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, 2001.

[ ] TRANSITIONAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(d) OF THE  SECURITIES
    XCHANGE 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, 2001, was $63,894,347.  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, 2001,  there were issued and outstanding  3,758,491
shares of the  registrant's  common  stock,  of which  directors  and  executive
officers  held 658,195  shares and more than 5%  beneficial  owners held 207,045
shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

1.   Portions of the Registrant's Definitive Proxy Statement for the 2001 Annual
     Meeting of Shareholders are incorporated by reference into Part III.


<PAGE>

                                     PART I

PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

          Statements  by  First  Federal  Financial   Corporation  of   Kentucky
(the  "Corporation")  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,  the Corporation may
make  forward-looking  statements  in future  filings  with the  Securities  and
Exchange Commission,  in press releases, and in oral and written statements made
by or with the approval of the Corporation.  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 Corporation 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  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"),  which became effective on June 1, 1990. Since
that date, 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 subsidiaries.
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,  multi-family housing and commercial property.  First
Federal also makes home improvement loans,  consumer loans,  commercial business
loans,  FHA loans and through its  subsidiaries  offers  insurance  products and
brokerage  services to its  customers  and makes  qualified VA 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,  and loan  repayments.  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.

                                       2
<PAGE>

         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.
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. The Bank also 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,
                  ---------------------------------------------------------------------------------------------------
                           2001                 2000               1999                1998               1997
                           ----                 ----               ----                ----               ----
                    AMOUNT       %       AMOUNT      %       AMOUNT      %      AMOUNT      %      AMOUNT      %
                    ------       -       ------      -       ------      -      ------      -      ------      -
<S>               <C>         <C>      <C>        <C>     <C>        <C>      <C>         <C>     <C>        <C>
Type of Loan:
Real Estate:
   Mortgage        $328,297    63.12%   $308,507   65.16%  $297,574   73.94%  $282,503    79.18%  $266,599   80.91%
   Construction       9,079     1.75       8,975    1.89     11,430    2.84      5,960     1.67      8,346    2.53
   Commercial        88,821    17.08      64,828   13.69     32,729    8.13     22,169     6.21     17,141    5.20
Consumer and
     home equity     54,189    10.42      59,692   12.61     48,281   12.00     45,136    12.65     35,467   10.76
Indirect consumer    21,822     4.20      15,186    3.21        762     .19       -          -        -         -
Commercial,
     other           17,844     3.43      16,295    3.44     11,692    2.90      1,020      .29      1,953     .60
                   --------  -------    --------  ------   --------  ------   --------   ------   --------  ------
      Total loans  $520,052   100.00%   $473,483  100.00%  $402,468  100.00%  $356,788   100.00%  $329,506  100.00%
                   ========  ========   ========  =======  ========  =======  ========   =======  ========  =======
</TABLE>

LOAN MATURITY  SCHEDULE.  The following table sets forth certain  information at
June 30, 2001,  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
                                   2002              2001              2001          LOANS
                                   ----              ----              ----          -----

                                                     (DOLLARS IN THOUSANDS)
<S>                             <C>              <C>              <C>            <C>
 Real estate mortgage             $ 728           $ 10,325         $317,244       $328,297
 Real estate construction (1)     8,641                438              -            9,079
 Consumer                         9,209             63,552            3,250         76,011
 Commercial, financial and
    agricultural                 19,784             47,191           39,690        106,665
                                 ------           --------         --------        -------

       Total                    $38,362           $121,506         $360,184       $520,052
                                =======           ========         ========       ========
</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         $252,403         $ 75,166       $327,569
   Real estate construction          438            -                438
   Consumer                       59,545            7,257         66,802
   Commercial, financial and
      agricultural                72,442           14,439         86,881
                                --------         --------       --------
         Total                  $384,828         $ 96,862       $481,690
                                ========         ========       ========

         RESIDENTIAL  REAL ESTATE &  CONSTRUCTION  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, 2001,  approximately
22.9% 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 90%. 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 $12.2 million of the
loan portfolio at June 30, 2001. 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  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 permanent residential mortgage lending.

         The Bank's  underwriting  criteria is 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;  pre-construction  sale and leasing  information;  and cash flow
projections of the borrower.

         COMMERCIAL REAL ESTATE LENDING.  First Federal originates loans secured
by existing  commercial  properties  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, 2001, the Bank
had $88.8 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, 2001, fiscal year had a balance of $4.4 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.

                                       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, 2001,  total loans under the dealer loan program totaled
$21.8 million.  As of June 30, 2001, consumer loans outstanding were $76 million
or  approximately  14.6% 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. 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, 2001, these loans totaled $20.2 million.

         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.

         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, 2001 totaled $17.8  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, 2001, these loans totaled approximately $8.5 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  analyzes the loan  application and the property to be
used as collateral  and  subsequently  approves or denies the loan  request.  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 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 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, 2001, was approximately $4.6 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,  real estate  acquired  through  foreclosure and
repossessed  assets.  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.
<TABLE>
<CAPTION>

                                                             AT JUNE 30,
                                      2001         2000         1999        1998         1997
                                      ----         ----         ----        ----         ----
                                                       (DOLLARS IN THOUSANDS)
<S>                                 <C>          <C>          <C>          <C>          <C>
Past due 90 days still on accural    $   -        $   -        $   -       $   -        $   -
Loans on non-accrual status (1)       2,720        1,562        2,529       2,128        1,550
                                     ------       ------       ------      ------       ------

   Total non-performing loans         2,720        1,562        2,529       2,128        1,550
Real estate acquired through
   Foreclosure                          296           -           109         134          184
Repossessed assets                       70           -            -           -            -
                                     ------       ------       ------      ------       ------
   Total non-performing assets       $3,086       $1,562       $2,638      $2,262       $1,734
                                     ======       ======       ======      ======       ======

Interest income that would have
  been earned and received on
  non-accrual loans                  $  227      $   126      $   209       $ 182       $  131
Ratios:  Non-performing loans
          to loans                      .52%         .33%         .63%        .60%         .47%
         Non-performing assets
          to total assets               .51%         .28%         .54%        .55%         .46%
</TABLE>

-------------------------------------------------------
(1) Loans on non-accrual status include impaired loans.



                                       6

<PAGE>

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.  An  appropriate  level of the
general  allowance is  determined  based on the  application  of projected  risk
percentages to graded loans by categories.  In addition,  specific  reserves are
established for individual loans when deemed necessary by management. The amount
of the provision for loan losses necessary to maintain an adequate  allowance is
based upon an assessment  of loan quality,  changes in the size and character of
the  loan  portfolio,  consultation  with  regulatory  authorities,  delinquency
trends,   economic   conditions,   industry  trends,   historical   charge-offs,
recoveries,  and other  information.  Management  monitors the  commercial  real
estate loan portfolio closely, recognizing that commercial loans carry a greater
risk of loss than  residential  real estate loans, and believes it has, based on
information presently available, adequately provided for loan losses at June 30,
2001.  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.

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

                                              YEAR ENDED JUNE 30,

                                   2001     2000     1999      1998     1997
                                   ----     ----     ----      ----     ----
                                                   (DOLLARS IN THOUSANDS)

Balance at beginning of period    $2,252   $2,108   $1,853    $1,715   $1,613
                                  ------   ------   ------    ------   ------
Loans charged-off:
   Real estate mortgage                2       36       42        16       17
   Consumer                          482      147      248       132      114
   Commercial                         15       82       -         -        -
                                     ---      ---      ---       ---      ---

Total charge-offs                    499      265      290       148      131
                                     ---      ---      ---       ---      ---
Recoveries:
   Real estate mortgage                4        1        5        -        -
   Consumer                           63        8       21        21       33
   Commercial                         -         -       -         -        -
Total recoveries                      67        9       26        21       33
                                     ---      ---      ---       ---       --

Net loans charged-off                432      256      264       127       98
                                     ---      ---      ---       ---       --

Acquired reserves                      -        -      205        -        -
Provision for loan losses          1,086      400      314       265      200
                                   -----      ---      ---       ---      ---

Balance at end of period          $2,906   $2,252   $2,108    $1,853   $1,715
                                  ------   ------   ------    ------   ------

Net charge-offs to average
   loans outstanding                .086%    .058%    .068%     .037%    .031%
Allowance for loan losses to
    total non-performing assets       94%     144%      80%       85%      99%


         The  provision  for loan losses was $1.1  million for 2001  compared to
$400,000 for the 2000 period.  The increase in the  provision is a result of the
increase  in  charge-offs  for the  period  and to  compensate  for  the  Bank's
continued  strong loan  growth,  particularly  the  commercial  and the indirect
consumer loan portfolios.  Net loan charge-offs  increased  $176,000 to $432,000
for 2001 compared to $256,000 for the 2000 period.  The increase in  charge-offs
is primarily  related to charge-offs of indirect  consumer loans during the 2001
period.

                                       7

<PAGE>


         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>


                        ---------------------------------------------------------------------------------

                                 2001                        2000                          1999
                                 ----                        ----                          ----
                         AMOUNT OF     PERCENT OF     AMOUNT OF    PERCENT OF    AMOUNT OF     PERCENT OF
                         ALLOWANCE     TOTAL LOANS    ALLOWANCE    TOTAL LOANS   ALLOWANCE     TOTAL LOANS

<S>                      <C>          <C>             <C>          <C>            <C>          <C>
Real estate mortgage      $1,399           65%         $1,411          67%         $1,546           77%
Consumer                     953           15             603          16             472           12
Commercial                   554           20             238          17              90           11
                          ------       ------          ------       ------         ------       ------

      Total               $2,906       100.00%         $2,252       100.00%        $2,108       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.

         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, 2001, on the basis of management's review of the Bank's
loan  portfolio,  the Bank had $2.7  million of assets  classified  substandard,
$248,000 of assets  classified as doubtful and $324,000 of assets  classified as
loss.

         Each element of the allowance was  determined by applying the following
risk percentages to each grade of loan:  Substandard-2.5% to 20%; Doubtful-5% to
50%; Loss-100%; and Special Mention-2% to 6%. The risk percentages are developed
by the Bank in consultation with regulatory authorities, actual loss experience,
peer group loss experience and are adjusted for current economic conditions. The
risk percentages are considered a prudent  measurement of the risk of the Bank's
loan portfolio.  Such risk  percentages are applied to individual loans based on
loan type.

INVESTMENT SECURITIES

         Interest on securities  provides the largest source of income for First
Federal after interest on loans,  constituting 7.5% of the total interest income
for fiscal  year 2001.  First  Federal  maintains  its liquid  assets 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, 2001,
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 2 of Notes to Consolidated  Financial Statements for
further information concerning the Bank's investment portfolio.

                                       8

<PAGE>

The  following  table sets  forth the  carrying  value of the Bank's  securities
portfolio  at the dates  indicated.  At June 30,  2001,  the market value of the
Bank's securities portfolio was $23 million.

                                                          AT JUNE 30
                                          -------------------------------------

                                            2001            2000          1999
                                            ----            ----          ----
                                                    (DOLLARS IN THOUSANDS)
 Securities available-for-sale:
    Equity securities                     $   996        $ 1,105        $ 1,948
    Obligations of states and political
       Subdivisions                         1,017            943            988
                                            -----         ------        -------

    Total available-for-sale              $ 2,013        $ 2,048        $ 2,936
                                          =======        =======        =======

 Securities held-to-maturity:
    U.S. Treasury and agencies            $19,917        $41,860        $42,814
    Mortgage-backed securities              1,004          1,274          1,590
                                            -----         ------        -------

    Total held-to-maturity                $20,921        $43,134        $44,404
                                          =======        =======        =======


       The following table sets forth the scheduled maturities,  amortized cost,
       fair value and weighted average yields for the Bank's  securities at June
       30, 2001.
                                                                        WEIGHTED
                                               AMORTIZED      FAIR      AVERAGE
                                                 COST         VALUE      YIELD*
                                                     (DOLLARS IN THOUSANDS)
   Securities available-for-sale:
      Due after one year through five years     $ 357       $   360      4.38%
      Due after five years through ten years      653           657      4.40
      Equity securities                           385           996      3.38
                                               ------       -------

             Total available-for-sale          $1,395       $ 2,013
                                               ======       =======


   Securities held-to-maturity:
      Due after one year through five years    $ 6,921      $ 7,071      6.75
      Due after five years through ten years    11,996       11,913      6.53
      Due after ten years                        1,000          979      6.75
      Mortgage-backed securities                 1,004          991      7.44
                                               -------     --------

                Total held-to-maturity         $20,921      $20,954
                                               =======      =======

      *The weighted  average  yields are calculated on amortized 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.

                                       9


<PAGE>

         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,  2001,  approximately  31% 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.

         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 the flow of funds away from depository  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 market conditions.

The  following  table sets forth the amount of  deposits  as of June 30, 2001 by
various interest rate categories.

 WEIGHTED
 AVERAGE                                                               PERCENT
 INTEREST                                                                 OF
   RATE           CATEGORY                           BALANCES (1)      DEPOSITS
   ----           --------                           ------------      --------

    -  %     Non-interest bearing demand accounts      $ 21,208           4.52%
   1.60      NOW demand accounts                         58,354          12.45
   2.60      Savings accounts                            34,833           7.43
   3.27      Money market deposit accounts               30,799           6.57
   6.44      Certificates of deposit                    288,256          61.48
   5.21      Individual Retirement Accounts              35,375           7.55
                                                        -------         -------

                                                         $468,825       100.00%
                                                         ========       =======

         (1) Dollars in thousands.

The  following  table  indicates  at June 30,  2001  the  amount  of the  Bank's
certificates of deposit of $100,000 or more by time remaining until maturity.


         MATURITY PERIOD                    CERTIFICATES
                                             OF DEPOSIT
                                           (IN THOUSANDS)

        Three months or less                 $  30,457
        Three through six months                26,502
        Six through twelve months               23,133
        Over twelve months                      22,485
                                                ------
             Total                            $102,577
                                              ========



                                       10

<PAGE>

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,
                           -------------------------------------------------------------------------
                                    2001                      2000                      1999
                                    ----                      ----                      ----
                            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          $18,427        -  %      $ 16,896        -  %     $ 14,651       -  %
 Demand deposit and
    money market accounts    79,792       2.71         78,222       2.39        72,224      2.11
 Savings deposits            33,964       2.72         36,115       2.90        38,494      2.56
 Certificates of deposit    309,651       6.15        279,941       5.41       266,575      5.50
</TABLE>

         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  substantially all of
the Bank's  first  mortgage  loans.  At June 30,  2001 First  Federal  had $77.3
million in advances  outstanding  from the FHLB and the capacity to increase its
borrowings an additional $39.6 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. For further information,  see Note 6
of the Notes to Consolidated Financial Statements in the Annual Report.

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

                                                       AT JUNE 30,
                                       ----------------------------------------
                                         2001            2000           1999
                                         ----            ----           ----
                                                  (DOLLARS IN THOUSANDS)


 Average balance outstanding            $91,418         $23,560       $41,990
 Maximum amount outstanding at
    any month-end during the period     111,026          25,894        43,441
 Year end balance                        77,298          25,894        43,249
 Weighted average interest rate:
    At end of year                         4.89%           5.25%         5.39%
    During the year                        5.80%           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,
                                    ----------------------------------------------------------------------------------------------
                                                  2001                               2000                              1999
                                                  ----                               ----                              ----
<S>                                <C>          <C>     <C>          <C>        <C>       <C>         <C>       <C>       <C>
                                     AVERAGE              AVERAGE     AVERAGE               AVERAGE    AVERAGE             AVERAGE
                                     BALANCE    INTEREST YIELD/COST   BALANCE    INTEREST  YIELD/COST  BALANCE  INTEREST  YIELD/COST
ASSETS                                                                    (DOLLARS IN THOUSANDS)
Interest earning assets:
   Equity securities                 $ 1,005     $  34     3.38%     $ 1,432      $  43     3.00%     $ 2,109      $  28      1.33%
   State and political subdivision
     Securities (1)                      980        67     6.84          960         67     6.98          992         68      6.85
   U.S. Treasury and agencies         37,207     2,552     6.86       41,507      2,711     6.53       40,506      2,730      6.74
   Mortgage-backed securities          1,115        83     7.44        1,403         93     6.63        1,786        124      6.94
   Loans receivable (2) (3)          504,404    41,996     8.33      437,640     35,317     8.07      386,132     31,896      8.26
   FHLB stock                          5,257       385     7.32        3,354        237     7.07        3,082        216      7.01
   Interest bearing deposits           7,736       297     3.84        3,221         97     3.01        8,635        457      5.29
                                      ------    -----      ----       ------     ------     ----      -------     ------      ----
  TOTAL INTEREST EARNING ASSETS      557,704    45,414     8.14      489,517     38,565     7.88      443,242     35,519      8.01
                                                ------     ----                  ------     ----                  ------      ----
Less:  Allowance for loan losses      (2,537)                         (2,221)                          (2,071)
Non-interest earning assets           37,457                          36,383                           37,636
                                    --------                        --------                         --------
  TOTAL ASSETS                      $592,624                        $523,679                         $478,807
                                    ========                        ========                         ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
   Savings accounts                 $ 33,964     $ 925     2.72%     $36,115    $ 1,047     2.90%     $38,494      $ 984      2.56%
   NOW and money market
     Accounts                         79,792     2,161     2.71       78,222      1,871     2.39       72,224      1,522      2.11
   Certificates of deposit and
     other time deposits             309,651    19,039     6.15      279,941     15,155     5.41      266,575     14,674      5.50
   FHLB Advances                      91,418     5,304     5.80       52,419      2,800     5.34       23,560      1,301      5.52
                                     -------    ------     ----     --------     ------     ----      -------     ------      ----
  TOTAL INTEREST BEARING LIABILITIES 514,825    27,429     5.33     446,697      20,873     4.67      400,853     18,481      4.61
                                                ------     ----                  ------     ----                  ------      ----
Non-interest bearing liabilities:
   Non-interest bearing deposits      18,427                         16,896                            14,651
   Other liabilities                   6,195                          6,231                             6,542
                                      ------                         ------                            ------
  TOTAL LIABILITIES                  539,447                        469,824                           422,046

Stockholders' equity                  53,177                         53,855                            56,761
                                     -------                        -------                           -------
     TOTAL LIABILITIES AND
       STOCKHOLDERS' EQUITY         $592,624                       $523,679                          $478,807
                                    ========                       ========                          ========

NET INTEREST INCOME                            $17,985                          $17,692                         $17,038
                                               =======                          =======                         =======
NET INTEREST SPREAD                                        2.81%                            3.21%                             3.40%
                                                           =====                            =====                             =====
NET INTEREST MARGIN                                        3.22%                            3.61%                             3.84%
                                                           =====                            =====                             =====

Ratio of average interest earning
   assets to average interest bearing
    liabilities                                          108.33%                          109.59%                           110.57
                                                         =======                          =======                           =======
</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,
                                   ------------------------------------------------------------------------------------------------

                                           2001 VS. 2000                      2000 VS. 1999                     1999 VS. 1998
                                        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                              $1,150    $5,529    $6,679        $(750)    $4,171    $3,421       $(962)    $3,519     $2,557
  Equity securities                       5       (14)       (9)          26        (11)       15         (35)       (10)       (45)
  State and political subdivision
    securities                           (1)        1         0            1         (2)       (1)          0         68         68
  U.S. Treasury and agencies            131      (290)     (159)         (86)        67       (19)         55      1,617      1,672
  Mortgage-backed securities             11       (21)      (10)          (5)       (26)      (31)         (2)       (21)       (23)
  FHLB stock                              9       139       148            2         19        21          (6)        15          9

  Interest bearing deposits              33       167       200         (147)      (213)     (360)         (4)       103         99
                                     ------    ------    ------        -----     ------    ------       -----     ------     ------

 TOTAL INTEREST EARNING ASSETS       $1,338    $5,511    $6,849        $(959)    $4,005    $3,046       $(954)    $5,291     $4,337
                                     ======    ======    ======        =====     ======    ======       =====     ======     ======


INTEREST EXPENSE:
   Savings accounts                  $  (62)   $  (60)   $ (122)       $ 126     $  (63)   $   63       $ (25)    $  200     $  175
   NOW and money market accounts        252        38       290          216        133       349          33        602        635
   Certificates of deposit and
    other time deposits               2,180     1,704     3,884         (246)       727       481        (590)     3,284      2,694
   FHLB advances                        260     2,244     2,504          (44)     1,543     1,499         (63)    (1,019)    (1,082)
                                     ------     -----   -------         ----      -----    ------       -----     ------     ------
 TOTAL INTEREST BEARING LIABILITIES  $2,630    $3,926    $6,556         $ 52     $2,340    $2,392       $(645)    $3,067     $2,422
                                     ======    ======    ======         ====     ======    ======       =====     ======     ======
</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, 2001, the Bank was authorized to invest up to approximately $18.2 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, 2001, the Bank's
investment in and loans to subsidiaries was approximately $676,000 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 January 1999 First  Service  entered into a contract with Raymond
James  Financial  Services,  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 four  full-time  employees to perform
these services.  This investment  function operates under licenses held by First
Service. The net income of First Service was $208,000 during fiscal year 2001.

                                       13
<PAGE>

             In July 1999, the Bank formed First Heartland  Mortgage  Company of
Elizabethtown  ("First  Heartland")  through which the secondary  market lending
department originates qualified VA loans on the behalf of the investors, thereby
providing necessary liquidity to the Bank and needed loan products to the Bank's
customers.  The new subsidiary has been 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, 2001,  First Heartland  originated
$29.4 million in loans on the behalf of investors.

         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, 2001, the Bank deducted 100% of its investment
in   its   service    corporation    from   its    regulatory    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.  Retail  establishments  compete for loans by
offering credit cards and retail installment contracts for the purchase of goods
and  merchandise.  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,  2001,  the Bank had 200  employees  of which  183 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 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,  at least  quarterly,  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.

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, 2001, of $5.8 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,  2001,  First
Federal had $77.3 million in advances outstanding from the FHLB. See "Business -
Sources of Funds - Borrowings."

         QUALIFIED THRIFT LENDER TEST. The Bank is currently subject to the Home
Owners'  Loan Act,  which  uses 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,  2001,
approximately  94.57% 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 cannot exceed
15% of capital and surplus.  Loans and  extensions  of credit  fully  secured by
readily  marketable  collateral  (as defined) may comprise an additional  10% of
capital and surplus.  At June 30, 2001,  the Bank complied  with its  regulatory
lending limits. The aggregate amount of loans that 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 4% Tier 1 leverage  ratio,  a 4% Tier 1
risk-based  capital  ratio  and  an  8%  total  risk-based  capital  ratio.  OTS
regulations  restrict 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  average  assets of less than
4.0%. As of June 30, 2001,  the Bank's actual  capital  percentages  for current
risk-based  capital of 10.96%,  Tier 1 capital of 10.20%, and Tier 1 leverage of
7.24%,  significantly exceed the regulatory  requirement for each category.  For
additional  information  see  Note  8 of the  Notes  to  Consolidated  Financial
Statements in the Annual Report.

         For  purposes  of the  OTS's  regulatory  capital  regulations,  Tier 1
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."  Tier 1 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.

         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.

                                       15

<PAGE>

         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 and commercial 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,  2001,  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
$622,000.  Accordingly,  on  June  30,  2001,  the  Bank  deducted  100% of this
investment from its Tier1 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.

         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,  2001 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 to 300 basis points in market interest rates.

                               AS OF JUNE 30, 2001

                  Net Portfolio Value               NPV as % of PV of Assets
                  -------------------               ------------------------
  In Rates     $ Amount     $ Change     % Change    NPV Ratio      Change
  --------     --------     --------     --------    ---------      ------
    +300 bp      39,054     (30,419)         (44)         6.69    (444 bp)
    +200 bp      49,458     (20,015)         (29)         8.28    (285 bp)
    +100 bp      59,900      (9,573)         (14)         9.81    (133 bp)
       0 bp      69,473                                  11.14
    -100 bp      75,434        5,960            9        11.90       76 bp
    -200 bp      78,621        9,147           13        12.24      110 bp
    -300 bp      80,681       11,207           16        12.39      125 bp


                                       16
<PAGE>

         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 must  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 must 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 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

                                       17

<PAGE>

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 capital ratio (the ratio of its
Tier 1 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.

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.  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,
2001, 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.

                                       18

<PAGE>

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.

         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.  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.


                                       19

<PAGE>

         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
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

                                       20

<PAGE>


 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 7 of the Notes
to Consolidated Financial Statements in the Annual Report.

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
Federal's  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
                                                 Owned or           Square
Banking Centers                                   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,  2001,  the net  book  value of  office  properties  and
equipment owned or leased by the Bank and its subsidiary was $11.5 million.  For
further  information,  see  Note  4  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, 2001.

                                       21

<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  number of  registered stockholders as of September 15, 2001,
was 746. 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
                                                                   MONTHS ENDED
                                   QUARTER ENDED

FISCAL 2001:        9/30         12/31        3/31         6/30       8/31/01
                    ----         -----        ----         ----       -------
High              $ 17.63      $ 16.50     $ 15.50      $ 18.25      $ 18.50
Low                 15.00        13.25       14.25        13.50        16.02
Cash dividends       0.18         0.18        0.18         0.18


FISCAL 2000:        9/30        12/31        3/31         6/30
                    ----        -----        ----         ----
High              $ 24.88      $ 24.50     $ 24.38      $ 20.50
Low                 22.50        21.75       17.25        15.25
Cash dividends       0.18         0.18        0.18         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

                                                     AT JUNE 30,
                                -----------------------------------------------
                                 2001       2000      1999      1998      1997
                                 ----       ----      ----      ----      ----
FINANCIAL CONDITION DATA:                    (Dollars in thousands)

Total assets                   $606,726   $560,785  $488,304  $409,651  $377,380
Net loans outstanding           517,145    471,231   400,360   354,935   327,502
Investments                      22,934     45,182    47,340    26,574    22,677
Deposits                        468,825    423,759   399,443   306,703   281,342
Borrowings                       77,298     80,339    25,894    43,249    41,514
Stockholders' equity             54,592     51,681    57,862    54,688    51,665

Number of:
Real estate loans outstanding     6,837      7,154     6,968     6,709     6,380
Deposit accounts                 49,615     47,238    45,425    37,764    36,378
Offices                              13         13        12         8         8



                                       22

<PAGE>

                                               YEAR ENDED JUNE 30,
                           ----------------------------------------------------
                             2001       2000       1999        1998        1997
                             ----       ----       ----        ----        ----
OPERATIONS DATA:                           (Dollars in thousands)

Interest income            $45,392    $38,542    $35,496     $31,182    $28,782
Interest expense            27,429     20,873     18,481      16,059     14,375
Net interest income         17,963     17,669     17,015      15,123     14,407
Provision for loan losses    1,086        400        314         265        200
Non-interest income          5,145      3,877      3,954       2,860      2,468
Non-interest expense  (1)   13,570     12,691     11,706       8,082      9,472
Income tax expense           2,803      2,792      2,970       3,302      2,429
Net income                   5,649      5,663      5,979       6,334      4,774

Earnings per share:
    Basic                     1.50       1.45       1.45        1.53       1.14
    Diluted                   1.50       1.44       1.44        1.52       1.13
Book value per share         14.53      13.76      14.04       13.24      12.39
Dividends paid per share      0.72       0.72       0.63        0.56       0.50

Dividend payout ratio           48%        49%        43%         37%        44%
Return on average assets       .95%      1.08%      1.25%       1.60%      1.30%
Average equity to average
   assets                     8.97%     10.28%     11.85%      13.55%     13.77%
Return on average equity     10.62%     10.52%     10.53%      11.81%      9.46%


     (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.

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

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.

OVERVIEW

Net income was $5.6 million or $1.50 per share  diluted in 2001 compared to $5.7
million or $1.44 per share  diluted in 2000.  Even though  overall  earnings are
down for the  period,  a result  of the  decreasing  net  interest  margin,  net
interest income increased by 1.7% during 2001 compared to an increase of 3.8% in
2000. Increasing average earning asset balances during these periods contributed
to the growth in net interest income. In January 2001, the Bank restructured $75
million of its Federal Home Loan Bank advances to secure  longer term  financing
at lower  interest  rates.  Management  anticipates  that the  restructuring  of
advances  coupled  with  the  Federal  Open  Market  Committee's  interest  rate
reductions will have a positive impact on future earnings. The Bank's book value
per common  share  increased  from $13.76 at June 30, 2000 to $14.53 at June 30,
2001. Net income for 2001 generated  return on average assets of .95% and return
on average  equity of 10.62%.  These  compare  with return on average  assets of
1.08% and return on average equity of 10.52% for the 2000 period.

The Bank's  total  assets at June 30,  2001 grew to $606.7  million  compared to
$560.8 million at June 30, 2000. Net loans increased $45.9 million from June 30,
2000 to $517.1 million at June 30, 2001. The  commercial  real estate  portfolio
increased $25.7 million while the residential  real estate  portfolio grew $19.4
million.  This growth is a result of the Bank's continued emphasis on the active
pursuit of lending opportunities.  The Bank's dealer loan program increased $6.6
million while consumer and home equity loans decreased $5.5 million.  While loan
growth remained strong,  the percentage of  non-performing  loans to total loans
remained low at .52%, as  the Bank  maintained  its  underwriting  standards and
continued its emphasis on secured real estate lending.

                                       23
<PAGE>


Funding for the growth in the loan portfolio was derived from deposits. Deposits
increased by $45 million to $468.8  million at June 30, 2001  compared to $423.8
million  at June 30,  2000.  The  growth in retail  deposits  was  primarily  in
short-term certificate of deposits and money market accounts caused in part by a
shift during recent quarters in funds from the stock market to more conservative
investments.  FHLB  advances  decreased  from $80.3  million at June 30, 2000 to
$77.3 million at June 30, 2001.

RESULTS OF OPERATIONS

NET INTEREST INCOME - Net interest  income  increased by $294,000 during 2001 to
$18  million as compared  to $17.7  million in 2000 in spite of a declining  net
interest  margin.  The Bank's net interest margin declined to 3.22% for the year
ended June 30, 2001  compared to 3.61% for the 2000  period.  An increase in the
cost of funds over the past  fiscal  year,  offset by an increase in the average
earning assets of commercial real estate and residential mortgage loans, reduced
the net interest margin.

While  market  interest  rates  increased  the first  half of the  fiscal  year,
short-term  rates  increased more than long-term  rates during that time period.
This  caused  interest  bearing   liabilities,   which  are  generally  tied  to
shorter-term  market  indices to reprice at higher rates than  interest  earning
assets,  which are  generally  tied to  longer-term  indexes.  Also,  the Bank's
interest bearing  liabilities have a shorter repricing frequency and are subject
to repricing at a faster pace than its interest earning assets.  However, during
the last half of the fiscal year, the margin  recovered  significantly.  For the
month of December 2000, the net interest margin was 2.91% compared to 3.67 % for
the  month of June  2001.  Actions  by the  Federal  Reserve  Board to lower the
federal discount rate,  coupled with the restructuring of Federal Home Loan Bank
advances  during 2001, are the  contributing  factors towards the rebound in the
net interest  margin.  Management  believes  that the Federal  Reserve  Board is
closer to a stable interest rate environment, which will lead to a less volatile
net interest margin.

Average  interest  earning assets increased by $68.2 million from $489.5 million
for the 2000  period  to $557.7  million  for the 2001  period  due to the large
growth of the Bank's loan  portfolio.  Average loans,  which comprise 90% of the
total interest  earning  assets,  were $66.8 million higher and averaged  $504.4
million  during  2001,  while the average  yield on loans  increased by 26 basis
points to 8.33%. Average interest bearing liabilities increased by $68.1 million
to an average  balance of $514.8 million for 2001.  Customer  deposits  averaged
$423.4  million  during 2001,  a $29.1  million  increase  from the 2000 average
balance of $394.3 million. Average Federal Home Loan Bank advances increased $39
million for the 2001 period to fund the Bank's  increased  lending activity that
exceeded its deposit growth during  certain  periods  throughout the year.  This
same lending growth has impacted the level of future Bank  investments that will
be  decreasing  in  balance  in the near  future,  given the need for  available
deposit  dollars to fund  lending  activity.  The Bank's cost of funds  averaged
5.33% during 2001 which was an increase of 66 basis points from the 2000 average
cost of funds of 4.67% due to higher rates paid on short-term customer deposits.

NON-INTEREST  INCOME - Non-interest income was $5.1 million for 2001 as compared
to $3.9  million for the 2000  period,  an increase of $1.2  million,  or 32.7%.
Gains from investment sales were $696,000 in 2001 compared to $457,000 for 2000,
an increase of $239,000.  Fee income from secondary  market  lending  operations
increased  by  $172,000 or 48% during the fiscal  year.  Customer  service  fees
charged on deposit  accounts  increased by $610,000 or 31% during 2001 due to an
increase in fees charged and also growth in accounts  and deposit  relationships
with  existing  customers.  Brokerage  and  insurance  commissions  increased by
$175,000 or 38% during the 2001 period.  Other  sources of income such as trust,
loan fee income,  and other customer  transaction fees also increased during the
2001 period by $104,000.

NON-INTEREST  EXPENSE - Non-interest  expense increased by $879,000 or 7% during
2001 as  compared  to 2000.  Compensation  and  employee  benefits,  the largest
component of non-interest expense, increased by $772,000 or 14% in 2001 compared
to 2000. The increase includes  cost-of-living  salary  adjustments and reflects
growth in the overall  staffing  level from 170 at June 30, 2000, to 203 at June
30,  2001.  Additional  staffing was  required to achieve a new  strategic  plan
adopted by the Bank in 1999 to develop a bank-wide  service  and sales  culture.
The plan emphasizes expanding account  relationships,  which requires increasing
the number of  associates in banking  centers,  relationship  bankers,  business
development officers,  stockbrokers,  and loan officers. The transition has been
responsible  for much of the  renewed  growth in  lending  and  certificates  of
deposit.

                                       24

<PAGE>

Beyond  compensation  and  benefits,  office  occupancy  and  equipment  expense
increased by $94,000 in 2001 compared to 2000 due to costs  associated  with the
Bank's new Customer  Service Center,  which became  operational in July 2000 and
the second  Bardstown,  Kentucky  banking center,  which reopened in early 2000.
Data processing expense also increased during the fiscal year due to an increase
in processor  charges  relating to an increase in the number of users,  training
expenses and the implementation of internet banking.

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.  An  appropriate  level of the
general  allowance is  determined  based on the  application  of projected  risk
percentages to graded loans by categories.  In addition,  specific  reserves are
established for individual loans when deemed necessary by management. The amount
of the provision for loan losses necessary to maintain an adequate  allowance is
based upon an assessment  of loan quality,  changes in the size and character of
the  loan  portfolio,  consultation  with  regulatory  authorities,  delinquency
trends,   economic   conditions,   industry  trends,   historical   charge-offs,
recoveries, and other information.  Management is monitoring the commercial real
estate loan portfolio  closely,  recognizing  that  commercial real estate loans
carry a greater risk of loss than residential real estate loans, and believes it
has,  based on information  presently  available,  adequately  provided for loan
losses  at  June  30,  2001.  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.

The provision for loan losses was $1.1 million for 2001 compared to $400,000 for
the 2000 period.  The  increase in the  provision is a result of the increase in
charge-offs  for the period and to compensate  for the Bank's  continued  strong
loan  growth.  Net loan  charge-offs  increased  $176,000 to  $432,000  for 2001
compared  to $255,000  for the 2000  period.  The  increase  in  charge-offs  is
primarily  related to  charge-offs  of indirect  consumer  loans during the 2001
period.  The  following  table  presents  an  analysis  of the Bank's  loan loss
experience and non-performing assets for the periods indicated.

                                                     YEAR ENDED JUNE 30,
                                                     -------------------
                                               2001          2000         1999
                                               ----          ----         ----
                                                    (Dollars in thousands)
Allowance for loan losses:
   Balance, July 1                          $  2,252      $  2,108     $  1,853
   Provision for loan losses                   1,086           400          314
   Acquired                                      -              -           205
   Charge-offs                                  (499)         (265)        (290)
   Recoveries                                     67             9           26
                                             -------      --------      -------
   Balance, June 30                         $  2,906      $  2,252     $  2,108
                                             =======       =======      =======

Loans outstanding at year end               $520,052      $473,483     $402,468
Non-performing loans at year end:
   Collateralized by one-to-four
    family homes                             $   644      $    977     $  1,633
   Other non-performing loans                  2,076           585          896
                                             -------       -------     --------
       Total non-performing loans              2,720         1,562        2,529
   Real estate acquired through foreclosure      296            -           109
   Repossessed assets                             70            -            -
                                             -------      --------     --------
       Total non-performing assets           $ 3,086      $  1,562     $  2,638
                                             =======      ========     ========

Ratios: Non-performing loans to loans            .52%          .33%         .63%
        Allowance for loan losses to
         non-performing loans                    107%          144%          83%
        Allowance for loan losses to net loans   .56%          .48%         .52%
        Non-performing assets to total assets    .51%          .28%         .54%


                                       25
<PAGE>


LIQUIDITY

The Bank maintains  sufficient liquidity to fund loan demand and routine deposit
withdrawal  activity.  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. At June 30, 2001, the Bank's
liquid assets were 6.01% of its liquidity  base. The Bank intends to continue to
fund loan growth  (outstanding  loan  commitments  were $4.6 million at June 30,
2001) with customer  deposits and additional  advances from the FHLB.  While the
Bank utilizes other funding sources in order to meet its liquidity  needs,  FHLB
borrowings remain a material  component of management's  balance sheet strategy.
At June 30, 2001,  the Bank had an unused  approved line of credit in the amount
of $38.3 million and sufficient collateral to borrow an additional $39.6 million
in advances from the FHLB.

CAPITAL

Savings  institutions  insured by the FDIC must meet various  regulatory capital
requirements:  a 4% Tier I leverage ratio; a 4% Tier I capital ratio;  and an 8%
risk-based  capital  standard.  As of June 30, 2001,  the Bank's actual  capital
percentages for Tier I leverage of 7.24%, Tier I capital of 10.20%,  and current
risk-based  capital  of  10.96%,  exceed  the  regulatory  requirement  for each
category.  The Bank expects to maintain a capital position that meets or exceeds
the "well capitalized" requirements as defined by the FDIC.

ASSET/LIABILITY MANAGEMENT AND 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
("ALCO").  The ALCO, which includes senior management  representatives,  has the
responsibility  for  approving  and  ensuring  compliance  with  asset/liability
management  polices of the  Corporation.  Interest  rate risk is the exposure to
adverse changes in the net interest income as a result of market fluctuations in
interest  rates.  The ALCO,  on an ongoing  basis,  monitors  interest  rate and
liquidity  risk in order to  implement  appropriate  funding and  balance  sheet
strategies.  Management  considers  interest  rate  risk to be the  Bank's  most
significant market risk.

The Bank utilizes an earnings  simulation  model to analyze net interest  income
sensitivity.  Potential  changes in market  interest rates and their  subsequent
effects on net interest income are then evaluated. The model projects the effect
of  instantaneous  movements in interest rates of both 100 and 200 basis points.
Assumptions  based on the  historical  behavior of the Bank's  deposit rates and
balances in relation to changes in interest rates are also incorporated into the
model.  These assumptions are inherently  uncertain and, as a result,  the model
cannot  precisely  measure future net interest  income or precisely  predict the
impact of fluctuations in market interest rates on net interest  income.  Actual
results will differ from the model's simulated results due to timing,  magnitude
and frequency of interest  rate changes as well as changes in market  conditions
and the application and timing of various management strategies.

The Bank's interest  sensitivity profile improved from June 30, 2000 to June 30,
2001.  Given a sustained 100 basis point  downward shock to the yield curve used
in the simulation  model,  the Bank's base net interest income would increase by
an estimated 3.92% at June 30, 2001 compared to an increase of 7.58% at June 30,
2000.  Given a 100 basis  point  increase in the yield curve the Bank's base net
interest  income would decrease by an estimated  4.30% at June 30, 2001 compared
to a decrease of 8.99% at June 30, 2000. The  improvement in the Bank's interest
sensitivity  profile  is  primarily  attributable  to the  restructuring  of $75
million of the Bank's  Federal  Home Loan Bank  advances  to secure  longer term
financing at lower interest rates.

The  interest  sensitivity  profile  of the Bank at any  point  in time  will be
affected  by a number of  factors.  These  factors  include  the mix of interest
sensitive assets and liabilities as well as their relative pricing schedules. It
is also influenced by market interest rates,  deposit growth,  loan growth,  and
other  factors.  The  table  below is  representative  only and is not a precise
measurement of the effect of changing  interest rates on the Bank's net interest
income in the future.

                                       26
<PAGE>
<TABLE>
<CAPTION>

                                                              JUNE 30, 2001
                                     DECREASE IN RATES                           INCREASE IN RATES
                                     -----------------                           -----------------
                                   200              100                         100             200
                               BASIS POINTS     BASIS POINTS      BASE      BASIS POINTS    BASIS POINTS

                                                        (Dollars in thousands)
<S>                              <C>              <C>          <C>            <C>             <C>
PROJECTED INTEREST INCOME
     Loans                        $40,259          $41,873      $43,221        $44,342         $45,361
     Investments                    2,068            2,184        2,271          2,507           2,628
                                  -------          -------       ------        -------          ------
TOTAL INTEREST INCOME              42,327           44,057       45,492         46,849          47,989

PROJECTED INTEREST EXPENSE
     Deposits                      16,858           19,092       21,326         23,560          25,149
     Borrowed funds                 3,734            3,735        3,736          3,738           3,785
                                   ------           ------       ------         ------          ------
TOTAL INTEREST EXPENSE             20,592           22,827       25,062         27,298          28,934

NET INTEREST INCOME               $21,735          $21,230      $20,430        $19,551         $19,055
Change from base                   $1,305             $800                       $(879)        $(1,375)
% Change from base                   6.39%            3.92%                      (4.30)%         (6.73)%

</TABLE>

<TABLE>
<CAPTION>


                                                              JUNE 30, 2000

                                       DECREASE IN RATES                              INCREASE IN RATES
                                      ------------------                              -----------------
                                     200            100                             100             200
                                 BASIS POINTS   BASIS POINTS       BASE         BASIS POINTS    BASIS POINTS
                                                         (Dollars in thousands)
<S>                               <C>            <C>            <C>              <C>              <C>
PROJECTED INTEREST INCOME
     Loans                         $39,133        $40,340        $41,318          $42,169          $42,955
     Investments                     2,944          3,050          3,162            3,173            3,168
                                    ------         ------         ------           ------          -------
TOTAL INTEREST INCOME               42,077         43,390         44,480           45,342           46,123

PROJECTED INTEREST EXPENSE
     Deposits                       18,913         20,505         22,097           23,688           25,280
     Borrowed funds                  3,573          4,331          5,136            5,957            6,779
                                    ------         ------         ------          -------           ------
TOTAL INTEREST EXPENSE              22,486         24,836         27,233           29,645           32,059

NET INTEREST INCOME                $19,591        $18,554        $17,247          $15,697          $14,064
Change from base                    $2,344         $1,307                         $(1,550)         $(3,183)
% Change from base                   13.59%          7.58%                          (8.99)%         (18.46)%

</TABLE>

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.


                                       27

<PAGE>

COMPARISON OF FISCAL 2000 TO 1999

Net income for the fiscal year ended June 30,  2000,  was $5.7  million or $1.44
per share  diluted as compared to net income of $6.0  million or $1.44 per share
diluted for the same  period 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 $292,000 ($193,000,  net of tax) were charged against
earnings.  Also,  during the 1999  period,  the  Corporation  incurred  data and
computer  conversion  costs of $497,000  ($328,000,  net of tax) relating to its
conversion to a new data processor. In addition to these expenses,  amortization
of acquisition intangibles increased to $831,000 ($630,000,  net of tax) in 2000
from $781,000 ($597,000, net of tax) in 1999.

NET INTEREST INCOME - Net interest  income  increased by $654,000 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 last eight months of the year. 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.

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 was responsible
for much of the Bank's loan growth. 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.

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  impacts  the level of future  Bank
investments that should be decreasing in balance, 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.

ALLOWANCE AND 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  $400,000  for 2000 as  compared  to  $314,000  for 1999.  Net
charge-offs  were $256,000  during 2000 as compared to $264,000 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.

                                       28
<PAGE>


NON-INTEREST  INCOME - Non-interest  income was $3.9 million in 2000, a decrease
of $77,000 or 2% over 1999.  Gains on  investment  sales were  $457,000  in 2000
compared  to  $352,000  for 1999,  an  increase  of  $105,000.  Fee income  from
secondary  market  lending  operations  decreased  by $284,000 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  $237,000  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 $6,000 for
2000 compared to gains of $255,000 for 1999.  Three commercial lots in an office
park currently under development were sold in 1999.

NON-INTEREST  EXPENSE - 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.

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  $88,000  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  $549,000  in 2000
compared to 1999 including  postage,  telephone,  data processing,  supplies and
customer account expenses.

ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The  information  required  by this  Item is set  forth in the  section
entitled  "Asset/Liability  Management and Market Risk" included under Item 7 of
the document and is incorporated herein by reference.


                                       29

<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          31
   Consolidated Statements of Financial Condition                        32
   Consolidated Statements of Income                                     33
   Consolidated Statements of Comprehensive Income                       34
   Consolidated Statements of Changes in Stockholders' Equity            35
   Consolidated Statements of Cash Flows                                 36
   Notes to Consolidated Financial Statements                          37-53





                                       30
<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, 2001 and 2000
and the related consolidated statements of income, comprehensive income, changes
in stockholders'  equity and cash flows for the three years in the period ending
June  30,  2001.  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.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  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, 2001 and 2000 and the results
of its  operations  and its cash flows for the three years in the period  ending
June 30, 2001 in conformity with accounting principles generally accepted in the
United States of America.




                                         Crowe, Chizek and Company LLP

Louisville, Kentucky
August 6, 2001


                                       31

<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                   ASSETS                     JUNE 30,
                                                       2001             2000
                                                       ----             ----
Cash and due from banks                          $  14,927,588      $ 11,310,438
Interest bearing deposits                           20,536,800         3,668,498
                                                    ----------      ------------
           Total cash and cash equivalents          35,464,388        14,978,936
Securities available-for-sale                        2,013,107         2,047,642
Securities held-to-maturity: fair value of
   $20,954,198 (2001) and $41,194,541 (2000)        20,920,760        43,133,967
Loans receivable, less allowance for loan losses
   of $2,906,356 (2001) and $2,252,062 (2000)      517,145,157       471,231,319
Federal Home Loan Bank stock                         5,845,000         4,080,800
Premises and equipment                              11,453,601        11,709,268
Real estate owned:
  Acquired through foreclosure                         295,989              -
  Held for development                                 720,683           445,683
Repossessed assets                                      70,050              -
Acquisition intangibles                              9,215,373        10,047,173
Accrued interest receivable                          2,024,554         2,031,877
Other assets                                         1,557,078         1,078,157
                                                  ------------       -----------

     TOTAL ASSETS                                 $606,725,740      $560,784,822
                                                  ============      ============

                          LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Deposits:
   Non-interest bearing                          $  21,208,411     $  16,821,604
   Interest bearing                                447,616,786       406,937,351
                                                   ------------      -----------
             Total Deposits                        468,825,197       423,758,955
Advances from Federal Home Loan Bank                77,297,658        80,338,550
Accrued interest payable                             1,969,545         1,128,790
Accounts payable and other liabilities               2,475,687         1,962,543
Deferred income taxes                                1,565,376         1,914,903
                                                   -----------       -----------

     TOTAL LIABILITIES                             552,133,463       509,103,741
                                                   -----------       -----------

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, 3,758,491 shares in 2001 and
      3,755,761 shares in 2000                       3,758,491         3,755,761
 Additional paid-in capital                             20,527              -
 Retained earnings                                  50,405,481        47,481,149
 Accumulated other comprehensive
      income, net of tax                               407,778           444,171
                                                  ------------      ------------

     TOTAL STOCKHOLDERS' EQUITY                     54,592,277        51,681,081
                                                  ------------      ------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $606,725,740      $560,784,822
                                                  ============      ============

                 See notes to consolidated financial statements.

                                       32

<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
                        CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

                                                                     YEAR ENDED JUNE 30,
                                                      -----------------------------------------------
                                                           2001             2000            1999
<S>                                                   <C>              <C>             <C>
INTEREST INCOME:
  Interest and fees on loans                           $41,996,226      $35,316,819     $31,895,805
  Interest and dividends on investments and deposits     3,395,588        3,225,633       3,600,283
                                                       -----------       ----------      ----------
          Total interest income                         45,391,814       38,542,452      35,496,088
                                                        ----------       ----------      ----------
INTEREST EXPENSE:
  Deposits                                              22,125,115       18,073,392      17,180,146
  Federal Home Loan Bank advances                        5,304,192        2,800,076       1,301,096
                                                        ----------       ----------      ----------
          Total interest expense                        27,429,307       20,873,468      18,481,242
                                                        ----------       ----------      ----------

Net interest income                                     17,962,507       17,668,984      17,014,846
Provision for loan losses                                1,086,100          399,500         314,000
                                                        ----------       ----------      ----------
Net interest income after provision for loan losses     16,876,407       17,269,484      16,700,846
                                                        ----------       ----------      ----------
NON-INTEREST INCOME:
  Customer service fees on deposit accounts              2,567,780        1,957,445       1,720,542
  Secondary mortgage market closing fees                   526,304          354,391         638,877
  Gain on sale of investments                              696,041          456,926         351,753
  Brokerage and insurance commissions                      639,637          464,388         394,070
  Gain on sale of real estate held for development          11,718            6,194         254,688
  Other income                                             703,997          637,779         594,364
                                                         ---------        ---------       ---------
          Total non-interest income                      5,145,477        3,877,123       3,954,294
                                                         ---------        ---------       ---------
NON-INTEREST EXPENSE:
  Employee compensation and benefits                     6,416,848        5,644,270       4,506,758
  Office occupancy expense and equipment                 1,456,721        1,362,424       1,274,885
  FDIC insurance premiums                                   84,653          158,117         207,298
  Marketing and advertising                                505,418          524,349         527,110
  Outside services and data processing                   1,420,324        1,259,148       1,001,612
  State franchise tax                                      424,663          403,869         357,776
  Acquisition related expense                                -                -             291,869
  Data and equipment conversion expense                      -                -             497,368
  Amortization of acquisition intangibles                  831,799          831,799         781,347
  Other expense                                          2,429,330        2,506,928       2,260,025
                                                        -----------       ---------       ---------

          Total non-interest expense                    13,569,756       12,690,904      11,706,048
                                                        ----------       ----------      ----------

  Income before income taxes                             8,452,128        8,455,703       8,949,092
  Income taxes                                           2,802,693        2,792,361       2,970,291
                                                        ----------       ----------       ---------
NET INCOME                                              $5,649,435       $5,663,342      $5,978,801
                                                        ==========       ==========      ==========
Earnings per share:
          Basic                                         $     1.50       $     1.45      $     1.45

          Diluted                                       $     1.50       $     1.44      $     1.44
</TABLE>

                 See notes to consolidated financial statements.

                                       33

<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>


                                                            YEAR ENDED JUNE 30,

                                                    2001          2000           1999
                                                    ----          ----           ----
<S>                                             <C>           <C>            <C>
NET INCOME                                       $5,649,435    $5,663,342     $5,978,801
Other comprehensive income (loss), net of tax:
     Change in unrealized gain (loss)
       on securities                                422,994      (352,242)       233,837
     Reclassification of realized amount           (459,387)     (301,571)      (232,157)
                                                 ----------      --------       --------
     Net unrealized gain (loss) recognized in
        comprehensive income                        (36,393)     (653,813)         1,680
                                                 ----------      --------     ----------
COMPREHENSIVE INCOME                             $5,613,042    $5,009,529     $5,980,481
                                                 ==========    ==========     ==========
</TABLE>









                 See notes to consolidated financial statements.

                                       34

<PAGE>



                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                   YEARS ENDING JUNE 30, 2001, 2000, AND 1999

<TABLE>
<CAPTION>


                                                                                                ACCUMULATED OTHER
                                                                 ADDITIONAL                       COMPREHENSIVE
                                        COMMON                   PAID - IN          RETAINED         INCOME,
                                SHARES          AMOUNT            CAPITAL           EARNINGS       NET OF TAX           TOTAL
                                ------          ------            --------          --------       ----------           -----
<S>                          <C>             <C>                <C>              <C>             <C>               <C>
BALANCE, JUNE 30, 1998        4,129,612       $4,129,612         $3,253,664       $46,208,807     $1,096,304        $54,688,387
Net income                         -                -                 -             5,978,801           -             5,978,801
Net change in unrealized
  gains (losses) on
  securities available-
  for-sale, net of tax             -                -                 -                 -              1,680              1,680
Cash dividends declared
   ($.56 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
Net income                         -                -                 -             5,649,435            -             5,649,435
Exercise of stock
   options                        4,730            4,730             27,788             -                -                32,518
Net change in unrealized
  gains (losses) on
  securities available-
  for-sale, net of tax             -                 -                 -                -            (36,393)            (36,393)

Cash dividends declared
   ($.72 per share)                -                 -                 -          (2,704,364)           -             (2,704,364)
Stock repurchased                (2,000)          (2,000)            (7,261)         (20,739)           -                (30,000)
                              ---------       ----------        -----------     ------------      ----------        ------------
BALANCE, JUNE 30, 2001        3,758,491       $ 3,758,491       $    20,527     $ 50,405,481      $  407,778        $ 54,592,277
                              =========       ===========       ===========     ============      ==========        ============
</TABLE>





                 See notes to consolidated financial statements.

                                       35
<PAGE>



                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                              YEAR ENDED JUNE 30,

                                                      2001          2000          1999
                                                      ----          ----          ----
<S>                                               <C>           <C>           <C>
OPERATING ACTIVITIES:
 Net income                                        $5,649,435    $5,663,342    $5,978,801
 Adjustments to reconcile net income to net
  cash provided by operating activities:
    Provision for loan losses                       1,086,100       399,500       314,000
    Depreciation of premises and equipment          1,136,143     1,022,327       825,483
    Net change in deferred loan fees and costs        338,316       226,177       238,711
    Federal Home Loan Bank stock dividends           (384,600)     (237,300)     (216,200)
    Amortization of acquired intangible assets        831,799       831,799       781,347
    Amortization and accretion on securities          (71,922)      (61,435)     (137,369)
    Gain on sale of investments available-for-sale   (696,041)     (456,926)     (351,753)
    Gain on sale of real estate held for development  (11,718)       (6,194)     (254,688)
    Deferred taxes                                   (330,781)      353,014      (178,266)
    Changes in:
      Interest receivable                               7,323      (428,363)     (769,462)
      Other assets                                   (478,920)     (197,941)        3,293
      Interest payable                                840,755       259,950      (328,249)
      Accounts payable and other liabilities          524,862      (367,766)     (286,766)
                                                    ---------     ---------     ---------
Net cash provided by operating activities           8,440,751     7,000,184     5,618,882
                                                    ---------     ---------     ---------
INVESTING ACTIVITIES:
  Sales of securities available-for-sale              707,607       461,782       362,459
  Purchases of securities available-for-sale          (32,325)     (107,300)   (1,010,000)
  Purchases of securities held-to-maturity               -       (5,000,000)  (49,855,000)
  Maturities of securities held-to-maturity        22,285,284     6,332,014    30,227,733
  Net increase in loans                           (47,704,293)  (71,387,984)  (34,934,161)
  Purchase of Federal Home Loan Bank stock         (1,379,600)     (643,500)         -
  Net purchases of premises and equipment            (880,476)   (1,137,226)   (1,545,933)
  Purchase of real estate held for development       (275,000)         -             -
  Sales of real estate held for development              -             -          451,496
  Net cash received in acquisition                       -             -       52,456,754
                                                  -----------   -----------    ----------
Net cash used in investing activities             (27,278,803)  (71,482,214)   (3,846,652)
                                                  -----------   -----------    ----------
FINANCING ACTIVITIES:
  Net increase in deposits                         45,066,242    24,315,516    21,131,129
  Advances from Federal Home Loan Bank             76,090,434    79,647,360     5,000,000
  Repayments to Federal Home Loan Bank            (79,131,326)  (25,202,937)  (22,354,728)
  Proceeds from stock options exercised                32,518         5,762          -
  Dividends paid                                   (2,704,364)   (2,802,833)   (2,600,186)
  Common stock repurchased                            (30,000)   (8,393,539)     (206,520)
                                                   ----------    ----------       -------
Net cash provided by financing activities          39,323,504    67,569,329       969,695
                                                   ----------    ----------       -------
INCREASE IN CASH AND CASH EQUIVALENTS              20,485,452     3,087,299     2,741,925
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR       14,978,936    11,891,637     9,149,712
                                                  -----------   -----------   -----------
CASH AND CASH EQUIVALENTS, END OF YEAR            $35,464,388   $14,978,936   $11,891,637
                                                  ===========   ===========   ===========
</TABLE>

                 See notes to consolidated financial statements.

                                       36
<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 accounting  principles
                  generally  accepted in the United  States of America  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.


                                       37
<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.

                  FEDERAL HOME LOAN BANK STOCK - Investment  in stock of Federal
                  Home Loan Bank is carried at cost.

                  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.

                                       38
<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (CONTINUED)

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

                  ACQUISITION  INTANGIBLES - The unamortized  costs in excess of
                  the fair value of acquired net tangible assets are included in
                  acquisition intangibles. Acquisition intangibles are amortized
                  on a straight-line basis over 15 years.

                  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 requires
                  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.

                  The Financial  Accounting  Standards Board issued SFAS No. 141
                  "Business  Combinations"  and SFAS No. 142 "Goodwill and Other
                  Intangibles"   in  June  2001.   As  a  result  and  effective
                  immediately,  the purchase method is the only allowable method
                  for  accounting   for   prospective   business   combinations.
                  Effective  July  1,  2002  for  the  Corporation,  acquisition
                  intangibles  must be separated into goodwill and  identifiable
                  intangibles.  Identifiable  intangibles  will  continue  to be
                  amortized while  amortization  of goodwill will cease.  Annual
                  impairment   testing  will  be  required  for  goodwill   with
                  impairment charges to be recorded if the carrying amount is in
                  excess  of  its  fair  value.  The  Corporation's  acquisition
                  intangibles  as currently  reported  include both core deposit
                  and goodwill, the amounts of which and therefore the financial
                  statement impact, have not yet been determined.

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

                  RECLASSIFICATIONS  -  Certain  amounts  for 2000 and 1999 have
                  been reclassified to conform to the presentation for 2001.

                                       39

<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (CONTINUED)


2.       SECURITIES

         The  amortized  cost basis and fair values of securities at June 30 are
         as follows:
<TABLE>
<CAPTION>

                                                               Gross        Gross
                                               Amortized     Unrealized   Unrealized
                                                 Cost          Gains        Losses       Fair Value
 <S>                                       <C>              <C>         <C>           <C>
  Securities available-for-sale:
    June 30, 2001:
       Equity securities                    $   385,484      $ 616,676   $  (5,625)    $   996,535
       Obligation of states and political
           Subdivisions                       1,009,773          6,799         -         1,016,572
                                              ---------      ---------    --------     -----------
        Total available-for-sale            $ 1,395,257      $ 623,475   $  (5,625)    $ 2,013,107
                                            ===========      =========    ========      ===========

    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
                                            ===========      =========   =========     ===========

  Securities held-to-maturity:
    June 30, 2001:
       U.S. Treasury and agencies           $19,917,029      $ 150,470   $(103,869)    $19,963,630
       Mortgage-backed securities             1,003,731          4,235     (17,398)        990,568
                                            -----------      ---------   ---------     -----------
         Total held-to-maturity securities  $20,920,760      $ 154,705   $(121,267)    $20,954,198
                                            ===========      =========   =========     ===========

    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
                                            ===========      =========   ===========   ===========
</TABLE>

         The  amortized  cost and fair value of  securities at June 30, 2001, 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     $   356,894       $  359,926           $ 6,920,800      $ 7,071,270
  Due after five years through ten years        652,879          656,646            11,996,229       11,912,830
  Due after ten years                              -                 -               1,000,000          979,530
  Mortgage-backed securities                       -                 -               1,003,731          990,568
  Equity securities                             385,484          996,535                  -                -
                                             --- -------      ----------           -----------      -----------
                                             $1,395,257       $2,013,107           $20,920,760      $20,954,198
                                             ==========       ==========           ===========      ===========
</TABLE>


                                       40
<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (CONTINUED)


2.       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:

                                         2001       2000        1999
                                         ----       ----        ----

          Proceeds from sales          $707,607   $461,782    $362,459
          Gross realized gains          696,041    456,926     351,753
          Realized gains, net of tax    459,387    301,571     232,157

         Investment  securities having an amortized cost of $20,401,230 and fair
         value of  $20,442,480  at June 30, 2001 were  pledged to secure  public
         deposits.

3.       LOANS RECEIVABLE:
         -----------------

         Loans receivable at June 30 are summarized as follows:

                                                  2001               2000
                                                  ----               ----

      Commercial                              $ 17,843,459       $ 16,294,738
      Real estate commercial                    88,937,849         64,828,182
      Real estate construction                   9,079,184          8,974,863
      Real estate mortgage                     330,488,000        311,091,127
      Consumer and home equity                  54,189,225         59,692,209
      Indirect consumer                         21,822,325         15,185,698
                                               -----------        -----------
                                               522,360,042        476,066,817
      Less:
        Net deferred loan origination fees      (2,308,529)        (2,583,436)
        Allowance for loan losses               (2,906,356)        (2,252,062)
                                              ------------       ------------
                                                (5,214,885)        (4,835,498)
                                              ------------       ------------
                                              $517,145,157       $471,231,319

         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,
                                      ----------------------------------------
                                         2001           2000         1999
                                         ----           ----         ----

          Balance, beginning of year  $2,252,062     $2,107,994   $1,852,576
          Provision for loan losses    1,086,100        399,500      314,000
          Acquired                         -               -         205,400
          Charge-offs                   (498,796)      (265,302)    (290,049)
          Recoveries                      66,990          9,870       26,067
                                      ----------     ----------   ----------
          Balance, end of year        $2,906,356     $2,252,062   $2,107,994
                                      ==========     ==========   ==========


                                       41

<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (CONTINUED)


3.         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,
                                          --------------------------------------
                                             2001          2000          1999
                                             ----          ----          ----

      Year-end impaired loans             $2,720,000    $1,562,000   $ 2,529,000
      Amount of allowance for loan
        loss allocated                       268,000       117,000       135,000
      Average impaired loans outstanding   1,921,000     2,764,000     2,382,000
      Interest income recognized                           223,000       197,000
                                             160,000
      Interest income received               160,000       223,000       197,000

         Non-performing loans, including impaired loans, are as follows:
                                                          June 30,
                                            -----------------------------------
                                              2001          2000         1999
                                              ----          ----         ----
      Past due 90 days still on accrual   $    -         $    -       $   -
      Nonaccrual                           1,381,000      1,307,000    2,381,000


4.       PREMISES AND EQUIPMENT

         Premises and equipment consist of the following:
                                                        June 30,
                                             ------------------------------
                                                 2001             2000
                                                 ----             ----

        Land                                   $ 953,765        $ 816,265
        Buildings                             10,055,266        9,962,447
        Furniture, fixtures and equipment      5,924,356        5,746,366
                                               ---------        ---------
                                              16,933,387       16,525,078
        Less accumulated depreciation         (5,479,786)      (4,815,810)
                                              ----------       ----------
                                             $11,453,601      $11,709,268
                                             ===========      ===========

         Certain  premises are leased under  various  operating  leases.  Rental
         expense was  $256,000,  $259,600  and $233,318 for the years ended June
         30, 2001,  2000, and 1999,  respectively.  Future  minimum  commitments
         under these leases are:

                Year Ended
                  June 30
                ----------
                   2002            $  260,011
                   2003               263,208
                   2004               266,408
                   2005               239,908
                Thereafter          1,463,690
                                    ---------
                                   $2,493,225
                                   ==========

                                       42

<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (CONTINUED)

5.       DEPOSITS

         Time Deposits of $100,000 or more were  $102,577,000 and $87,941,000 at
         June 30,  2001 and  2000,  respectively.  At June 30,  2001,  scheduled
         maturities of time deposits are as follows:

                                                   Amount
                                                   ------
                    2002                         $261,683,009
                    2003                           44,912,152
                    2004                           10,486,348
                    2005                            4,851,251
                    Thereafter                      5,038,038
                                                 ------------
                                                 $326,970,798
                                                 ============

6.       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 125 percent
         of the outstanding  advances.  At June 30, 2001, the Bank has available
         collateral to borrow an additional  $39.6 million from the Federal Home
         Loan Bank.  During the first quarter of 2001, the Bank entered into $75
         million in  convertible  fixed  rate  advances  with a maturity  of ten
         years.  These advances are fixed for periods of two to three years.  At
         the end of the  fixed  term,  the FHLB has the right to  convert  these
         advances to variable rate advances tied to the three-month LIBOR index.
<TABLE>
<CAPTION>

                                                                         June 30,
                                                             2001                             2000
                                               ------------------------------------------------------------
                                                  Weighted-                       Weighted-
                                                Average Rate      Amount        Average Rate        Amount
                                                ------------      ------        ------------        ------
    <S>                                            <C>       <C>                   <C>          <C>
     Fixed rate advances:
       Mortgage matched advances
        with interest rates from 5.30% to 7.80%     6.52%    $   559,864            6.54%       $   691,190
       Overnight repo advance                         - %            -              7.20%        44,000,000
       One month repo advance                         - %            -              6.55%        35,000,000
       Convertible fixed rate advances              4.92%     75,000,000              -               -
       Other fixed rate advances                    6.76%      1,737,794            7.53%           647,360
      Lines of credit in the amount
        of $38.3 million (2001) and $28.0
        million (2000) maturing in 2004
        through 2006                                8.01%            -              7.62%             -
                                                             -----------                        -----------
      Total borrowings                                       $77,297,658                        $80,338,550
                                                             ===========                        ===========
</TABLE>

         The aggregate  minimum  annual  repayments of borrowings as of June 30,
         2001 is as follows:

                   2002                          $134,784
                   2003                           142,694
                   2004                           146,834
                   2005                           152,158
                   2006                           157,847
                   Thereafter                  76,563,341
                                              -----------
                                              $77,297,658
                                              ===========

                                       43

<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (CONTINUED)


  7.        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:

                                     2001          2000          1999
                                     ----          ----          ----

       Current                    $3,133,474    $2,439,347    $3,148,557
       Deferred                     (330,781)      353,014      (178,266)
                                  ----------    ----------    ----------

       Total income tax expense   $2,802,693    $2,792,361    $2,970,291
                                  ==========    ==========    ==========

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

                                              2001         2000          1999
                                              ----         ----          ----

         Federal statutory rate               34.0%        34.0%        34.0%
              Tax-exempt interest income       (.2)         (.2)         (.2)
              Acquisition intangibles          1.0          1.0           .9
              Dividends to ESOP                (.6)         (.6)         (.5)
              Other                           (1.0)        (1.2)        (1.0)
                                              ----         ----         ----
         Effective rate                       33.2%        33.0%        33.2%
                                              =====        =====        =====

         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:

                                                   2001               2000
                                                   ----               ----

        Deferred tax assets:
           Allowance for loan losses           $ 532,644          $ 158,344
           Investment securities                  26,928            107,426
           Accrued liabilities and other         262,244            211,400
                                                 -------            -------
                                                 821,816            477,170
                                                 -------            -------
        Deferred tax liabilities:
           Depreciation                          872,006            890,335
           Net unrealized gain on securities
              available-for-sale                 210,072            228,818
           Federal Home Loan Bank stock          844,919            714,155
           Other                                 460,195            558,765
                                               ---------          ---------
                                               2,387,192          2,392,073
                                               ---------          ---------
        Net deferred tax liability            $1,565,376         $1,914,903
                                              ==========         ==========

                                       44
<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (CONTINUED)


7.       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, 2001 and 2000. 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.

8.       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 $632,725  for the  purpose of granting to eligible  deposit
                  account holders a priority in the event of future liquidation.
                  Only  in  such  an  event,  an  eligible  account  holder  who
                  continues  to maintain a deposit  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  deposit
                  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,  2001,  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, 2001:                     Amount       Ratio       Amount       Ratio        Amount        Ratio
                                              ------       -----       ------       -----        ------        -----
    <S>                                   <C>             <C>       <C>              <C>      <C>             <C>
       Total risk-based capital (to risk-
         weighted assets)                  $46,945,000     11.0%     $34,280,000      8.0%     $42,850,000     10.0%
       Tier I capital (to risk-weighted
         assets)                            43,722,000     10.2       17,140,000      4.0       25,710,000      6.0
       Tier I capital (to average assets)   43,722,000      7.2       24,168,000      4.0       30,210,000      5.0

     AS OF JUNE 30, 2000:
       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

</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

                                       45

<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (CONTINUED)


8.       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, 2001, the Bank was
                  able to declare  $7.3 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 met.

 9.      EARNINGS PER SHARE

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

                                                  Year Ended June 30,
                                          2001          2000            1999
                                          ----          ----           ----
  Net income available to common
    Shareholders                       $5,649,435    $5,663,342     $5,978,801
                                       ==========    ==========     ==========
  Basic EPS:
    Weighted average common shares      3,755,688     3,906,197      4,127,804
                                        =========     =========      =========
  Diluted EPS:
    Weighted average common shares      3,755,688     3,906,197      4,127,804
    Dilutive effect of stock options        5,348        16,766         20,419
                                        ---------     ---------      ---------
    Weighted average common and
      incremental shares                3,761,036     3,922,963      4,148,223
                                        =========     =========      =========
  Earnings Per Share:
    Basic                                   $1.50         $1.45          $1.45
                                            =====         =====          =====

    Diluted                                 $1.50         $1.44          $1.44
                                            =====         =====          =====


                  Stock  options  for  79,500  shares of common  stock  were not
                  included in the 2001  computation of diluted earning per share
                  because their impact was anti-dilutive.




                                       46

<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (CONTINUED)

10.   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 2001,  2000 and 1999 totaled
               $0, $5,418, and $4,486, 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 and  administrative
               expenses  charged  to  operations  for  2001,  2000 and 1999 were
               $184,331, $166,577, and $142,465, 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:

                                           2001         2000          1999
                                           ----         ----          ----
               Allocated ESOP shares     207,045       211,503      225,889
               Contributions to ESOP     $56,000       $66,000      $50,000

          (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.  At
               June 30, 2001 options  available  for future grant under the 1998
               Stock   Option  Plan   totaled   89,000.   A  summary  of  option
               transactions is as follows:
<TABLE>
<CAPTION>

                                                                          June 30,
                                         ---------------------------------------------------------------------------
                                                 2001                       2000                      1999
                                                 ----                       ----                      ----
                                                        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         102,230     $19.13        55,064      $15.52       42,564       $12.88
     Granted during year                     12,000      17.00        52,500       22.53       12,500        24.50
     Forfeited during year                   (5,000)     24.50          (500)      17.13         -            -
     Exercised during the year               (4,730)      6.88        (4,834)      15.10         -            -
                                            -------                  -------

     Outstanding, end of year               104,500      19.18       102,230       19.13       55,064        15.52
                                            =======                  =======                   ======

     Eligible for exercise at year end       47,900                   32,230                   26,564
     Weighted average fair value of
       options granted during the year     $   4.71                 $   7.06                 $   8.79

</TABLE>


                                       47

<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (CONTINUED)


10.      EMPLOYEE BENEFIT PLANS - (CONTINUED)

                  The following table summarizes information about stock options
                  outstanding at June 30, 2001:
<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>
         $12.50              25,000               2.7 years         $12.50          25,000         $ 12.50
    $16.00 to $17.00         19,500               7.1                16.70           7,400           16.32
    $22.38 to $22.63         52,500               8.6                22.53          12,500           22.63
         $24.50               7,500               7.8                24.50           3,000           24.50
                            -------                                                  -----

                            104,500               6.8               $19.18          47,900          $16.49
                            =======                                                 ======
</TABLE>

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

                                              Year Ended June 30,
                                     2001            2000             1999
                                     ----            ----             ----

    Net income:  As reported      $5,649,435      $5,663,342      $5,978,801
                 Pro-forma         5,544,858       5,600,975       5,968,780
    Earnings per share:
        Basic    As reported          $ 1.50          $ 1.45          $ 1.45
                 Pro-forma              1.48            1.43            1.45

        Diluted  As reported          $ 1.50          $ 1.44          $ 1.44
                 Pro-forma              1.47            1.43            1.44



                   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 2001: 1)
                   expected dividend yields at 4.2%, 2) risk-free interest rates
                   at 5.88%, 3) expected volatility at 31%, 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.

    11.      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:

                                     2001            2000            1999
                                     ----            ----            ----

             Interest expense    $26,588,552     $20,613,518    $18,165,549
                                 ===========     ===========    ===========

             Income taxes        $ 3,127,940     $ 2,973,347    $ 2,946,000
                                 ===========     ===========    ===========


                                       48

<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (CONTINUED)

11.      CASH FLOW ACTIVITIES - (CONTINUED)

         (b)      Supplemental disclosure of non-cash activities:

                                              2001         2000         1999
                                              ----         ----         ----
        Loans to facilitate sales of
        real state owned                    $120,766     $783,075     $320,688
                                            ========     ========     ========

        Transfers from loans to real estate
        acquired through foreclosure        $416,755     $674,465     $295,714
                                            ========     ========     ========


12.      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,
                                                 ------------------------------
                                                     2001              2000
                                                     ----              ----
                      ASSETS
   Cash and interest bearing deposits           $   312,275       $   211,100
   Investment in subsidiary                      54,003,275        53,302,018
   Securities available-for-sale                    396,355           279,301
   Receivable from Bank                             270,965              -
   Other assets                                       6,685            10,241
                                                -----------       -----------
                                                $54,989,555       $53,802,660
                                                ===========       ===========
          LIABILITIES AND STOCKHOLDERS' EQUITY
   Payable to Bank                              $    10,539       $ 1,985,835
   Other liabilities                                386,739           135,744
   Stockholders' equity                          54,592,277        51,681,081
                                                -----------        ----------
                                                $54,989,555       $53,802,660
                                                ===========       ===========

                         CONDENSED STATEMENTS OF INCOME

                                                   Year Ended June 30,
                                         -------------------------------------
                                          2001           2000           1999
                                          ----           ----           ----

 Dividend from subsidiary               $4,900,000     $7,000,000    $4,000,000
 Interest income                            20,916         52,695        34,681
 Other expenses                           (169,816)      (164,893)     (547,656)
                                        ----------     ----------     ---------
 Income before income tax benefit        4,751,100      6,887,802     3,487,025
 Income tax benefit                        104,764         93,942       222,473
                                        ----------     ----------     ----------
 Income before equity in undistributed
   net income of subsidiary              4,855,864      6,981,744     3,709,498
 Equity in undistributed net income of
   subsidiaries (distributions in excess
   of net income)                          793,571     (1,318,402)    2,269,303
                                         ---------     ----------    ----------
   Net income                           $5,649,435     $5,663,342    $5,978,801
                                        ==========     ==========    ==========


                                       49

<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (CONTINUED)


12.      CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) - (CONTINUED)


                       CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                Year Ended June 30,
                                                   --------------------------------------------
                                                     2001             2000             1999
                                                     ----             ----             ----
  <S>                                            <C>              <C>              <C>
   Operating Activities:
      Net income                                  $5,649,435       $5,663,342       $5,978,801
      Adjustments to reconcile net income to
        cash provided by operating activities:
         (Equity in undistributed net income
           from subsidiary) distributions in
           excess of net income                     (793,571)       1,318,402       (2,269,303)
         Decrease (increase) in other assets         (25,252)          22,344
                                                                                        (5,265)
          Increase in other liabilities              250,995          135,744            -
                                                   ---------        ---------        ---------
    Net cash provided by operating activities      5,081,607        7,139,832        3,704,233
                                                   ---------        ---------        ---------
    Investing Activities:
      Purchases of securities available-for-sale     (32,325)        (107,300)           -
      Net change in receivable from Bank            (270,965)       1,787,705         (393,895)
                                                    --------        ---------         --------
    Net cash provided (used) by investing
      activities                                    (303,290)       1,680,405         (393,895)
                                                    --------        ---------         --------
    Financing Activities:
       Proceeds from stock options exercised          32,518            5,762            -
       Dividends paid                             (2,704,364)      (2,802,833)      (2,600,186)
       Common stock repurchases                      (30,000)      (8,393,539)        (206,520)
       Net change in payable to Bank              (1,975,296)       1,985,835            -
                                                  ----------        ---------
    Net cash used by financing activities         (4,677,142)      (9,204,775)      (2,806,706)
                                                  ----------       ----------       ----------
    Net increase (decrease) in cash                  101,175         (384,538)         503,632
    Cash and interest bearing deposits,
       beginning of year                             211,100          595,638           92,006
                                                 -----------      -----------        ---------
    Cash and interest bearing deposits,
       end of year                               $   312,275      $   211,100        $ 595,638
                                                 ===========      ===========        =========
</TABLE>



                                       50
<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (CONTINUED)


13.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The estimated fair values of the Corporation's financial instruments are as
     follows:
<TABLE>
<CAPTION>

                                                 June 30, 2001                      June 30, 2000
                                         ---------------------------------------------------------------
                                           Carrying          Fair            Carrying           Fair
                                             Value           Value             Value            Value
                                             -----           -----             -----            -----
   <S>                                  <C>             <C>               <C>              <C>
    Financial assets:
      Cash and cash equivalents          $ 35,464,388    $ 35,464,000      $ 14,978,936     $ 14,979,000
      Investment securities:
        Securities available-for-sale       2,013,107       2,013,000         2,047,642        2,048,000
        Securities held-to-maturity        20,920,760      20,954,000        43,133,967       41,195,000
      Loans, net                          517,145,157     526,880,000       471,231,319      463,191,000
      Federal Home Loan Bank stock          5,845,000       5,845,000         4,080,800        4,080,800
      Accrued interest receivable           2,024,554       2,025,000         2,031,877        2,032,000
    Financial liabilities:
      Deposits                           (468,825,197)   (469,719,000)     (423,758,955)    (422,696,000)
      Advances from Federal
        Home Loan Bank                    (77,297,658)    (81,923,000)      (80,338,550)     (79,992,000)
      Accrued interest payable             (1,969,545)     (1,970,000)       (1,128,790)      (1,129,000)

</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.

14.  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.

15.        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.


                                       51

<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (CONTINUED)

  15.     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:

                                      2001                       2000
                           -----------------------------------------------------
                                Fixed      Variable      Fixed         Variable
                                Rate         Rate         Rate           Rate
                                ----         ----         ----           ----
 Commitments to make loans  $ 4,231,215    $ 389,500   $ 3,218,720   $ 1,859,590
 Unused lines of credit           -       38,257,649        -         28,020,618
 Standby letters of credit        -        3,846,000        -          3,240,860
                            -----------  -----------   -----------   -----------

                            $ 4,231,215  $42,493,149   $ 3,218,720   $33,121,068
                            ===========  ===========   ===========   ===========

         Fixed rate loan  commitments  at June 30,  2001 were at  current  rates
         ranging from 6.99% to 8.00%. Variable rate loan commitments at June 30,
         2001 were at a current rate of 7.00%,  6.00% to 18.00% 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.

         At June 30, 2001, a reserve of $3,573,000 was required as deposits with
         the  Federal  Reserve  or as cash on  hand.  The  reserves  do not earn
         interest.

16.      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,
                                     -------------------------------
                                        2001               2000
                                        ----               ----

         Beginning of year           $1,283,427         $1,668,630
              New loans                   7,726            -
              Repayments                (68,823)          (246,857)
              Other changes             167,130           (138,346)
                                     ----------         ----------
         End of year                 $1,389,460         $1,283,427
                                     ==========         ==========

         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.


                                       52

<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (CONTINUED)

17.        SUMMARY OF QUARTERLY FINANCIAL DATA - (UNAUDITED)

             (Dollars in thousands except per share data)

FISCAL 2001:                   September 30   December 31    March 31    June 30
                               ------------   -----------    --------    -------

    Total interest income         $10,818       $11,301       $11,662    $11,611
    Total interest expense          6,603         7,177         6,933      6,716
    Net interest income             4,215         4,124         4,729      4,895
    Provision for loan losses         195           306           285        300
    Non-interest income             1,313         1,464         1,112      1,256
    Non-interest expense            3,256         3,349         3,447      3,518
    Net income                      1,389         1,305         1,404      1,551
    Earnings per share:
        Basic                        0.37          0.35          0.37       0.41
        Diluted                      0.37          0.35          0.37       0.41

    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
    Non-interest income               962         1,001           984        930
    Non-interest expense            2,998         3,192         3,124      3,377
    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



                                      53
<PAGE>


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

                  None.

                                    PART III

         ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

               The information  contained under the sections captioned "Proposal
          I - Election of Directors"  and "Section 16 (a)  Beneficial  Ownership
          Reporting Compliance" in the Corporation's  definitive proxy statement
          for the Corporation's  2001 Annual Meeting of Shareholders (the "Proxy
          Statement") is incorporated herein by reference.


         ITEM 11. EXECUTIVE COMPENSATION

               The information  contained under the sections  captioned "Summary
          Compensation  Table,"  "Option  Exercises  and Year-end  Value Table,"
          "Directors Compensation," and "Retirement Plan" 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  "Transactions with the Corporation
          and the Bank" in the Proxy Statement.



                                       54

<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
               (b)    Consolidated Statements of Financial Condition at June 30,
                      2001 and 2000.
               (c)    Consolidated  Statements  of  Income  for the years ended
                      June 30, 2001, 2000, and 1999.
               (d)    Consolidated  Statements  of  Comprehensive Income for the
                      years ended June 30, 2001, 2000, and 1999.
               (e)    Consolidated Statements of Changes in Stockholders' Equity
                      for the years ended June 30, 2001, 2000, and 1999.
               (f)    Consolidated Statements  of Cash Flows for the years ended
                      June 30, 2001, 2000, and 1999.
               (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**
              (21)     Subsidiaries of the Registrant
              (23)(a)  Consent of Crowe, Chizek and Company LLP, Certified
                       Public Accountants

         4.    The Registrant has filed no reports on Form 8-K for the quarter
               ending June 30, 2001.











*   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.

                                       55

<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: 9/18/01                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/ Bob Brown
                --------------------                   -------------
                B. Keith Johnson                       Bob Brown
                Principal Executive Officer            Director
                and Director

       Date:    9/18/01                         Date:  9/18/01

       By:      /s/ Wreno M. Hall               By:    /s/ Diane E. Logsdon
                --------------------                   ---------------------
                Wreno M. Hall                           Diane E. Logsdon
                Director                                Director

       Date:    9/18/01                         Date:  9/18/01

       By:      /s/ J. Alton Rider              By:   /s/ John L. Newcomb, Jr.
                ------------------                    -------------------------
                J. Alton Rider                         John L. Newcomb, Jr.
                Director                               Director

       Date:    9/18/01                         Date:  9/18/01


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

       Date:    9/18/01                         Date:  9/18/01


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

       Date:    9/18/01                         Date: 9/18/01


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

       Date:    9/18/01



                                   56

<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

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













*   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>

                                   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.


                                       58
<PAGE>


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


We hereby consent to the incorporation by reference in the Form S-8 Registration
Statement No. 33-30582 of First Federal Financial Corporation of Kentucky of our
report dated August 6, 2001 on the  consolidated  financial  statements of First
Federal  Financial  Corporation of Kentucky as of June 30, 2001 and 2000 for the
years in the period ending June 30, 2001 as included in the registrant's  annual
report on Form 10-K.


Crowe, Chizek & Company LLP

Louisville, Kentucky
September 28, 2001