
                                                    ---------     ---------     ---------
 Net cash provided by operating activities          7,139,832     3,704,233     4,125,682
                                                    ---------     ---------     ---------
 Investing Activities:
   Purchases of securities available-for-sale        (107,300)        -             -
   Net change in receivable from Bank               1,787,705      (393,895)     (778,172)
                                                    ---------     ---------    ----------
 Net cash provided (used) by investing
   activities                                       1,680,405      (393,895)     (778,172)
                                                    ---------     ---------    ----------
 Financing Activities:
    Proceeds from stock options exercised               5,762         -                40
    Dividends paid                                 (2,802,833)   (2,600,186)   (2,319,019)
    Common stock repurchases                       (8,393,539)     (206,520)   (1,117,315)
    Collection on advance to ESOP                       -             -            11,129
    Net change in payable to Bank                   1,985,835         -             -
                                                   ----------    ----------    ----------
 Net cash used by financing activities             (9,204,775)   (2,806,706)   (3,425,165)
                                                   ----------    ----------    ----------
 Net increase (decrease) in cash                     (384,538)      503,632       (77,655)

 Cash and interest bearing deposits,
    beginning of year                                 595,638        92,006       169,661
                                                   ----------    ----------    ----------
 Cash and interest bearing deposits,
    end of year                                    $  211,100    $  595,638    $   92,006
                                                   ==========    ==========    ==========
</TABLE>


                                       53
<PAGE>



                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)


14.      FAIR VALUE OF FINANCIAL INSTRUMENTS

         The estimated fair values of the  Corporation's  financial  instruments
         are as follows:
<TABLE>
<CAPTION>
                                                      June 30, 2000                    June 30, 1999
                                            -------------------------------   -----------------------------
                                               Carrying          Fair           Carrying         Fair
                                                 Value           Value            Value          Value
                                                 -----           -----            -----          -----
        <S>                                 <C>             <C>              <C>            <C>
         Financial assets:
           Cash and cash equivalents         $ 14,978,936    $ 14,979,000     $ 11,891,637   $ 11,892,000
           Investment securities:
             Securities available-for-sale      2,047,642       2,048,000        2,935,979      2,936,000
             Securities held-to-maturity       43,133,967      41,195,000       44,404,392     43,525,000
           Loans, net                         471,231,319     463,191,000      400,360,402    397,967,000
           Federal Home Loan Bank stock         4,080,800       4,080,800        3,200,000      3,200,000
           Accrued interest receivable          2,031,877       2,032,000        1,603,514      1,604,000
         Financial liabilities:
           Deposits                          (423,758,955)   (422,696,000)    (399,443,439)  (398,444,000)
           Advances from Federal
             Home Loan Bank                   (80,338,550)    (79,992,000)     (25,894,127)   (24,239,000)
           Accrued interest payable            (1,128,790)     (1,129,000)        (868,840)      (869,000)
</TABLE>


         The methods and  assumptions  used by the Corporation in estimating its
         fair value disclosures for financial instruments are presented below:

         Carrying  amount  is  the  estimated  fair  value  for  cash  and  cash
         equivalents,  Federal Home Loan Bank stock, accrued interest receivable
         and payable,  demand deposits, and variable rate loans or deposits that
         reprice frequently and fully.  Security fair values are based on market
         prices or dealer quotes,  and if no such  information is available,  on
         the rate and term of the security and information about the issuer. For
         fixed rate loans or deposits  and for  variable  rate loans or deposits
         with infrequent  repricing or repricing limits,  fair value is based on
         discounted  cash  flows  using  current  market  rates  applied  to the
         estimated  life and credit  risk.  Fair values for  impaired  loans are
         estimated using discounted cash flow analysis or underlying  collateral
         values. Fair values of advances from Federal Home Loan Bank is based on
         current   rates   for   similar   financing.    The   fair   value   of
         off-balance-sheet items is based on the current fees or cost that would
         be charged to enter into or terminate such arrangements.

15.      CONTINGENCIES

         In the normal course of business,  there are various  outstanding legal
         proceedings   and  claims.   In  the  opinion  of   management,   after
         consultation  with  legal  counsel,   the  disposition  of  such  legal
         proceedings  and claims will not  materially  affect the  Corporation's
         consolidated financial position, results of operations or liquidity.

16.               FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

         The Bank is a party to  financial  instruments  with  off-balance-sheet
         risk in the normal  course of business to meet the  financing  needs of
         its  customers.  These  financial  instruments  include  commitments to
         extend credit. Those instruments involve, to varying degrees,  elements
         of credit and interest-rate  risk in excess of the amount recognized in
         the  balance  sheet.   The  contract  or  notional   amounts  of  those
         instruments reflect the  extent of the Bank's involvement in particular
         classes of financial instruments.

                                       54
<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Continued)

  16.     FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK - (Continued)

         The Bank's  exposure to credit loss in the event of  nonperformance  by
         the other party to the financial  instrument for  commitments to extend
         credit  is  represented  by the  contractual  notional  amount of those
         instruments.   The  Bank  uses  the  same  credit  policies  in  making
         commitments and conditional obligations as it does for on-balance-sheet
         instruments.

         Commitments  to extend  credit are  agreements to lend to a customer as
         long as there  is no  violation  of any  condition  established  in the
         contract.  Commitments  generally have fixed  expiration dates or other
         termination clauses and may require payment of a fee. Since many of the
         commitments  are expected to expire without being drawn upon, the total
         commitment   amounts  do  not   necessarily   represent   future   cash
         requirements. The Bank evaluates each customer's credit worthiness. The
         amount of collateral  obtained,  if it is deemed  necessary by the Bank
         upon extension of credit, is based on management's credit evaluation of
         the counterparty.

         Commitments to make loans,  excluding  undisbursed portions of loans in
         process, at June 30 were as follows:

                                      2000                       1999
                           -------------------------  -------------------------
                              Fixed       Variable        Fixed      Variable
                               Rate         Rate           Rate        Rate
Commitments to make loans  $ 3,218,720  $ 1,859,590    $16,146,055  $ 3,455,856
Unused lines of credit          -        28,020,618         -        21,090,958
Standby letters of credit       -         3,240,860         -         2,694,940
                           -----------  -----------    -----------  -----------

                           $ 3,218,720  $33,121,068    $16,146,055  $27,241,754
                           ===========  ===========    ===========  ===========

         Fixed rate loan  commitments  at June 30,  2000 were at  current  rates
         ranging from 7.13% to 9.50%.

         Variable rate loan  commitments  at June 30, 2000 were at current rates
         ranging from 8.00% to 9.13% for loan  commitments,  6.99% to 10.50% for
         unused  lines of credit and  primarily  at the  national  prime rate of
         interest plus 50 to 200 basis points for standby letters of credit.

17.      RELATED PARTY TRANSACTIONS

         Certain directors, executive officers and principal shareholders of the
         Company,  including associates of such persons,  are loan customers.  A
         summary of the  related  party  loan  activity,  for loans  aggregating
         $60,000 or more to any one related party, is as follows:
                                                    June 30,
                                          --------------------------
                                             2000            1999
                                             ----            ----

             Beginning of year            $1,668,630      $1,112,789
              New loans                        -             182,000
              Repayments                    (246,857)       (294,770)
              Other changes                 (138,346)        668,611
                                          ----------      ----------
             End of year                  $1,283,427      $1,668,630
                                          ==========      ==========

         Other changes include adjustments for loans applicable to one reporting
         period that are excludable from the other reporting period. These loans
         were made in the ordinary  course of business at market  interest rates
         and normal credit terms.

                                       55

<PAGE>


ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
            AND FINANCIAL DISCLOSURE

         Information  required by this item is herein  incorporated by reference
to the Corporation's Form 8-K filed April 20,1999.

                                    PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         For information  concerning the Board of Directors of the  Corporation,
the information  contained under the section captioned "Proposal I - Election of
Directors" in the Corporation's definitive proxy statement for the Corporation's
2000 Annual Meeting of  Stockholders  (the "Proxy  Statement")  is  incorporated
herein by reference.

ITEM 11.    EXECUTIVE COMPENSATION

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

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         (a)      Security Ownership of Certain Beneficial Owners

                  Information  required by this item is  incorporated  herein by
                  reference  to the section  captioned  "Voting  Securities  and
                  Principal Holders Thereof" in the Proxy Statement

         (b)      Security Ownership of Management

                  Information  required by this item is  incorporated  herein by
                  reference to the sections captioned  "Proposal I - Election of
                  Directors"  and  "Voting   Securities  and  Principal  Holders
                  Thereof" in the Proxy Statement.

         (c)      Changes in Control

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

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The  information  required  by this  item  is  incorporated  herein  by
reference to the section  captioned  "Proposal I - Election of Directors" in the
Proxy Statement.

                                       56
<PAGE>
                                     PART IV


ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

         1.       Financial Statements Filed

                  (a) (1)  Report  of  Independent  Auditors-Crowe,  Chizek  and
                           Company  LLP
                  (a) (2)  Report of  Independent  Auditors-Whelan, Doerr &
                           Company PSC
                  (b)      Consolidated  Statements of Financial Condition  at
                           June  30,  2000  and  1999.
                  (c)      Consolidated Statements of Income for the years ended
                           June 30, 2000, 1999, and 1998.
                  (d)      Consolidated Statements of Comprehensive Income for
                           the years ended June 30, 2000, 1999, and 1998.
                  (e)      Consolidated  Statements of Changes in  Stockholders'
                           Equity for the years ended June 30, 2000, 1999, and
                           1998.
                  (f)      Consolidated Statements of Cash Flows for the years
                           ended June 30, 2000, 1999, and 1998.
                  (g)      Notes to Consolidated Financial Statements

         2.       All financial  statement  schedules have been omitted,  as the
                  required information is either inapplicable or included in the
                  financial statements or related notes.

         3.       Exhibits
                  (3)(a)   Articles of Incorporation *
                  (3)(b)   Bylaws *
                 (10)(b)   First Federal Savings Bank of Elizabethtown
                           Stock Option and Incentive Plan, as amended**
                 (16)      Letter re Change in Auditor***
                 (21)      Subsidiaries of the Registrant
                 (99)      Undertakings
                 (23)(a)   Consent of Crowe, Chizek and Company LLP, Certified
                           Public Accountants
                 (23)(b)   Consent of Whelan, Doerr & Company PSC, Certified
                           Public Accountants
                 (27)      Financial Data Schedule

         4.      The Registrant has filed no reports on Form 8-K for the quarter
                 ending June 30, 2000.







*        Incorporated by reference to the Corporation's Form S-4 Registration
         Statement (No. 33-30582).
**       Incorporated by reference to Exhibit 10(b) of the Corporation's 1998
         definitive proxy statement.
***      Incorporated by reference to the Corporation's Form 8-K filed
         April 20, 1999.


                                       57
<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.

                                   FIRST FEDERAL FINANCIAL CORPORATION
                                   OF KENTUCKY

Date: 9/19/00            By:      /s/ B. Keith Johnson
                                   ----------------------
                                   B. Keith Johnson
                                   President and Chief Executive Officer
                                   Duly Authorized Representative

         Pursuant to the  requirements  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 and on the dates indicated.


By:  /s/ B.Keith Johnson                         By: /s/ Irene B. Lewis
     --------------------                            --------------------
     B. Keith Johnson                                Irene B. Lewis
     Principal Executive Officer                     Director
     and Director

Date:     9/19/00                                Date:  9/19/00


By:  /s/ Wreno M. Hall                           By: /s/ Bob Brown
     -------------------                               ----------------
     Wreno M. Hall                                   Bob Brown
     Director                                        Director

Date:     9/19/00                                Date:  9/19/00

By:  /s/ J. Alton Rider                          By: /s/ Kennard Peden
     --------------------                            --------------------
     J. Alton Rider                                  Kennard Peden
     Director                                        Director

Date:     9/19/00                                Date:  9/19/00


By:  /s/ Burlyn Pike                             By: /s/ Walter D. Huddleston
     ---------------------                           -------------------------
     Burlyn Pike                                     Walter D. Huddleston
     Director                                        Director

Date:     9/19/00                                Date:  9/19/00


By:  /s/ Stephen Mouser                          By: /s/ Charles Chaney
     ---------------------                           ---------------------
     Stephen Mouser                                 Charles Chaney
     Director                                       Chief Operating Officer

Date:  9/19/00                                   Date:  9/19/00


By:  /s/ Michael Thomas
     -------------------
     Michael Thomas, DVM
     Director

Date:  9/19/00

                                       58
<PAGE>



                                INDEX TO EXHIBITS



Exhibit No.    Description
----------     ------------
  (3) (a)      Articles of Incorporation *

  (3) (b)      Bylaws*

  (10)(b)      First Federal Savings Bank of Elizabethtown Stock Option and
               Incentive Plan, as amended **

  (16)         Letter re Change in Auditor***

  (21)         Subsidiaries of the Registrant

  (99)         Undertakings

  (23)(a)      Consent of Crowe, Chizek and Company LLP, Certified Public
               Accountants

  (23)(b)      Consent of Whelan, Doerr & Company PSC, Certified Public
               Accountants

  (27)         Financial Data Schedule







*        Incorporated by reference to the Corporation's Form S-4 Registration
         Statement (No. 33-30582).
**       Incorporated by reference to Exhibit 10(b) of the Corporation's 1998
         definitive proxy statement.
***      Incorporated by reference to the Corporation's Form 8-K filed
         April 20, 1999.

                                       59


<PAGE>


                                   EXHIBIT 21


                         SUBSIDIARIES OF THE REGISTRANT



Parent
------
First Federal Financial Corporation of Kentucky



                                          State of               Percentage
Subsidiaries                           Incorporation               Owned
------------                           -------------             ----------

First Federal Savings Bank             United States                 100%
  of Elizabethtown

First Service Corporation                 Kentucky                   100%
  of Elizabethtown (a)

First Heartland Mortgage                  Kentucky                   100%
  of Elizabethtown (a)

(a)    Wholly-owned subsidiaries of First Federal Savings Bank of Elizabethtown.

                                       60

<PAGE>



EXHIBIT 99 - UNDERTAKINGS

(a)      The undersigned Registrant hereby undertakes:

         (1)  To file,  during any period in which offers or sales are being
              made, a post-effective  amendment to its Form S-8 registration
              statement No. 33-30582

              (i)      To include any prospectus required by section 10(a)(3)
                       of the Securities Act of 1933;
              (ii)     To  reflect  in the  prospectus  any  facts or events
                       arising after the effective date of the  registration
                       statement   (or  the   most   recent   post-effective
                       amendment  thereof)  which,  individually  or in  the
                       aggregate,  represents  a  fundamental  change in the
                       information set forth in the registration statement;
              (iii)    To include any material  information  with respect to
                       the plan of distribution not previously  disclosed in
                       the registration  statement or any material change to
                       such information in the registration statements;

          (2)  That,  for the purpose of  determining  any  liability  under the
               Securities Act of 1933, each such post-effective  amendment shall
               be  deemed to be a new  registration  statement  relating  to the
               securities  offered therein,  and the offering of such securities
               at that time shall be deemed to be the initial bona fide offering
               thereof.

          (3)  To  remove  from   registration  by  means  of  a  post-effective
               amendment any of the  securities  being  registered  which remain
               unsold at the termination of the offering.

(b)            The undersigned  Registrant  hereby undertakes that, for purposes
               of  determining  any liability  under the Securities Act of 1933,
               each filing of the Registrant's Annual Report pursuant to section
               13(a) or section  15(d) of the  Securities  Exchange  Act of 1934
               (and, where applicable, each filing of an employee benefit plan's
               annual  report  pursuant  to  section  15(d)  of  the  Securities
               Exchange  of  1934)  that is  incorporated  by  reference  in the
               registration   statement   relating  to  the  securities  offered
               therein,  and the offering of such  securities at that time shall
               be deemed to be the initial bona fide offering thereof.

(h)            Insofar as  indemnification  for  liabilities  arising  under the
               Securities  Act of 1933 may be permitted to  directors,  officers
               and  controlling  persons  of  the  registrant  pursuant  to  the
               foregoing  provisions,  or  otherwise,  the  registrant  has been
               advised  that  in the  opinion  of the  Securities  and  Exchange
               Commission  such  indemnification  is  against  public  policy as
               expressed  in the Act and is,  therefore,  unenforceable.  In the
               event that a claim for  indemnification  against such liabilities
               (other than the payment by the registrant of expenses incurred or
               paid  by  a  director,  officer  or  controlling  person  of  the
               registrant  in the  successful  defense  of any  action,  suit or
               proceeding) is asserted by such director,  officer or controlling
               person in connection with the securities  being  registered,  the
               registrant will,  unless in the opinion of its counsel the matter
               has been settled by controlling  precedent,  submit to a court of
               appropriate    jurisdiction    the    question    whether    such
               indemnification  by it is against  public  policy as expressed in
               the Act and will be  governed by the final  adjudication  of such
               issue.


                                       61
<PAGE>


EXHIBIT 23(a) - CONSENT OF CROWE, CHIZEK & COMPANY LLP


We hereby  consent to the  inclusion  of our report  dated July 28,  2000 in the
annual report on Form 10-K of First Federal Financial Corporation of Kentucky as
of June 30, 2000.




                                            /s/ Crowe, Chizek & Company LLP
                                            -------------------------------
                                            Crowe, Chizek & Company LLP



                                       62
<PAGE>



EXHIBIT 23(b) - CONSENT OF WHELAN, DOERR & COMPANY PSC


We consent to  incorporation  by reference  in the  Registration  Statement  No.
33-30582 on Form S-8 of First Federal  Financial  Corporation of Kentucky to our
report dated August 17, 1998, relating to the consolidated  financial statements
of First Federal  Financial  Corporation of Kentucky for the year ended June 30,
1998.



                                            /s/ Whelan, Doerr & Company PSC
                                            -------------------------------
                                            Whelan, Doerr & Company PSC


                                       63