UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934.

                For the quarterly period ended December 31, 2001

                                       OR

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934.


                         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             (IRS Employer Identification No.)
   of incorporation or organization)

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

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

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 90 days.

Yes    X     No
    -------     ------

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

          Class                      Outstanding as of January 31, 2002
       -----------                 --------------------------------------

       Common Stock                           3,758,491 shares




                     This document is comprised of 23 pages.

<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY


                                      INDEX

                                                                     Page Number
PART I - FINANCIAL INFORMATION                                       -----------

 Item 1 -Consolidated Financial Statements and Notes to Consolidated
         Financial Statements                                             3-11

 Item 2 -Management's Discussion and Analysis of the Consolidated
         Statements of Financial Condition and Results of Operations     12-21

 Item 3 -Quantitative and Qualitative Disclosures about Market Risk      20-21

 PART II - OTHER INFORMATION                                                22

 SIGNATURES                                                                 23



<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
                 Consolidated Statements of Financial Condition

                                                    (Unaudited)
                                                    December 31,       June 30,
                         ASSETS                        2001              2001
                                                       ----              ----
                                                       (Dollars in thousands)

Cash and due from banks                             $ 11,861          $ 14,927
Interest bearing deposits                             36,019            20,537
                                                      ------            ------
           Total cash and cash equivalents            47,880            35,464
Securities available-for-sale                          1,964             2,013
Securities held-to-maturity: fair value of $7,892
   (Dec.) and $20,954 at (June) 2001                   7,812            20,921
Loans receivable, less allowance for loan losses
   of $3,284 (Dec.) and $2,906 (June) 2001           522,534           517,145
Federal Home Loan Bank stock                           6,031             5,845
Premises and equipment                                11,475            11,454
Real estate owned:
  Acquired through foreclosure                           380               296
  Held for development                                   721               721
Repossessed assets                                       145                70
Acquisition intangibles                                8,799             9,215
Accrued interest receivable                            1,516             2,025
Other assets                                           1,244             1,557
                                                       -----             -----

      TOTAL ASSETS                                  $610,501          $606,726
                                                    ========          ========

                       LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Deposits:
   Non-interest bearing                             $ 20,328          $ 21,208
   Interest bearing                                  452,164           447,617
                                                     -------          -------
             Total Deposits                          472,492           468,825
Advances from Federal Home Loan Bank                  77,208            77,298
Accrued interest payable                                 793             1,970
Accounts payable and other liabilities                 1,561             2,476
Deferred income taxes                                  1,509             1,565
                                                     -------           -------

      TOTAL LIABILITIES                              553,563           552,134
                                                     -------           -------

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, 3,758,000 shares in June and
      3,758,000 shares in December                     3,758             3,758
 Additional paid-in capital                               21                21
 Retained earnings                                    52,783            50,405
 Accumulated other comprehensive
    income, net of tax                                   376               408
                                                      ------           -------

      TOTAL STOCKHOLDERS' EQUITY                      56,938            54,592
                                                     -------          --------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $610,501          $606,726
                                                    ========          ========

                 See notes to consolidated financial statements.

                                       3
<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
                        Consolidated Statements of Income
                                   (Unaudited)
                  (Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                         Three Months Ended           Six Months Ended
                                                            December 31,                 December 31,
                                                        2001            2000         2001           2000
                                                        ----            ----         ----           ----
<S>                                                 <C>              <C>          <C>            <C>
 Interest Income:
   Interest and fees on loans                        $10,683          $10,435      $21,556        $20,412
   Interest and dividends on investments
     and deposits                                        363              866          976          1,707
                                                      ------           ------       ------         ------
          Total interest income                       11,046           11,301       22,532         22,119
                                                      ------           ------       ------         ------
Interest Expense:
   Deposits                                            4,428            5,475        9,650         10,673
   Federal Home Loan Bank advances                       940            1,702        1,883          3,107
                                                       -----            -----       ------         ------
          Total interest expense                       5,368            7,177       11,533         13,780
                                                       -----            -----       ------         ------

Net interest income                                    5,678            4,124       10,999          8,339
Provision for loan losses                                460              306          760            501
                                                       -----            -----       ------          -----
Net interest income after provision for loan losses    5,218            3,818       10,239          7,838
                                                       -----            -----       ------          -----
Non-interest Income:
   Customer service fees on deposit accounts             725              621        1,428          1,199
   Secondary mortgage market closing fees                193              115          354            226
   Gain on sale of investments                            -               351           -             696
   Brokerage and insurance commissions                   126              198          276            323
   Other income                                          363              179          584            333
                                                       -----            -----        -----           -----
         Total non-interest income                     1,407            1,464        2,642           2,777
                                                       -----            -----        -----           -----
Non-interest Expense:
   Employee compensation and benefits                  1,719            1,571        3,463           3,068
   Office occupancy expense and equipment                366              357          745             723
   FDIC insurance premium                                 21               21           43              43
   Marketing and advertising                             131              125          263             250
   Outside services and data processing                  369              342          752             664
   State franchise tax                                   107              103          214             206
   Amortization of intangibles                           208              208          416             416
   Other expense                                         736              622        1,385           1,234
                                                       -----            -----        -----           -----
         Total non-interest expense                    3,657            3,349        7,281           6,604
                                                       -----            -----        -----           -----
Income before income taxes                             2,968            1,933        5,600           4,011
Income taxes                                             990              628        1,869           1,317
                                                      ------           ------        -----           -----
Net income                                            $1,978           $1,305       $3,731          $2,694
                                                      ======           ======       ======          ======
Earnings per share:
         Basic                                        $ 0.53           $ 0.35       $ 0.99          $ 0.72
         Diluted                                      $ 0.53           $ 0.35       $ 0.99          $ 0.72

</TABLE>

                 See notes to consolidated financial statements.

                                       4
<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
                 Consolidated Statements of Comprehensive Income
                                   (Unaudited)
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                    Three Months Ended         Six Months Ended
                                                        December 31,              December 31,
                                                       ------------              -------------
                                                    2001          2000        2001          2000
                                                    ----          ----        ----          ----
<S>                                               <C>           <C>         <C>           <C>
Net Income                                         $1,978        $1,305      $3,731        $2,694
Other comprehensive income (loss), net of tax:
     Change in unrealized gain (loss)
        on securities                                  (4)          169         (32)          374
     Reclassification of realized amount                -          (231)         -           (459)
                                                    ------      -------      ------        ------
     Net unrealized gain (loss) recognized in
        Comprehensive income                           (4)          (62)        (32)          (85)
                                                   ------        ------      ------        ------
Comprehensive Income                               $1,974        $1,243      $3,699        $2,609
                                                   ======        ======      ======        ======

</TABLE>



                 See notes to consolidated financial statements.

                                       5
<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
           Consolidated Statements of Changes in Stockholders' Equity
                   For the Six Months Ended December 31, 2001
                                   (Unaudited)
                                 (In thousands)


<TABLE>
<CAPTION>



                                                                                Accumulated Other
                                                     Additional                   Comprehensive
                                Common Stock          Paid - in      Retained        Income,
                             Shares       Amount       Capital       Earnings      Net of Tax        Total
                             ------       ------       -------       --------      ----------        -----
<S>                          <C>        <C>           <C>            <C>            <C>            <C>
Balance, June 30, 2001        3,758      $ 3,758       $   21         $50,405        $  408         $54,592
Net income                      -            -              -           3,731           -             3,731
Net change in unrealized
  gains (losses) on
  securities available
  for-sale, net of tax          -            -              -             -             (32)            (32)
Cash dividends declared
   ($.36 per share)             -            -              -          (1,353)          -            (1,353)
                              -----      -------        -----         -------        ------         -------
Balance, December 31, 2001    3,758      $ 3,758        $  21         $52,783        $  376         $56,938
                              =====      =======        =====         =======        ======         =======

</TABLE>








                 See notes to consolidated financial statements.

                                       6


<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
                             (Dollars in thousands)
                                                          Six Months Ended
                                                             December 31,
                                                         2001            2000
                                                         ----            ----
Operating Activities:
 Net income                                            $ 3,731         $ 2,694
 Adjustments to reconcile net income to net
    cash provided by operating activities:
    Provision for loan losses                              760             501
    Depreciation of premises and equipment                 535             567
    Net change in deferred loan fees and costs             190             174
    Federal Home Loan Bank stock dividends                (186)           (180)
    Amortization of acquired intangible assets             416             416
    Amortization and accretion on securities               (33)            (31)
    Gain on sale of investments available-for-sale          -             (696)
    Gain on sale of real estate held for developmen         (6)             (6)
    Deferred taxes                                         (40)             14
    Changes in:
      Interest receivable                                  509            (363)
      Other assets                                         313            (399)
      Interest payable                                  (1,177)           (102)
      Accounts payable and other liabilities              (909)           (848)
                                                         -----           -----
Net cash from operating activities                       4,103           1,741
                                                         -----           -----
Investing Activities:
  Sales of securities available-for-sale                   -               708
  Purchases of securities available-for-sale               -               (32)
  Purchases of securities held-to-maturity              (5,000)             -
  Maturities of securities held-to-maturity             18,143             214
  Net increase in loans                                 (6,498)        (40,960)
  Purchase of Federal Home Loan Bank stock                 -            (1,380)
  Net purchases of premises and equipment                 (556)           (598)
  Purchase of real estate held for development             -              (275)
                                                         -----         -------
Net cash from investing activities                       6,089         (42,323)
                                                         -----         -------
Financing Activities:
  Net increase in deposits                               3,667          12,185
  Advances from Federal Home Loan Bank                     -            30,544
  Repayments to Federal Home Loan Bank                     (90)            (46)
  Dividends paid                                        (1,353)         (1,351)
  Proceeds from stock options exercised                    -                 7
  Common stock repurchased                                 -               (30)
                                                         -----          ------
Net cash from financing activities                       2,224          41,309
                                                         -----          ------

Increase in cash and cash equivalents                   12,416             727
Cash and cash equivalents, beginning of period          35,464          14,979
                                                        ------          ------
Cash and cash equivalents, end of period               $47,880         $15,706
                                                       =======         =======


                 See notes to consolidated financial statements.

                                       7
<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   Notes to Consolidated Financial Statements


1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of  Presentation  - 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  Corporation  of
Elizabethtown and First Heartland Mortgage Company. All significant intercompany
transactions and balances have been eliminated.

The accompanying  unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America for interim  financial  information and with the instructions to Form
10-Q and Rule 10 of Regulation S-X. Accordingly,  they do not include all of the
information and footnotes required by accounting  principles  generally accepted
in the United  States of  America  for  complete  financial  statements.  In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered  necessary  for a fair  presentation  have been  included.  Operating
results for the six-month  period ending  December 31, 2001 are not  necessarily
indicative of the results that may be expected for the year ended June 30, 2002.
For further  information,  refer to the  consolidated  financial  statements and
footnotes thereto included in the  Corporation's  annual report on Form 10-K for
the year ended June 30, 2001.

New Accounting  Pronouncements - 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.

Reclassifications  -  Certain  amounts  have  been  reclassified  in  the  prior
financial  statements  to conform to the  current  period  classifications.  The
reclassifications  have no  effect  on net  income  or  stockholders'  equity as
previously reported.




                                       8

<PAGE>

2. SECURITIES

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

                                                                       Gross        Gross
                                                      Amortized      Unrealized   Unrealized
                                                         Cost          Gains        Losses      Fair Value
                                                         ----          -----        ------      ----------
                                                                      (Dollars in thousands)
<S>                                                    <C>            <C>          <C>          <C>
         Securities available-for-sale:
           December 31, 2001:
               Equity securities                        $   385        $ 570        $  (6)       $   949
               Obligation of states and political
                  subdivisions                            1,010           10           (5)         1,015
                                                        -------        -----        -----        -------
                    Total available-for-sale            $ 1,395        $ 580        $ (11)       $ 1,964
                                                        =======        =====        =====        =======

         Securities held-to-maturity:
           December 31, 2001:
              U.S. Treasury and agencies                $ 6,942        $ 105        $  -         $ 7,047
              Mortgage-backed securities                    870            2          (27)           845
                                                        -------        -----        -----        -------
                   Total held-to-maturity               $ 7,812        $ 107        $ (27)       $ 7,892
                                                        =======        =====        =====        =======
</TABLE>


<TABLE>
<CAPTION>
                                                                      Gross        Gross
                                                      Amortized      Unrealized   Unrealized
                                                         Cost          Gains        Losses      Fair Value
                                                         ----          -----        ------      ----------
                                                                     (Dollars in thousands)
<S>                                                    <C>            <C>          <C>          <C>
         Securities available-for-sale:
           June 30, 2001:
               Equity securities                        $   385        $ 617        $  (5)       $   997
               Obligation of states and political
                  Subdivisions                            1,010            6            -          1,016
                                                        -------        -----        -----        -------
                    Total available-for-sale            $ 1,395        $ 623        $  (5)       $ 2,013
                                                        =======        =====        =====        =======

         Securities held-to-maturity:
           June 30, 2001:
              U.S. Treasury and agencies                $19,917        $ 150        $(104)       $19,963
              Mortgage-backed securities                  1,004            4          (17)           991
                                                        -------        -----        -----        -------
                   Total held-to-maturity               $20,921        $ 154        $(121)       $20,954
                                                        =======        =====        =====        =======

</TABLE>


                                       9


<PAGE>

3. LOANS RECEIVABLE

   Loans receivable are summarized as follows:
                                                     December 31,     June 30,
                                                        2001            2001
                                                        ----            ----

                                                       (Dollars in thousands)

          Commercial                                 $ 17,864        $ 17,844
          Real estate commercial                      104,571          88,938
          Real estate construction                      7,658           9,079
          Real estate mortgage                        326,660         330,488
          Consumer and home equity                     50,898          54,189
          Indirect consumer                            20,288          21,822
                                                      -------         -------
                Total loans                           527,939         522,360
                                                      -------         -------
          Less:
            Net deferred loan origination fees         (2,121)         (2,309)
            Allowance for loan losses                  (3,284)         (2,906)
                                                       ------          ------
                                                       (5,405)         (5,215)
                                                     --------        --------
          Loans, net                                 $522,534        $517,145
                                                     ========        ========



      The following table sets forth the changes in the allowance for loan
      losses:
<TABLE>
<CAPTION>

                                                  Three Months Ended         Six Months Ended
                                                     December 31,               December 31,
                                                ------------------------------------------------
                                                  2001         2000          2001         2000
                                                  ----         ----          ----         ----

                                                             (Dollars in thousands)
           <S>                                 <C>          <C>          <C>           <C>
            Allowance for loan losses:
              Balance, beginning of period      $ 2,975      $ 2,311      $ 2,906       $ 2,252
              Provision for loan losses             460          306          760           501
              Charge-offs                          (174)         (96)        (426)         (239)
              Recoveries                             23           20           44            27
                                                -------      -------      -------      --------
              Balance, end of period            $ 3,284      $ 2,541      $ 3,284       $ 2,541
                                                =======      =======      =======       =======

</TABLE>

     Investment in impaired loans is summarized below. There were no impaired
     loans for the periods presented without an allowance allocation.

                                            December 31,         June 30,
                                              2001                2001
                                              ----                ----
                                                (Dollars in thousands)

     End of period impaired loans           $  2,347             $2,720
     Amount of allowance for loan
       loss allocated                            415                268





                                       10
<PAGE>



4. 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
December 31, 2001 First Federal had $77.2 million in advances  outstanding  from
the FHLB and the  capacity  to  increase  its  borrowings  an  additional  $23.7
million.


5. EARNINGS PER SHARE

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.   A
reconciliation  of the numerators and  denominators of the basic and diluted EPS
is as follows:
<TABLE>
<CAPTION>

                                              Three Months Ended           Six Months Ended
                                                 December 31,                 December 31,
                                                 ------------                 ------------
                                               2001        2000            2001        2000
                                               ----        ----           -----       -----
                                                              (In thousands)
        <S>                                  <C>         <C>            <C>          <C>
         Net income available
            To common shareholders            $1,978      $1,305         $3,731       $2,694
                                              ======      ======         ======       ======
         Basic EPS:
            Weighted average common shares     3,758       3,755          3,758        3,755
                                               =====       =====         ======       ======
         Diluted EPS:
            Weighted average common shares     3,758       3,755          3,758        3,755
            Dilutive effect of stock options       7           5              7            7
                                               -----       -----          -----       ------
            Weighted average common and
              incremental shares               3,765       3,760          3,765        3,762
                                               =====       =====          =====        =====
         Earnings Per Share:
             Basic                             $0.53       $0.35          $0.99        $0.72
                                               =====       =====          =====        =====

             Diluted                           $0.53       $0.35          $0.99        $0.72
                                               =====       =====          =====        =====

</TABLE>




                                       11



<PAGE>

            MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

GENERAL

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

The following  discussion  and analysis  covers any  significant  changes in the
financial  condition since June 30, 2001 and any material changes in the results
of operations for the  three-month and six-month  periods  ending,  December 31,
2001.  This  discussion  and  analysis  should  be  read  in  conjunction   with
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" included in the 2001 Annual Report to Shareholders.

PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements  contained in 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.
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, and readers are cautioned not to place undue reliance on
the forward-looking  statements in this report. The  forward-looking  statements
speak  as of the  date of this  report,  and  except  as  required  by law,  the
Corporation  makes no undertaking to revise the  forwared-looking  statements to
reflect developments after the date of theis report.

OVERVIEW

Net income for the quarter ended December 31, 2001 was $2.0 million or $0.53 per
share  diluted  compared to $1.3 million or $0.35 per share diluted for the same
period in 2000.  During the 2000 quarter,  the Corporation sold investments with
gains of $351,000. Excluding this gain, earnings would have been $1.1 million or
$0.29 per share  diluted.  The Bank's  increased  earnings were primarily due to
increases in net interest income and loan and deposit fee income.

Net income for the six months ended  December 31, 2001 was $3.7 million or $0.99
per share  diluted  compared to $2.7 million or $0.72 per share  diluted for the
same period in 2000. 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  expects that the  restructuring of advances coupled
with the Federal Open Market Committee's  interest rate reductions will continue
to have a positive impact on future  earnings.  The Bank's book value per common
share increased from $14.09 at December 31, 2000 to $15.15 at December 31, 2001.
Net income for the 2001 period  generated  return on average assets of 1.23% and
return of average equity of 13.35%.  These compare with return on average assets
of .93% and return on average equity of 10.27% for the 2000 period.

                                       12
<PAGE>


The Bank's total assets at December 31, 2001 grew to $610.5 million  compared to
$606.7 million at June 30, 2001. Net loans  increased $5.4 million from June 30,
2001 to $522.5  million at December  31,  2001.  Residential  real estate  loans
decreased  during 2001 as declining  market interest rates caused an increase in
1-4 family refinancing activity into fixed-rate, secondary market loan products.
The  commercial  real estate  portfolio  remained  strong,  increasing  by $15.6
million to $104.6  million at December 31, 2001.  This growth is a result of the
Bank's  continued   emphasis  on  the  active  pursuit  of  commercial   lending
opportunities.  While overall loan volume  remained  strong,  the  percentage of
non-performing  loans  to  total  loans  remained  low at  0.45%,  as  the  Bank
maintained its underwriting standards and continued its emphasis on secured real
estate lending.

RESULTS OF OPERATIONS

Net Interest Income-For the quarter ended December 31, 2001, net interest income
was $5.7 million, up $1.6 million from the $4.1 million attained during the 2000
quarter.  The net  interest  rate spread  increased  from 2.55%  during the 2000
quarter  to 3.59% in the  comparable  quarter of 2001.  The Bank's net  interest
margin  increased from 2.96% during the quarter ended December 31, 2000 to 3.96%
for the 2001  period.  The net  interest  spread  and  margin  benefited  from a
significant decline in the Bank's cost of funds due to a reduction in short-term
market interest rates. During the 2001 period, average  interest-earning  assets
were $574.4 million,  an increase of $16.7 million over the same period in 2000.
Total average interest bearing liabilities  increased from $516.5 million during
the quarter  ended  December  31, 2000 to $522.8  million for the same period in
2001.

Net  interest  income  for the six  months  ended  December  31,  2001 was $11.0
million,  an increase of $2.7 million from the $8.3 million  attained during the
same period of 2000.  The Bank's net interest  spread  increased 80 basis points
while the net interest margin increased 78 basis points for the six months ended
December 31, 2001 compared to the same period in 2000.





                                       13


<PAGE>


Average Balance Sheet

The  following  table  provides  detailed  information  as  to  average balance,
interest income/expense, and  rates by major balance  sheet  categories  for the
three months ended December 31, 2001 and 2000.
<TABLE>
<CAPTION>

                                                                   Three Months Ended December 31,
                                         ------------------------------------------------------------------------------------
                                                           2001                                       2000
                                                           ----                                       ----
                                            Average                     Average       Average                    Average
                                            Balance       Interest    Yield/Cost      Balance      Interest     Yield/Cost
                                            -------       --------    ----------      -------      --------     ----------
ASSETS                                                                 (Dollars in thousands)
<S>                                     <C>            <C>              <C>         <C>          <C>              <C>
Interest earning assets:
   Equity securities                     $    940       $    10          4.26%       $ 1,045      $     8          3.06%
   State and political subdivision
     Securities (1)                         1,029            18          7.00            969           17          7.02
   U.S. Treasury and agencies               4,716            58          4.92         41,891          684          6.53
   Mortgage-backed securities                 889            15          6.75          1,163           22          7.57
   Loans receivable (2) (3)               526,649        10,683          8.11        503,202       10,435          8.29
   FHLB stock                               5,969            83          5.56          5,281           99          7.50
   Interest bearing deposits               34,191           186          2.18          4,138           42          4.06
                                          -------        ------          ----        -------       ------          ----
     Total interest earning assets        574,383        11,053          7.70        557,689       11,307          8.11
                                                         ------          ----                      ------          ----
Less:  Allowance for loan losses           (3,115)                                    (2,410)
Non-interest earning assets                35,920                                     37,368
                                         --------                                   --------
     Total assets                        $607,188                                   $592,647
                                         ========                                   ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
   Savings accounts                       $44,138       $   231          2.09%      $ 32,432       $  249          3.07
   NOW and money market
     accounts                              93,254           532          2.28         78,394          546          2.79
   Certificates of deposit and
     other time deposits                  308,218         3,665          4.76        301,313        4,680          6.21
   FHLB Advances                           77,236           940          4.87        104,365        1,702          6.52
                                          -------         -----          ----        -------        -----          ----
     Total interest bearing liabilities   522,846         5,368          4.11        516,504        7,177          5.56
                                                          -----          ----        -------        -----          ----
Non-interest bearing liabilities:
   Non-interest bearing deposits           22,220                                     18,010
   Other liabilities                        5,645                                      5,369
                                          -------                                    -------
     Total liabilities                    550,711                                    539,883
Stockholders' equity                       56,477                                     52,764
                                         --------                                    -------
     Total liabilities and
       stockholders' equity              $607,188                                   $592,647
                                         ========                                   ========

Net interest income                                      $5,685                                    $4,130
                                                         ======                                    ======
Net interest spread                                                      3.59%                                    2.55%
                                                                         =====                                    =====
Net interest margin                                                      3.96%                                    2.96%
                                                                         =====                                    =====
</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.



                                       14


<PAGE>

Average Balance Sheet

The  following  table  provides  detailed  information  as  to  average balance,
interest income/expense, and rates by major balance sheet categories for the six
months ended December 31, 2001 and 2000.
<TABLE>
<CAPTION>

                                                                     Six Months Ended December 31,
                                         ------------------------------------------------------------------------------------
                                                           2001                                       2000
                                                           ----                                       ----

                                            Average                     Average       Average                      Average
                                            Balance       Interest    Yield/Cost      Balance       Interest      Yield/Cost

ASSETS                                                                 (Dollars in thousands)
<S>                                      <C>           <C>             <C>         <C>           <C>               <C>
Interest earning assets:
   Equity securities                      $    964      $    17         3.53%       $  1,071      $    16           2.99%
   State and political subdivision
     Securities (1)                          1,024           35         6.84             958           34           7.10
   U.S. Treasury and agencies                9,814          323         6.58          41,883        1,363           6.51
   Mortgage-backed securities                  920           32         6.96           1,204           44           7.31
   Loans receivable (2) (3)                526,111       21,556         8.19         492,961       20,412           8.28
   FHLB stock                                5,916          186         6.29           4,855          180           7.42
   Interest bearing deposits                29,904          396         2.65           4,310           82           3.81
     Total interest earning assets         574,653       22,545         7.85         547,242       22,131           8.09
                                                         ------         ----                       ------           ----
Less:  Allowance for loan losses            (3,056)                                   (2,353)
Non-interest earning assets                 36,393                                    37,249
                                          --------                                  --------
     Total assets                         $607,990                                  $582,138
                                          ========                                  ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
   Savings accounts                       $ 40,655      $   441         2.17%       $ 33,897      $  591            3.49%
   NOW and money market
     Accounts                               90,419          998         2.21          78,398         969            2.47
   Certificates of deposit and
     other time deposits                   315,046        8,211         5.21         297,827       9,113            6.12
   FHLB Advances                            77,701        1,883         4.85          96,040       3,107            6.47
                                           -------       ------         ----         -------      ------            ----
     Total interest bearing liabilities    523,821       11,533         4.40         506,162      13,780            5.44
                                                         ------         ----                      ------            ----
Non-interest bearing liabilities:
   Non-interest bearing deposits            21,954                                    17,820
   Other liabilities                         6,315                                     5,696
                                           -------                                   -------

Stockholders' equity                        55,900                                    52,460
                                           -------                                   -------
     Total liabilities and
       stockholders' equity               $607,990                                  $582,138
                                          ========                                  ========

Net interest income                                      $11,012                                 $ 8,351
                                                         =======                                 =======
Net interest spread                                                     3.45%                                      2.65%
                                                                        =====                                      =====
Net interest margin                                                     3.83%                                      3.05%
                                                                        =====                                      =====

</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.




                                       15

<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>

                                             Three Months Ended                 Six Months Ended
                                                December 31,                      December 31,
                                               2001 vs. 2000                     2001 vs. 2000
                                            ------------------                ------------------
                                            Increase (decrease)               Increase (decrease)
                                              Due to change in                  Due to change in
  (Dollars in thousands)
                                                              Net                                 Net
                                         Rate     Volume     Change          Rate     Volume    Change
                                         ----     ------     ------          ----     ------    ------
  <S>                                  <C>        <C>       <C>            <C>       <C>       <C>
   Interest income:
     Loans                              $(231)     $479      $248           $(216)    $1,360    $1,144
     Equity securities                      3        (1)        2               3         (2)        1
     State and political subdivision
       securities                           -         1         1              (2)         3         1
     U.S. Treasury and agencies          (136)     (490)     (626)             16     (1,056)   (1,040)
     Mortgage-backed securities            (2)       (5)       (7)             (2)       (10)      (12)
     FHLB stock                           (28)       12       (16)            (30)        36         6
     Interest bearing deposits            (28)      172       144             (32)       346       314
                                         ----       ---       ---            ----        ---       ---
    Total interest earning assets        (422)      168      (254)           (263)       677       414
                                         ----       ---       ---            ----        ---       ---
   Interest expense:
      Savings accounts                    (93)       75       (18)           (253)       103      (150)
      NOW and money market accounts      (108)       94       (14)           (110)       139        29

         time deposits                 (1,119)      105    (1,015)         (1,406)       504      (902)
      FHLB advances                      (377)     (386)     (762)           (695)      (529)   (1,224)
                                       ------      ----    ------          ------       ----    ------
    Total interest bearing liabilities (1,697)     (112)   (1,809)         (2,464)       217    (2,247)
                                       ------      ----    ------          ------       ----    ------

    Net change in net interest income  $1,275     $ 280   $ 1,555         $ 2,201      $ 460   $ 2,661
                                       ======     =====   =======         =======      ======  =======
</TABLE>

Non-Interest  Income-Non-interest  income was $1.4 million for the quarter ended
December 31, 2001,  as compared to $1.5 million for the 2000 period,  a decrease
of $57,000.  During the December  2001 quarter the Bank did not report any gains
from  investment  sales  compared  to reported  gains of  $351,000  for the 2000
period. Fee income from secondary market lending operations increased by $78,000
or 68% during the 2001 period compared to 2000 due to increased secondary market
residential  loan  originations  from a higher  level of  refinancing  activity.
Customer service fees charged on deposit  accounts  increased by $104,000 or 17%
during the 2001 quarter due to growth in fee-related  customer  transactions and
deposit  relationships with existing customers.  Other sources of income such as
loan fees and other customer  transaction  fees also  increased  during the 2001
period as compared to the 2000 period.

Non-interest income was $2.6 million for the six months ended December 31, 2001,
as compared to $2.8  million for the same period last year.  During the December
2001 period the Bank did not report any gains from investment  sales compared to
reported gains of $696,000 for the 2000 period. Fee income from secondary market
lending operations  increased by $128,000 or 57% during the 2001 period compared
to 2000. Customer service fees charged on deposit accounts increased by $229,000
or 19% during the 2001 period due to the Bank's continued  efforts to expand its
product line.


                                       16
<PAGE>

Non-Interest  Expense-Non-interest  expense  increased  during the  quarter  and
six-month  period ended  December 31, 2001  compared to the same period in 2000.
The most significant factors comprising the increase in non-interest expense for
the quarter and  six-months  ended  December 31, 2001 were increases in employee
compensation and benefits, data processing expense and other expense.

Compensation  and  employee  benefits,  the largest  component  of  non-interest
expense,  increased  $148,000 for the 2001 quarter compared to the 2000 quarter,
and $395,000 for the six months ended December 31, 2001 compared to December 31,
2000.  The  increase  reflects  growth in the  overall  staffing  level from 198
full-time  equivalent employees at December 31, 2000 to 219 full-time equivalent
employees at December 31, 2001.  The Bank's  continued  emphasis on building its
commercial  and retail staff because of shifting its focus to a commercial  bank
philosophy was the largest contributing factor.

Data  processing  expense  increased  for both the  three and six  months  ended
December  31,  2001 due to an  increase  in  processor  charges  relating  to an
increase in the number of users,  training expenses,  the implementation of cash
management,  internet  banking  and  the  creation  of the  Bank's  new  imaging
department.  Other expense  increased during the 2001 period including  postage,
stationary and supplies and customer account expenses.

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 and industry
trends, historical charge-offs,  recoveries,  and other information.  Management
monitors  the  commercial  real  estate  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 December 31, 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 $460,000 for the three months ended  December
31, 2001  compared to $306,000  for the 2000  quarter.  The  provision  for loan
losses  also  increased  for the six months  ended  December 31 2001 to $760,000
compared to $501,000  for the 2000 period.  The increase in the  provision is to
compensate  for the Bank's strong growth in commercial  real estate  lending,  a
slowing U.S.  economy during the quarter and an increase in charge-offs  for the
period. Net loan charge-offs  increased $75,000 to $151,000 for the three months
ended  December  31, 2001  compared to $76,000 for the same period in 2000.  Net
loan charge-offs also increased for the six-month period ended December 31, 2001
to $382,000  compared to $212,000  for the same period in 2000.  The increase in
charge-offs  is  related  to  charge-offs  of  indirect  consumer  loans  and  a
commercial real estate loan during the 2001 period.





                                       17


<PAGE>


The following table sets forth an analysis of the Bank's loan loss experience
for the three and six months ended December 31, 2001 and 2000.
<TABLE>
<CAPTION>

                                                     Three Months Ended        Six Months Ended
                                                        December 31,              December 31,

                                                     2001        2000          2001         2000
                                                     ----        ----          ----         ----
                                                               (Dollars in thousands)
     <S>                                           <C>         <C>           <C>          <C>
      Balance-beginning of period                   $2,975      $2,311        $2,906       $2,252
      Loans charged-off:                            ------      ------        ------       ------
         Real estate mortgage                           -           -             -            (2)
         Consumer                                     (174)        (96)         (278)        (237)
         Commercial                                     -           -           (148)          -
                                                      ----         ---          ----         ----
      Total charge-offs                               (174)        (96)         (426)        (239)
                                                      ----         ---          ----         ----
      Recoveries:
         Real estate mortgage                            4          -              5           -
         Consumer                                       12          20            32           27
         Commercial                                      7          -              7           -
                                                        --          --            --           --
      Total recoveries                                  23          20            44           27
                                                        --          --            --           --
      Net loans charged-off                           (151)        (76)         (382)        (212)
                                                      ----      ------          ----         ----
      Provision for loan losses                        460         306           760          501
                                                    ------      ------          ----         ----
      Balance-end of period                         $3,284      $2,541        $3,284       $2,541
                                                    ------      ------        ------       ------

       Net charge-offs to average
         loans outstanding                                                      .073%        .043%
       Allowance for loan losses to
         total non-performing loans                                              140%          95%

         to net loans outstanding                                                .50%         .63%

</TABLE>

Federal regulations require insured institutions to classify their own assets on
a regular basis.  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 December 31,
2001, on the basis of management's review of the Bank's loan portfolio, the Bank
had $2.3 million of assets classified substandard, $318,000 of assets classified
as doubtful and $88,000 of assets classified as loss.

The  amount  of the loan  loss  allowance  is based  on the  percentage  of each
classified  loan  considered  to be at  risk,  based  on the  following  ranges:
Substandard-2.5% to 35%;  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.




                                       18

<PAGE>


Non-Performing Assets

The Bank's 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. An impaired loan is
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  require an increase to the  allowance  for loan
losses, 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.  Management  does not consider the overall  increase in  non-performing
assets during the period to be material or  indicative of any adverse  change in
overall asset quality.  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
presents  information with respect to the Bank's  non-performing  assets for the
periods indicated.

                                                   December 31,       June 30,
                                                      2001              2001
                                                      ----              ----
                                                       (Dollars in thousands)

        Past due 90 days still on accrual           $    -           $     -
        Loans on non-accrual status (1)(2)            2,347             2,720
        Real estate acquired
           through foreclosure                          380               296
        Repossessed assets                              145                70
                                                     ------            ------
                Total non-performing assets          $2,872            $3,086
                                                     ======            ======

        Ratios:  Non-performing loans
                   to loans                             .45%              .52%
                 Non-performing assets
                   to total assets                      .47%              .51%

--------------------------------------------------------
(1)  Loans on non-accrual status include impaired loans.
(2)  The interest income that would have been earned and
     received on non-accrual loans was approximately $96,000
     for the six month period ending December 31, and $227,000
     for the year ending June 30.


                                       19

<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. The Bank intends to continue
to fund loan growth  (outstanding loan commitments were $3.2 million at December
31, 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 December 31, 2001, the Bank had an unused  approved line of credit
in the amount of $36.8 million and sufficient collateral to borrow an additional
$23.7 million in advances from the FHLB.

Capital

Regulatory  agencies  measure  capital  adequacy  within a framework  that makes
capital  requirements,  in part,  dependent on the  individual  risk profiles of
financial institutions. The Bank continues to exceed the regulatory requirements
for Tier I, Tier I leverage and total  risk-based  capital.  The Bank intends to
maintain  a capital  position  that  meets or  exceeds  the  "well  capitalized"
requirements as defined by the FDIC. The Bank's average  stockholders' equity to
average  assets ratio was 9.19% at December  31, 2001  compared to 8.97% at June
30, 2001. The Bank's actual and required  capital amounts and ratios at December
31, 2001 are presented below:

<TABLE>
<CAPTION>
                                                                                                 To Be Considered
                                                                                                 Well Capitalized
                                                                                                   Under Prompt
                                                                         For Capital                Correction
                                                 Actual               Adequacy Purposes         Action Provisions
                                          -----------------------------------------------------------------------
   As of December 31, 2001:                Amount      Ratio        Amount       Ratio        Amount        Ratio
                                           ------      -----        ------       -----        ------        -----
    <S>                                  <C>          <C>          <C>           <C>         <C>           <C>
     Total risk-based capital (to risk-
       weighted assets)                   $49,988      11.3%        $35,359       8.0%        $44,199       10.0%
     Tier I capital (to risk-weighted
       assets)                             46,456      10.5          17,679       4.0          26,519        6.0
     Tier I leverage capital (to
       average assets)                     46,456       7.6          24,287       4.0          30,359        5.0

</TABLE>


Quantitative and Qualitative Disclosures About Market Risk

To minimize the volatility of net interest  income and exposure to economic loss
that may result from  fluctuating  interest rates, the Bank manages its exposure
to adverse  changes in interest  rates through  asset and  liability  management
activities  within  guidelines  established  by its  Asset  Liability  Committee
("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.

                                       20

<PAGE>

The Bank's interest  sensitivity  profile changed from June 30, 2001 to December
31, 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 2.10% at
December  31,  2001.  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 3.93% at December 31, 2001.

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.
<TABLE>
<CAPTION>

                                                                December 31, 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                       $49,004          $51,582          $53,742           $55,515            $57,122
     Investments                   2,460            2,528            2,553             2,569              2,605
                                  ------           ------           ------            ------             ------
Total interest income             51,464           54,110           56,295            58,084             59,727

Projected interest expense
     Deposits                     16,676           19,457           22,257            25,197             28,444
     Borrowed funds                4,664            4,666            4,668             4,670              4,682
                                  ------           ------           ------            ------             ------
Total interest expense            21,340           24,123           26,925            29,867             33,126

Net interest income              $30,124          $29,987          $29,370           $28,217            $26,601
Change from base                    $754             $617                            $(1,153)           $(2,769)
% Change from base                  2.57%            2.10%                             (3.93)%            (9.43)%

</TABLE>

<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>


                                       21

<PAGE>



                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

Part II - Other Information

      Item 1.  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 2.  Changes in Securities
               Not Applicable

      Item 3.  Defaults Upon Senior Securities
               Not Applicable

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

               The  Corporation's  2001 Annual Meeting of Shareholders  was held
               on  November  14, 2001.  At  the  meeting , the directors  listed
               below  were  elected  as directors  of  the Corporation for terms
               expiring  at  the  annual  meeting  in the year set forth to each
               of their names.

                         Name                  Term Expires
                         ----                  ------------
                     Robert M. Brown               2004
                     Gail L. Schomp                2004
                     J. Alton Rider                2004

               In   addition,  the following  directors  will continue in office
               until  the  annual  meeting  of the year set forth beside each of
               their names.


               The  voting  results  for the  matters  brought  before  the 2001
               Annual Meeting are as follows:

                         Name                   Term Expires
                         ----                   ------------
                     Wreno M. Hall                 2002
                     Walter D. Huddleston          2002
                     B. Keith Johnson              2003
                     Diane E. Logsdon              2003
                     J. Stephen Mouser             2002
                     John L. Newcomb, Jr.          2003
                     Michael L. Thomas             2002

             1. Election of Directors. Cumulative voting applied in the election
                of directors.

                Name         Votes For       Abstentions        Broker Nonvotes
                ----         ---------       -----------        ---------------
           Robert M. Brown   3,174,510           0                    0
           Gail L. Schomp    3,418,387           0                    0
           J. Alton Rider    3,086,909           0                    0



       Item 5.  Other Information
                Not Applicable

       Item 6.  Exhibits:  Not Applicable
                Reports on Form 8-K:  Not Applicable


                                       22

<PAGE>

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

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.



DATE:  February 12, 2002         BY: (S)  B. Keith Johnson
                                     ---------------------------
                                      B. Keith Johnson
                                      President and Chief Executive Officer

DATE:  February 12, 2002         BY: (S) Charles E. Chaney
                                     ---------------------------
                                      Charles E. Chaney
                                      Senior Vice President
                                      Chief Operating Officer






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