SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                  FORM 10-QSB

(Mark One)

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

        For the quarterly period ended September 30, 1999

        OR

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

        For the transition period from ____________  to ___________


        Commission File Number 0-27170


                            CLASSIC BANCSHARES, INC.
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Delaware                                      61-1289391
-------------------------------------------------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
 or incorporation or organization)

344 Seventeenth Street, Ashland, Kentucky                  41101
-------------------------------------------------------------------------------
(Address of principal executive offices)                 (ZIP Code)

Registrant's telephone number, including area code:   (606) 325-4789


     Check here  whether  the issuer (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 [ ]

     As  of  August 9, 1999,  there were  1,232,500  shares of the  Registrant's
common stock issued and outstanding.

        Transitional Small Disclosure (check one):                Yes [ ] No [X]


<PAGE>
                            CLASSIC BANCSHARES, INC.

                                      INDEX

                                                                           Page
                                                                          Number

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

        Consolidated Balance Sheets as of September 30, 1999
        (Unaudited) and March 31, 1999                                         3

        Consolidated Statements of Income for the three and
         six months ended September 30, 1999 and 1998                        4-5

        Consolidated  Statements of  Stockholders'  Equity for the
        six months ended September 30, 1999 (Unaudited) and
        Year Ended March 31, 1999                                              6

        Consolidated Statements of Cash Flows for the six months
        ended September 30, 1999 and 1998                                    7-8

        Notes to Consolidated Financial Statements                          9-11


Item 2. Management's Discussion and Analysis of Financial Condition and
        Results of Operations                                              12-18

PART II.OTHER INFORMATION                                                     19

        Signatures                                                            20

        Index to Exhibits                                                     21


                                       2
<PAGE>
                            CLASSIC BANCSHARES, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                              September 30,       March 31,
                                                                  1999              1999
                                                              -------------    ------------
                                                              (Unaudited)
<S>                                                           <C>              <C>
ASSETS
------
  Cash and due from bank                                      $  4,277,280      $  3,088,248
  Federal funds sold                                                29,822         1,397,908
  Securities available for sale                                 24,303,801        25,141,436
  Mortgage-backed and related securities available for sale      3,693,883         4,479,136
  Loans receivable, net                                        123,842,458        97,527,492
  Real estate acquired in the settlement of loans                  245,590           225,590
  Accrued interest receivable                                    1,169,506           951,877
  Federal Home Loan Bank and Federal Reserve Bank stock          1,423,050         1,384,450
  Premises and equipment, net                                    5,206,877         4,523,720
  Cost in excess of fair value of net assets acquired
  (goodwill), net of accumulated amortization                    5,816,967         2,779,349
  Other assets                                                   1,180,679         1,239,835
                                                              ------------      ------------

TOTAL ASSETS                                                  $171,189,913      $142,739,041
------------                                                  ============      ============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities
  Non-interest bearing demand deposits                        $ 13,623,909      $  9,600,258
  Savings, NOW, and money market demand deposits                46,141,128        35,674,021
  Other time deposits                                           80,388,838        72,457,492
                                                              ------------      ------------
       Total deposits                                          140,153,875       117,731,771
  Federal funds purchased and securities sold
   under agreements to repurchase                                4,289,893         2,817,154
  Advances from Federal Home Loan Bank                           5,294,297           387,739
  Other short-term borrowings                                    1,059,630            84,578
  Accrued expenses and other liabilities                           490,863           428,065
  Accrued interest payable                                         551,881           418,642
  Accrued income taxes                                                   -            45,134
  Deferred income taxes                                             65,247           536,978
                                                              ------------      ------------

       Total Liabilities                                      $151,905,686      $122,450,061
                                                              ------------      ------------

Commitments and contingencies

Stockholders' Equity
  Common stock, $.01 par value, 1,322,500 shares
   issued and outstanding                                     $     13,225      $     13,225
  Additional paid-in capital                                    12,806,544        12,806,544
  Retained earnings - substantially restricted                   9,690,153         9,362,668
  Accumulated other comprehensive income                          (932,774)           83,977
  Unearned ESOP shares                                            (785,150)         (785,150)
  Unearned RRP shares                                             (234,406)         (294,332)
  Treasury stock, at cost                                       (1,273,365)         (897,952)
                                                              ------------      ------------
       Total Stockholders' Equity                             $ 19,284,227      $ 20,288,980
                                                              ------------      ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $171,189,913      $142,739,041
------------------------------------------                    ============      ============

</TABLE>

          See accompanying notes to consolidated financial statements.

                                       3


<PAGE>
                            CLASSIC BANCSHARES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                      THREE MONTHS ENDED                    SIX MONTHS ENDED
                                                        SEPTEMBER 30,                        SEPTEMBER 30,
                                                 -----------------------------        -----------------------------
                                                     1999             1998                1999             1998
                                                 -----------      ------------        -----------      ------------
<S>                                              <C>              <C>                 <C>              <C>
INTEREST INCOME
---------------
  Loans                                          $ 2,538,893      $1,941,667           $4,767,803       $3,859,136
  Investment securities                              396,547         325,668              793,450          662,889
  Mortgage-backed securities                          53,702         111,274              113,043          253,617
  Other interest earning assets                        5,756          55,145               19,236           73,543
                                                  ----------      ----------           ----------       ----------
          Total Interest Income                    2,994,898       2,433,754            5,693,532        4,849,185
                                                  ----------      ----------           ----------       ----------


INTEREST EXPENSE
----------------
  Interest on deposits                             1,345,625       1,208,474            2,567,053        2,325,741
  Interest on FHLB advances                           54,127          13,202               86,481           57,111
  Interest on other borrowed funds                    55,637          54,440               97,658          120,506
                                                  ----------      ----------           ----------       ----------
         Total Interest Expense                    1,455,389       1,276,116            2,751,192        2,503,358
                                                  ----------      ----------           ----------       ----------

         Net Interest Income                       1,539,509       1,157,638            2,942,340        2,345,827

Provision for loss on loans                           52,500          15,000               87,500           40,000
                                                  ----------      ----------           ----------       ----------
         Net interest income after
          provision for loss on
          loans                                    1,487,009       1,142,638            2,854,840        2,305,827
                                                  ----------      ----------           ----------       ----------
NON-INTEREST INCOME
-------------------
  Service charges and other fees                     169,798         105,187              318,683          222,279
  (Loss) gain on sale of securities
   available for sale                                (2,500)           3,340              (2,500)            3,904
  Gain (Loss) on disposal of assets                    3,704               -                3,704                -
  Other income                                        43,708          68,688               85,629           96,375
                                                  ----------      ----------           ----------       ----------
  Total Non-Interest Income                          214,710         177,215              405,516          322,558
                                                  ----------      ----------           ----------       ----------
NON-INTEREST EXPENSES
---------------------
  Employee compensation and benefits                 654,549         471,905            1,212,399          968,545
  Occupancy and equipment expense                    192,497         149,460              364,665          287,701
  Federal deposit insurance premiums                  10,310           9,042               20,024           17,725
  Loss (gain) on foreclosed real estate                1,708             875                1,983              914
  Other general and administrative
   expenses                                          443,069         366,418              896,685          738,700
                                                  ----------      ----------           ----------       ----------
         Total Non-Interest Expense                1,302,133         997,700            2,495,756        2,013,585
                                                  ----------      ----------           ----------       ----------
INCOME BEFORE INCOME TAXES                           399,586         322,153              764,600          614,800
--------------------------

         Income tax expense                           76,124          81,236              144,046          146,047
                                                  ----------      ----------           ----------       ----------
INCOME BEFORE GOODWILL AMORTIZATION                  323,462         240,917              620,554          468,753
-----------------------------------
                                                  ----------      ----------           ----------       ----------
Goodwill amortization                                (62,234)        (31,133)            (107,801)         (61,929)
                                                  ----------      ----------           ----------       ----------
NET INCOME                                         $ 261,228       $ 209,784            $ 512,753        $ 406,824
----------                                        ==========      ==========           ==========       ==========

Basic earnings per share before goodwill
 amortization                                         $ 0.29          $ 0.20               $ 0.55           $ 0.40
Goodwill amortization                                  (0.06)          (0.02)               (0.10)           (0.05)
                                                  ----------      ----------           ----------       ----------
Basic earnings per share after goodwill
 amortization                                         $ 0.23          $ 0.18               $ 0.45           $ 0.35
                                                  ==========      ==========           ==========       ==========
Diluted earnings per share before goodwill
 amortization                                         $ 0.28          $ 0.19               $ 0.54           $ 0.38
Goodwill amortization                                  (0.06)          (0.02)               (0.10)           (0.05)
                                                  ----------      ----------           ----------       ----------
Diluted earnings per share after goodwill
 amortization                                         $ 0.22          $ 0.17               $ 0.44           $ 0.33
                                                  ==========      ==========           ==========       ==========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       4

<PAGE>

                            CLASSIC BANCSHARES, INC.
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                   (UNAUDITED)


<TABLE>
<CAPTION>



                                                            THREE MONTHS ENDED              SIX MONTHS ENDED
                                                              SEPTEMBER 30,                   SEPTEMBER 30,
                                                         ------------------------       ------------------------
                                                           1999           1998            1999           1998
                                                         ---------     ----------       ---------     ----------
<S>                                                      <C>           <C>              <C>           <C>

Net Income                                               $ 261,228     $ 209,784        $  512,753     $ 406,824
                                                         ---------     ---------        ----------     ---------
  Other comprehensive income, net of tax:
    Unrealized holding gains (losses) on securities
    during the period                                     (430,417)       59,665        (1,018,401)       56,254

    Reclassification adjustments for realized
     gains (losses) included in earnings                     1,650        (2,204)            1,650        (2,577)


    Minimum pension liability adjustment                         -             -                 -           119
                                                         ---------     ---------        ----------     ---------

  Other comprehensive income                              (428,767)       57,461        (1,016,751)       53,796
                                                         ---------     ---------        ----------     ---------

Comprehensive Income (Loss)                             $ (167,539)    $ 267,245        $ (503,998)    $ 460,620
                                                        ==========     =========        ==========     =========

Accumulated Other Comprehensive Income                  $ (932,774)    $ 340,967        $ (932,744)    $ 340,967
                                                        ==========     =========        ==========     =========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       5
<PAGE>

<TABLE>
<CAPTION>

                            CLASSIC BANCSHARES, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                                                             NET UNREALIZED
                                                 ADDITIONAL                  GAIN (LOSS) ON
                                      COMMON      PAID-IN        RETAINED    AVAILABLE FOR
                                      STOCK       CAPTIAL        EARNINGS    SALE SECURITIES
                                    ---------   ------------    -----------  ---------------
<S>                                 <C>         <C>             <C>           <C>

Balance at April 1, 1998             $ 13,225    $ 12,753,789    $ 8,853,606   $   297,125

Net income for the year
 ended March 31, 1999                       -               -        885,324             -
Dividend paid                               -               -       (376,262)            -
ESOP shares earned                          -          28,198              -             -
RRP shares earned                           -               -              -             -
RRP shares granted                                      4,742
Tax benefit from RRP                        -          19,815              -             -
Purchased 43,894 treasury shares            -               -              -             -
Change in minimum
 pension liability adjustment               -               -              -             -
Change in unrealized gain                   -               -              -             -
 (loss) on available for sale
 securities, net of applicable
 deferred income taxes of $183,259          -               -              -      (213,148)
                                      -------    ------------    -----------   -----------

Balances at March 31, 1999             13,225      12,806,544      9,362,668        83,977

Net income for the six months
 ended September 30, 1999                   -               -        512,753             -
Dividend paid                               -               -       (185,268)            -
RRP shares earned                           -               -              -             -
Purchased 26,106 treasury shares            -               -              -             -
Change in unrealized gain
 (loss) on available for sale
 securities, net of applicable              -
 deferred income taxes of $480,519          -               -              -    (1,016,751)
                                     --------    ------------    -----------   -----------
Balances at September 30, 1999       $ 13,225    $ 12,806,544    $ 9,690,153   $  (932,774)
                                     ========    ============    ==========    ===========
</TABLE>

<TABLE>
<CAPTION>
                                         MINIMUM
                                         PENSION
                                        LIABILITY     UNEARNED
                                        ADJUSTMENT   ESOP SHARES      RRP SHARES         STOCK           TOTAL
                                        ----------   -----------      ----------      -----------     ------------
<S>                                     <C>          <C>              <C>             <C>             <C>


Balance at April 1, 1998                 $ (9,954)    $ (834,970)      $(371,879)      $  (293,880)    $ 20,407,062

Net income for the year
 ended March 31, 1999                           -              -               -                 -          885,324
Dividend paid                                   -              -               -                 -         (376,262)
ESOP shares earned                              -         49,820               -                 -           78,018
RRP shares earned                               -              -         114,132                 -          114,132
RRP shares granted                                                       (36,585)           31,843                -
Tax benefit from RRP                            -              -               -                 -           19,815
Purchased 43,894 treasury shares                -              -               -          (635,915)        (635,915)
Change in minimum
 pension liability adjustment               9,954              -               -                 -            9,954
Change in unrealized gain                       -              -               -                 -                -
 (loss) on available for sale
 securities, net of applicable
 deferred income taxes of $183,259              -              -               -                 -         (213,148)
                                        ---------     ----------       ---------       -----------     ------------

Balances at March 31, 1999                      -      (785,150)        (294,332)         (897,952)      20,288,980

Net income for the six months
 ended September 30, 1999                       -              -               -                 -          512,753
Dividend paid                                   -              -               -                 -         (185,268)
RRP shares earned                               -              -          59,926                 -           59,926
Purchased 26,106 treasury shares                -              -               -          (375,413)        (375,413)
Change in unrealized gain
 (loss) on available for sale
 securities, net of applicable
 deferred income taxes of $480,519              -              -               -                 -       (1,016,751)
                                        ---------     ----------       ---------       -----------     ------------
Balances at September 30, 1999          $       -     $ (785,150)      $(234,406)      $(1,273,365)    $ 19,284,227
                                        =========     ==========       =========       ===========     ============
</TABLE>

See accompanying notes to consolidated financial statements.


                                       6
<PAGE>

                           CLASSIC BANCSHARES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                 SIX MONTHS ENDED
                                                                   SEPTEMBER 30,
                                                          ------------------------------
                                                              1999             1998
                                                          ------------     -------------
<S>                                                       <C>              <C>
OPERATING ACTIVITIES
--------------------
   Net Income                                              $   512,753      $    406,824
   Adjustments to reconcile net income to net cash
     provided by operating activities:
        Depreciation and amortization                          254,339           188,784
        Provision for loss on loans                             87,500            40,000
        Loss (gain) on sale of securities
         available for sale                                      2,500            (3,904)
        Gain on disposal of equipment                           (3,704)                -
        Federal Home Loan Bank stock dividends                 (38,600)          (36,700)
        Deferred income tax expense (benefit)                   46,176            14,408
        Amortization and accretion of invesment
         securities premiums and discounts, net                 47,954            50,737
        RRP shares earned                                       59,926                 -
        Amortization of goodwill                               107,801            61,929
   Decrease (increase) in:
        Accrued interest receivable                           (217,629)          (89,037)
        Other assets                                            59,156             2,695
   Increase (decrease) in:
        Accrued interest payable                               133,239            62,522
        Accrued income taxes                                   (45,134)          125,220
        Accounts payable and accrued expenses                   62,798            10,419
                                                           -----------      ------------
            Net cash provided by operating activities        1,069,075           833,897
                                                           -----------      ------------

INVESTING ACTIVITIES
--------------------
   Securities:
       Proceeds from sale, maturities or calls                 527,500        10,298,703
       Purchased                                                     -       (16,481,096)
   Mortgage-backed securities:
       Proceeds from sale                                            -         5,035,426
       Purchased                                                     -        (3,839,846)
       Principal payments                                      734,452         1,467,148
   Redemption of Federal Reserve Bank Stock                     45,000                 -
   Purchased Federal Home Loan Bank stock                            -           (14,100)
   Certificates of deposits with other banks:
       Proceeds from maturies                                        -           194,000
   Loan originations and principal payments, net           (18,135,566)       (5,970,083)
   Proceed from sale of equipment                               28,000                 -
   Purchases of software                                        (4,755)           (6,677)
   Purchases of premises and equipment                        (163,313)         (332,574)
   Cash invested in purchase of Bank
    subsidiary in excess of cash and
    cash equivalents acquired                               (1,497,572)                -
                                                           -----------      ------------
             Net cash used by investing activities         (18,466,254)       (9,649,099)
                                                           -----------      ------------



</TABLE>
          See accompanying notes to consolidated financial statements.

                                       7
<PAGE>

                            CLASSIC BANCSHARES, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                          SIX MONTHS ENDED
                                                                            SEPTEMBER 30,
                                                                    -----------------------------
                                                                         1999            1998
                                                                    ------------     ------------
<S>                                                                <C>               <C>
FINANCING ACTIVITIES
--------------------
    Net increase in deposits                                        $ 10,424,457      $12,259,748
    Net proceeds from FHLB borrowings                                  4,906,558          397,325
    Repayment of long-term borrowings                                          -          (50,000)
    Increase (decrease) in federal funds purchased and
      securities sold under agreements to repurchase                   1,472,739       (1,411,805)
    Net increase in short-term borrowings                                975,052          582,538
    Purchase of treasury stock                                          (375,413)               -
    Dividends paid                                                      (185,268)        (182,414)
                                                                    ------------      -----------
           Net cash (used) provided by financing activities           17,218,125       11,595,392
                                                                    ------------      -----------

    Increase (decrease) in cash and cash equivalents                    (179,054)       2,780,190
    Cash and cash equivalent at beginning of period                    4,486,156        3,632,255
                                                                    ------------      -----------

    Cash and cash equivalents at end of period                      $  4,307,102      $ 6,412,445
                                                                    ============      ===========
    Additional cash flows and supplementary information
        Cash paid during the period for:
            Interest on deposits and borrowings                     $    688,281      $   495,095
            Taxes                                                   $    155,001      $   112,341
        Assets acquired in settlement of loans                      $     45,000      $    37,782
        Net unrealized gain (loss) on securities                    $(1,016,751)      $    53,677
         available for sale
        Liabilities assumed and cash paid in acquisition of
         Citizens Bank                                              $ 16,852,774                -
        Fair value of assets received                               $ 13,707,355                -
        Amount assigned to goodwill                                 $  3,145,419                -


</TABLE>

          See accompanying notes to consolidated financial statements.


                                       8


<PAGE>
                           CLASSIC BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  Acquisition
     -----------
     Effective May 14, 1999, Classic  Bancshares,  Inc. (the "Company") acquired
all of the 60,000  outstanding  shares of common stock of Citizens Bank, Grayson
("Citizens") for $75 per share in cash. In connection with the acquisition,  the
Company  recorded $3.1 million in goodwill.  The  acquisition  was accounted for
under the  purchase  method  of  accounting.  At the  close of the  transaction,
Citizens  Bank,  Grayson was merged with and into Classic Bank with Classic Bank
as the surviving institution.

(2)  Principles of Consolidation
     ---------------------------
     The financial  statements  for 1999 are  presented for Classic  Bancshares,
Inc. (the "Company") and its  wholly-owned  subsidiaries,  Classic Bank, and The
First National Bank of Paintsville ("First National").  The consolidated balance
sheets for  September  30, 1999 and March 31, 1999 is for the  Company,  Classic
Bank,  and First  National.  Citizen's  balance sheet was merged in with Classic
Bank on the date of  closing  and  therefore  is  included  in the  consolidated
balance sheet as of September 30, 1999.  The  consolidated  statements of income
include the  operations of the Company,  Classic Bank and First National for the
three and six months ended September 30, 1999 and 1998. The earnings of Citizens
Bank are  included  in the  consolidated  statement  of income  from the date of
closing.

(3)  Basis of Presentation
     ---------------------
     The accompanying  Consolidated  Financial  Statements have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information  and  with the  instructions  to Form  10-QSB  and  Regulation  S-B.
Accordingly,  they do not include all the information and footnotes  required by
generally accepted accounting principles for complete financial statements.

     In the opinion of management, the Consolidated Financial Statements contain
all adjustments  (consisting only of normal recurring  adjustments) necessary to
present  fairly the  financial  condition  of  Classic  Bancshares,  Inc.  as of
September  30,  1999,  and the results of  operations  for all  interim  periods
presented. Operating results for the six months ended September 30, 1999 are not
necessarily  indicative  of the results that may be expected for the fiscal year
ended March 31, 2000.

     Certain financial information and footnote disclosures normally included in
annual  financial  statements  prepared in conformity  with  generally  accepted
accounting principles have been omitted pursuant to the rules and regulations of
the  Securities  and Exchange  Commission.  The unaudited  interim  consolidated
financial  statements  presented  herein should be read in conjunction  with the
annual consolidated financial statements of the Company as of and for the fiscal
year ended March 31, 1999.

(4)  Earnings Per Share
     ------------------
     Effective  December 31, 1997,  the Company  began  presenting  earnings per
share pursuant to the provisions of SFAS No. 128, "Earnings Per Share."

     Basic  earnings  per share are  calculated  based on the  weighted  average
number of common shares outstanding during the respective periods.

                                       9
<PAGE>

     Diluted  earnings per share is computed  taking into  consideration  common
shares  outstanding and dilutive  potential common shares to be issued under the
Company's stock option plan and recognition and retention plan.

     Weighted  average  number of shares  used in the basic  earnings  per share
computations  was  1,127,512  and  1,182,451  for the  three-month  period ended
September 30, 1999 and 1998 and 1,127,548 and 1,179,327 for the six month period
ended September 30, 1999 and 1998. Weighted average number of shares used in the
diluted  earnings per share  computations  was  1,159,509  and 1,236,459 for the
three-month period ended September 30, 1999 and 1998 and 1,159,544 and 1,232,710
for the six month period ended September 30, 1999 and 1998.

(5)  Employee Stock Ownership Plan (ESOP)
     ------------------------------------
     In conjunction with the Bank's conversion on December 28, 1995, the Company
established an Employee Stock  Ownership Plan (ESOP) which covers  substantially
all  employees.  The ESOP borrowed  $1,058,000  from the Company,  and purchased
105,800 common  shares,  equal to 8% of the total number of shares issued in the
conversion. Classic Bank makes scheduled discretionary contributions to the ESOP
sufficient to service the debt.  Shares are allocated to participants'  accounts
under the shares allocated  method.  The cost of shares committed to be released
and  unallocated  shares is  reported as a reduction  of  stockholders'  equity.
Compensation  expense is recorded  based on the average fair market value of the
ESOP shares when  committed to be released.  Furthermore,  ESOP shares that have
not been  committed to be released are not considered  outstanding.  The expense
under the ESOP was $17,361 and $17,929 for the three months ended  September 30,
1999 and 1998 and $35,284 and $53,292  for the six months  ended  September  30,
1999 and 1998. As of September 30, 1999, the Company considered 78,515 shares as
unearned ESOP shares with a fair value of $1,099,210.

     On  September  14, 1998,  the Board of  Directors of the Company  adopted a
resolution to refinance the ESOP loan by extending its term to twenty-five years
effective for the plan year beginning April 1, 1998.

(6)  Stock Option and Incentive Plan and Recognition and Retention Plan
     ------------------------------------------------------------------
     On July 29, 1996, the  shareholders of the Company ratified the adoption of
the  Company's  1996 Stock Option and  Incentive  Plan and the  Recognition  and
Retention Plan ("RRP"). Pursuant to the Stock Option Plan, 132,250 shares of the
Company's  common  stock are  reserved  for  issuance,  of which the Company has
granted  options  on 106,774  shares at  $10.8125  per share,  options on 19,750
shares at $13.375  per  share,  options  on 4,500  shares at $13.875  per share,
options on 1,026 shares at $13.75 per share and options on 200 shares at $13.625
per share.  Pursuant to the Recognition and Retention Plan, 52,900 shares of the
Company's  common  stock are  reserved  for  issuance,  of which the Company has
granted awards on 52,900 shares.

     On July 27, 1998, the  shareholders of the Company ratified the adoption of
the  Company's  1998 Premium  Price Stock  Option Plan.  Pursuant to the Premium
Price Stock Option Plan, 50,000 shares of the Company's common stock is reserved
for issuance of which the Company has granted options on 5,000 shares at $16.295
per share and options on 6,300 shares at $14.988 per share.

                                       10
<PAGE>

(7)  Cash Dividend
     -------------
     On October 11, 1999,  the Board  declared a cash dividend of $.08 per share
payable on November 8, 1999 to shareholders of record on October 25, 1999.

                                       11
<PAGE>



                                 PART I - ITEM 2

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

Financial Condition
-------------------

     The Company's total assets increased $28.5 million,  or 20.0%,  from $142.7
million at March 31, 1999 to $171.2  million at September 30, 1999. The increase
was due  primarily  to an  increase  in loans of $26.3  million,  an increase in
premises  and  equipment  of  $700,000,  an increase in goodwill of $3.0 million
partially  offset by a decrease  in  investment  securities  of  $800,000  and a
decrease in mortgage-backed securities of $800,000.

     Net loans  receivable  increased  $26.3 million from $97.5 million at March
31,  1999 to $123.8  million  at  September  30,  1999 with $9.0  million of the
increase  attributable  to the  acquisition  of Citizens.  The  remainder of the
increase is due to aggressive origination efforts and continued loan demand that
resulted in  originations of $15.4 million in commercial  business loans,  $14.8
million in one-to-four family mortgage loans, $7.0 million in consumer loans and
$5.3 million in commercial  real estate loans offset by  repayments  since March
31, 1999.

     Investment securities decreased  approximately  $800,000 from $25.1 million
at March 31,  1999 to $24.3  million at  September  30, 1999 as a result of $1.2
million of  securities  acquired due to the  acquisition  of Citizens  more than
offset by sold  securities  of $528,000  and a decrease  in the market  value of
these available for sale securities.  These securities experienced approximately
a $1.5 million  temporary  decline in market  value since March 31,  1999.  This
decrease is due  primarily to a significant  increase in interest  rates and the
duration of the securities.  Mortgage-backed  securities decreased approximately
$800,000  from $4.5 million at March 31, 1999 to $3.7  million at September  30,
1999.  The  decrease  was  primarily  the  result  of  principal  repayments  of
approximately $734,000 and a decrease in the market value of these available for
sale securities.

     Premises and  equipment  increased  approximately  $700,000  primarily as a
result of the acquisition of Citizens.  Goodwill  increased  approximately  $3.0
million as a result of the goodwill  recorded in connection with the acquisition
of Citizens.

     Net deposits  increased $22.5 million from $117.7 million at March 31, 1999
to $140.2  million at  September  30,  1999 with $12.0  million of the  increase
attributable  to the  acquisition of Citizens.  The remainder of the increase is
the result of aggressive  marketing  and sales efforts and an increased  deposit
base due to the opening of two  additional  banking  offices during fiscal 1999.
Non-interest  bearing demand deposits increased $4.0 million,  savings,  NOW and
money market demand deposits  increased  $10.5 million,  and other time deposits
consisting primarily of certificates of deposit increased $8.0 million.

     Federal Home Loan Bank  advances  increased  $4.9 million from  $388,000 at
March 31, 1999 to $5.3 million at  September  30,  1999.  Net proceeds  from the
advances were used to fund the increase in loans.

         Total stockholders' equity was $20.3 million at March 31, 1999 compared
to $19.3  million at September  30, 1999.  The decrease was due to a decrease in

                                       12
<PAGE>

the market  value of  available  for sale  securities,  the purchase of treasury
stock and cash dividends paid  partially  offset by net income  recorded for the
period.

Forward-Looking Statements
--------------------------

     When used in this Form 10-QSB and in future filings by the Company with the
Securities and Exchange  Commission (the "SEC"), in the Company's press releases
or other public or shareholder communications,  and in oral statements made with
the approval of an  authorized  executive  officer,  the words or phrases  "will
likely  result",   "are  expected  to",  "will  continue",   "is   anticipated",
"estimate",  "project" or similar expressions are intended to identify "forward-
looking  statements"  within the  meaning of the Private  Securities  Litigation
Reform  Act  of  1995.   Such  statements  are  subject  to  certain  risks  and
uncertainties,  including changes in economic conditions in the Company's market
area,  changes in  policies by  regulatory  agencies,  fluctuations  in interest
rates, demand for loans in the Company's market area and competition, that could
cause actual results to differ  materially  from  historical  earnings and those
presently anticipated or projected. The Company wishes to caution readers not to
place undue reliance on any such forward-looking statements, which speak only as
of the date made.  The Company  wishes to advise readers that the factors listed
above  could  affect the  Company's  financial  performance  and could cause the
Company's  actual  results  for  future  periods to differ  materially  from any
opinions or statements  expressed  with respect to future periods in any current
statements.

     The Company does not undertake - and specifically declines any obligation -
to  publicly  release  the  result  of any  revisions  which  may be made to any
forward-looking  statements to reflect events or circumstances after the date of
such  statements or to reflect the occurrence of  anticipated  or  unanticipated
events.

Year 2000 Issue
---------------

     The advent of the year 2000 brings a  potentially  critical  problem to all
computers, software and micro-chip dependent systems. Many computer programs use
only a two-digit  character  for the year (1998  would  appear only as "98") and
thus the computer is unable to distinguish  between, for example, the years 1900
and 2000 or 1901 and 2001.  Left  uncorrected,  this  situation  will  result in
erroneous data and reports,  inability to effectuate electronic funds transfers,
and possibly the shut down of entire systems.

     The Company's  operations are heavily  dependent on information  technology
systems.  As a result,  the Company has put much effort in addressing  potential
problems that could exist with the turn of the century. The following summarizes
the phases of the Company's Y2K plan:

     Awareness  Phase.  The Company  formally  established  a Y2K plan and a Y2K
committee  that is  responsible  for  implementing  the  plan,  determining  the
resources (including personnel, time and expense estimates) required to complete
specific procedures, monitoring progress, establishing time lines and developing
contingency plans. This phase is substantially complete.

     Assessment  Phase.  The Company  developed a strategy to determine the size
and  complexity  of the Y2K  problem as it relates  to the  Company.  A Y2K risk
assessment was completed on each mission  critical  system to assess the ability
of hardware and software to accurately process date sensitive data,  including a
process specific rating assessing the relative risk of each of these processes.

                                       13
<PAGE>

     The Company's  primary  lending  relationships  are with  borrowers for 1-4
family residences.  However, the Company has contacted commercial customers with
a lending relationship  greater than $200,000 to determine Y2K compliance.  Each
customer  was rated based on Y2K  readiness.  As a result,  the Company does not
anticipate any Y2K issues with regard to its loan portfolio.

     Renovation Phase. The Company's  assessment of each mission critical system
revealed that new hardware  purchases  and software  upgrades  could  adequately
address Y2K date sensitive  applications.  These hardware purchases and software
upgrades  have been  delivered  and  placed  into  production  and  entered  the
validation and testing phase.

     Validation  (Testing)  Phase.  The validation phase is designed to test the
ability of hardware and software to accurately  process date sensitive data. The
Company has completed  validation  testing of each mission critical system.  The
testing  environment is insulated from production and development  environments,
therefore,  assuring minimal interruption of current operations.  No significant
Y2K problems have been identified  relating to any modified or upgraded  mission
critical systems. The Company completed this phase by December 31, 1998.

     Implementation  Phase.  The  Company's  plan  requires  that  all  required
hardware  purchase and software  upgrades be installed  and in  production  with
respect to all mission critical systems during the validation phase.

     The Company has  incurred  costs of  approximately  $21,000 for testing its
data processing  software.  These costs are being amortized  through March 2000.
The  Company  also has spent  costs of  approximately  $10,000  in new  hardware
purchases.  These costs will be capitalized and  depreciated  over the period of
time allowed by accounting  guidelines.  The Company does not anticipate  having
any material additional costs.

     Contingency  Plans.  The Company has developed a contingency plan outlining
alternative  plans if remediation  efforts are not  successful  and  established
trigger dates for activating the remediation  contingency  plan. In addition,  a
business resumption  contingency plan has been implemented,  which addresses the
potential  failure of mission  critical  systems to achieve Year 2000 readiness.
The Company's  contingency plan requires in the event that the Company's mission
critical  systems  become  inoperable  that all  procedures  performed  by those
systems  would  be  performed  manually.  Employee  training  for  these  manual
procedures will continue to be done through the end of 1999.

RESULTS OF OPERATIONS - COMPARISON OF OPERATING RESULTS FOR THE
---------------------------------------------------------------
THREE AND SIX MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
------------------------------------------------------

     General.  The Company's  results of operations  depend  primarily  upon the
level of net  interest  income,  which is the  difference  between the  interest
income earned on its interest-earning assets such as loans and investments,  and
the costs of the Company's interest-bearing liabilities,  primarily deposits and
borrowings.  Results  of  operations  are also  dependent  upon the level of the
Company's  non-interest  income,  including fee income and service charges,  and
affected by the level of its  non-interest  expenses,  including its general and
administrative  expenses.  Net  interest  income  depends  upon  the  volume  of
interest-earning assets and interest-bearing  liabilities and the interest rates
earned or paid on them, respectively.

                                       14
<PAGE>

     The Company  reported net income of $261,000  during the three months ended
September  30, 1999  compared to net income of $210,000  during the three months
ended  September  30, 1998.  The  increase in income of $51,000  between the two
periods  was  primarily  the result of an  increase  in net  interest  income of
$382,000, an increase in non-interest income of $37,000 and a decrease in income
taxes of $5,000  partially  offset by an increase in provision for loss on loans
of $37,000 and an increase in non-interest expenses of $336,000.

     The  Company  reported  net income of  $513,000  for the six  months  ended
September  30, 1999  compared to net income of $407,000 for the six months ended
September 30, 1998.  The increase in income of $106,000  between the two periods
was primarily the result of an increase in net interest  income of $597,000,  an
increase in  non-interest  income of $83,000  and a decrease in income  taxes of
$2,000 partially offset by an increase in provision for loss on loans of $48,000
and an increase in non-interest expenses of $528,000.

     Interest Income.  Total interest income increased $561,000 and $845,000 for
the three and six months ended  September  30, 1999 as compared to the three and
six months ended  September  30, 1998.  The increase in interest  income for the
periods  resulted   primarily  from  an  increase  in  the  average  balance  of
interest-earning  assets of $19.7 million from $125.3 million for the six months
ended  September 30, 1998 to $145.0  million for the six months ended  September
30, 1999. The increase in the average balance of interest-earning assets was due
primarily  to the  increase  in the  average  balance  of loans and the  average
balance of mortgage-backed and investment securities offset by a decrease in the
average balance of other interest earning assets. The increase in these balances
is the result of the significant growth that the Company  experienced during the
period within the Company's  existing  market area and from the  acquisition  of
Citizens  Bank. The average yield on  interest-earning  assets was 7.8% and 7.9%
for the three and six months ended  September 30, 1999 compared to 7.6% and 7.7%
for the three and six months ended September 30, 1998.

     Interest Expense.  Interest expense increased $179,000 and $248,000 for the
three and six months ended  September 30, 1999 as compared to the same period in
1998. Interest expense increased for the periods primarily due to an increase in
the average  balance of  interest-bearing  liabilities.  The average  balance of
interest-bearing  liabilities  increased  from $106.1 million for the six months
ended  September 30, 1998 to $129.3  million for the six months ended  September
30,  1999 as a result of an  increase  in  deposits  and an increase in FHLB and
other borrowings. The average rate paid on interest-bearing liabilities was 4.3%
for the three and six months ended  September  30, 1999 compared to 4.7% for the
three and six months ended  September 30, 1998. The decrease in the average rate
paid  on  interest-bearing  liabilities  is  due to the  continued  increase  in
interest-bearing transaction accounts that pay a lower rate of interest than the
certificate of deposit accounts.

     Provision for Loan Losses. The Company's  provision for loan losses totaled
$52,000  and  $88,000  for the three and six months  ended  September  30,  1999
compared to $15,000 and $40,000 for the three and six months ended September 30,
1998  based  on  management's  overall  assessment  of the loan  portfolio.  The
increase  for  the  three  and  six  month  period  was  due to an  increase  in
charge-offs and  management's  decision to increase the provision as a result of
an  evaluation  of  the  Company's  current  portfolio.  Management  continually
monitors  its  allowance  for loan  losses  and makes  adjustments  as  economic
conditions,  portfolio  quality and portfolio  diversity  dictate.  Although the
Company maintains its allowance for loan losses at a level which it considers to

                                       15
<PAGE>

be adequate to provide for  potential  losses,  there can be no  assurance  that
future losses will not exceed  estimated  amounts or that additional  provisions
for loan losses will not be required for future periods.

     Non-interest Income.  Non-interest income increased  approximately  $37,000
for the three months  ended  September  30, 1999  compared to the same period in
1998.  The increase  for the  three-month  period is primarily  the result of an
increase in service  charges and other fees on deposits of $64,000 and a gain on
disposal  of assets of $4,000  offset by a  decrease  in the gain on the sale of
securities  of  $6,000  and a  decrease  in fees  earned on the  origination  of
secondary  market  loans and other  income of $25,000.  The  increase in service
charges and other fees on deposits is the result of increased product offerings,
an increased deposit base and aggressive pricing strategies.

     Non-interest  income  increased  approximately  $83,000  for the six months
ended  September 30, 1999 compared to the same period in 1998.  The increase for
the six month period is primarily  the result of an increase in service  charges
and other fees on deposits of $96,000 and a gain on disposal of assets of $4,000
offset by a  decrease  in the gain on the sale of  securities  of  $6,000  and a
decrease in fees earned on the  origination of secondary  market loans and other
income of $11,000.

     Non-interest Expense. Non-interest expense increased $336,000 for the three
months  ended   September  30,  1999  compared  to  the  same  period  in  1998.
Non-interest expenses increased for the three-month period due to an increase in
employee  compensation  and benefits of $183,000,  an increase in occupancy  and
equipment expense of $43,000,  an increase in goodwill  amortization of $31,000,
an increase in ATM expense of $6,000,  an increase in marketing and  advertising
expense of $8,000,  an increase  in legal and  accounting  fees of  $26,000,  an
increase in  stationary,  printing and other supplies of $18,000 and an increase
in other general and administrative  expenses of $21,000.  Employee compensation
and benefits increased as a result of an increase in the net number of employees
due to the  acquisition  of Citizens and the hiring of  additional  employees in
order to facilitate the growth of the Company.  Occupancy and equipment  expense
increased due to increased  costs related to an additional  banking  office as a
result  of the  acquisition  of  Citizens  and  additional  costs as a result of
improved technology put in place by the Company. Goodwill amortization increased
due to the goodwill recorded in connection with the acquisition of Citizens.

     Non-interest  expense increased $528,000 for the six months ended September
30, 1999 compared to the same period in 1998.  Non-interest  expenses  increased
for the six month  period due to an increase  in  compensation  and  benefits of
$244,000, an increase in occupancy and equipment expense of $77,000, an increase
in goodwill  amortization of $46,000,  an increase in ATM expense of $6,000,  an
increase in marketing and advertising  expense of $18,000,  an increase in legal
and accounting  fees of $25,000,  an increase in stationary,  printing and other
supplies  of  $48,000,  an increase  in  telephone  expense of  $17,000,  and an
increase in other  general  and  administrative  expenses  of $47,000.  Employee
compensation and benefits increased as a result of an increase in the net number
of employees  due to the  acquisition  of Citizens and the hiring of  additional
employees  in order to  facilitate  the  growth of the  Company.  Occupancy  and
equipment  increased due to increased  costs  related to an  additional  banking
office  as a  result  of the  acquisition  of  Citizens.  Goodwill  amortization
increased due to the goodwill  recorded in connection  with the  acquisition  of
Citizens.  Stationary,   printing  and  other  general  administrative  expenses
increased  as a result of the  significant  growth that the Company  experienced
during the six month  period and the costs  associated  with  servicing a larger
customer  base.

                                       16
<PAGE>

     Income Tax Expense.  Income tax expense decreased $5,000 and $2,000 for the
three and six months ended  September  30, 1999  primarily due to an increase in
tax exempt income.

     Non-Performing Assets and Allowance for Loan Losses. The allowance for loan
losses is  calculated  based upon an  evaluation  and  assessment  of  pertinent
factors  underlying the types and qualities of the Company's  loans.  Management
considers such factors as the payment  status of a loan, the borrower's  ability
to repay  the loan,  the  estimated  fair  value of the  underlying  collateral,
anticipated economic conditions that may affect the borrower's repayment ability
and the  Company's  historical  charge-offs.  The  Company's  allowance for loan
losses as of September 30, 1999 was $1.3 million or 1.0% of the total loans. The
March 31, 1999 allowance for loan loss was $861,000,  or .9% of total loans. The
increase in the  allowance  since March 31,  1999 is due to the  acquisition  of
Citizens  and the  transfer  of that  allowance  to Classic  Bank.  The  Company
recorded a  provision  for loan  losses of  $87,000  for the  six-month  period,
recorded an allowance of $550,000 from the  acquisition  of Citizens and had net
charge-offs of $137,000 for the six-month period.  The allowance for loan losses
at September 30, 1999 was allocated as follows:  $387,000 to one-to-four  family
real estate loans,  $480,000 to commercial  real estate and commercial  business
loans,  $98,000 to consumer  loans,  $70,000 to year 2000 and $250,000  remained
unallocated.

     The ratio of  non-performing  assets to total  assets is one  indicator  of
other exposure to credit risk.  Non-performing  assets of the Company consist of
non-accruing  loans,  accruing loans  delinquent 90 days or more, and foreclosed
assets,  which have been acquired as a result of foreclosure or  deed-in-lieu of
foreclosure.  For  all  periods  presented  the  Company  had no  troubled  debt
restructurings.  The  following  table sets  forth the amount of  non-performing
assets at the periods indicated.

<TABLE>
<CAPTION>

                                                 September 30, 1999        March 31, 1999
                                                 ------------------        --------------
                                                         (Dollars in Thousands)
<S>                                                  <C>                      <C>
Non-Accruing Loans ............................       $   471                  $  315
Accruing Loans Delinquent 90 Days or More......           293                      91
Foreclosed Assets .............................           271                     226
                                                      -------                  ------
Total Non-Performing Assets ...................       $ 1,035                  $  632
Total Non-Performing Assets as a
         Percentage of Total Assets ...........           .6%                     .4%

</TABLE>

     Total  non-performing  assets  increased  $403,000  from March 31,  1999 to
September  30,  1999.  This  increase is due  primarily  to the  acquisition  of
Citizens  and the  inclusion  of the  acquired  loans in  non-performing  loans.
Management  continually  pursues  collection of these loans in order to decrease
the level of non-performing loans.

     Other Assets of Concern.  Other than the non-performing assets set forth in
the table above,  as of September 30, 1999,  there were no loans with respect to
which known  information  about the possible credit problems of the borrowers or
the  cash  flows of the  security  properties  have  caused  management  to have
concerns  as to the  ability  of the  borrowers  to  comply  with  present  loan
repayment  terms and which may result in the future  inclusion  of such items in
the non-performing asset categories.

                                       17
<PAGE>

     Liquidity and Capital Resources.  The Company's most liquid assets are cash
and cash equivalents.  The levels of these assets are dependent on the Company's
operating,  financing, and investing activities. At September 30, 1999 and March
31, 1999,  cash and cash  equivalents  totaled  $4.3  million and $4.5  million,
respectively.  The  Company's  primary  sources of funds  include  principal and
interest  payments on loans (both  scheduled  and  prepayments),  maturities  of
investment  securities and principal payments from  mortgage-backed  securities,
deposits and Federal Home Loan Bank of Cincinnati advances. While scheduled loan
repayments  and proceeds  from  maturing  investment  securities  and  principal
payments on mortgage-backed securities are relatively predictable, deposit flows
and early  repayments are more  influenced by interest rates,  general  economic
conditions  and  competition.  Certificates  of deposit as of September 30, 1999
maturing within one year total $63.4 million.

     Liquidity  management  is both a short-  and  long-term  responsibility  of
management.  The Company  adjusts its  investments  in liquid  assets based upon
management's  assessment  of  expected  loan  demand,   projected  purchases  of
investment  and  mortgage-backed  securities,  expected  deposit  flows,  yields
available on  interest-bearing  deposits,  and liquidity of its  asset/liability
management  program.  Excess liquidity is generally invested in interest-bearing
overnight  deposits  and  other  short-term  liquid  asset  funds.  If funds are
required beyond the funds generated internally,  the subsidiaries of the Company
have the ability to borrow  funds from the FHLB.  At  September  30,  1999,  the
Company had $5.3 million in borrowings outstanding with the FHLB.

     Classic  Bank is required to maintain  minimum  levels of liquid  assets as
defined  by OTS  regulations.  This  requirement,  which  may be  varied  at the
direction  of  the  OTS  depending  on  economic  conditions,  is  based  upon a
percentage  of  deposits  and  short-term  borrowings.  The  required  ratio  is
currently 4.0%. The Bank's liquidity ratios have consistently been maintained at
levels in compliance with regulatory requirements.  As of September 30, 1999 and
March  31,  1999,   Classic  Bank's  liquidity  ratios  were  4.63%  and  4.12%,
respectively.  First  National,  as a  national  bank,  is  not  subject  to any
prescribed liquidity requirements.

     At September 30, 1999, the Company had outstanding commitments to originate
loans of $12.6 million.  The Company  anticipates  that it will have  sufficient
funds available to meet its current  commitments  principally through the use of
current liquid assets and through its borrowing capacity with the FHLB.

     Pursuant to rules promulgated by the Office of Thrift Supervision,  savings
institutions must meet several separate minimum  capital-to-asset  requirements.
The  following  table  summarizes,   as  of  September  30,  1999,  the  capital
requirements  applicable to Classic Bank and its actual  capital  ratios.  As of
September  30,  1999,  Classic  Bank  exceeded  all current  regulatory  capital
standards.

                                       Regulatory           Actual Capital
                                  Capital Requirement         (CB Only)
                                  -------------------     -----------------
                                   Amount    Percent      Amount    Percent
                                  --------   --------     ------    -------
                                              (Dollars in Thousands)
Risk-Based Capital
  (to Risk Weighted Assets)        $5,008      8.0%     $6,264        10.0%
Tier 1 (Core) Capital
  (to Adjusted Total Assets)        3,735      4.0       5,481         5.9




                                       18
<PAGE>

     Classic Bank  experienced a decrease in regulatory  capital and the related
ratios as a result of the  acquisition  of  Citizens.  Citizens  was merged into
Classic Bank resulting in increased assets for Classic, the creation of goodwill
and no change in capital levels.

     Pursuant to regulations promulgated by the Office of the Comptroller of the
Currency  (the  "OCC"),  national  banks must meet two minimum  capital-to-asset
requirements.  The following  table  summarizes,  as of September 30, 1999,  the
capital requirements applicable to First National and its actual capital ratios.
As of September 30, 1999, First National exceeded all current regulatory capital
standards.


                                       Regulatory           Actual Capital
                                  Capital Requirement         (FN Only)
                                  -------------------     -----------------
                                   Amount    Percent      Amount    Percent
                                  --------   --------     ------    -------
Risk-Based Capital
  (to Risk Weighted Assets)       $4,121       8.0%       $8,419      16.3%
Tier 1 Capital
  (to Risk Weighted Assets)        2,060       4.0         7,991      15.5


Impact of Inflation and Changing Prices
---------------------------------------

     The  consolidated  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
terms  of  historical  dollars  without  considering  changes  in  the  relative
purchasing  power of money over time due to  inflation.  The  primary  impact of
inflation on the  operations of the Company is reflected in increased  operating
costs.  Unlike  most  industrial  companies,  virtually  all of the  assets  and
liabilities  of a financial  institution  are  monetary in nature.  As a result,
interest  rates,  generally,  have  a more  significant  impact  on a  financial
institution's performance than does inflation. Interest rates do not necessarily
move in the same  direction  or to the same  extent  as the  prices of goods and
services.

                                       19
<PAGE>
                           PART II. OTHER INFORMATION

Item 1.   Legal Proceedings
          None.

Item 2.   Changes in Securities
          None.

Item 3.   Defaults Upon Senior Securities
          None.

Item 4.   Submission of Matters to a Vote of Security Holders
               The annual  meeting of  Shareholders  (the  "Meeting") of Classic
          Bancshares,  Inc. was held on July 26, 1999.  The matters  approved by
          shareholders at the Meeting and the number of votes cast for,  against
          or withheld (as well as the number of  abstentions)  as to each matter
          are as follows:

       PROPOSAL                                       NUMBER OF VOTES
                                            ------------------------------------
                                                                        Broker
                                              For        Withheld      Non-votes
                                            -------      --------      ---------
Election of the following directors
for the terms indicated:

Robert B. Keifer, Jr. (three years)         946,930        6,665           0
David A. Lang (three years)                 946,930        6,665           0
Robert L. Bayes (three years)               946,930        6,665           0
A. Bruce Addington (three years)            946,930        6,665           0

                                                                         Broker
                                         For      Against    Abstain   Non-votes
                                         ---      -------    -------   ---------
The ratification of the appointment
of Smith, Goolsby, Artis & Reams,
P.S.C. as the Company's auditors
for the fiscal year ending
March 31, 2000                         947,895    1,300       4,400        0

Item 5.   Other Information
          None.

Item 6.   Exhibits and Reports on Form 8-K
          a.   Exhibits
               Exhibit 27 Financial Data Schedule

          b.   Reports on Form 8-K
               The Registrant  filed the following  current  reports on Form 8-K
               during the three months ended September 30, 1999:

               Press release,  dated July 26, 1999  announcing  earnings for the
               quarter ending June 30, 1999 and declaring a cash dividend.







                                       20

<PAGE>
                                   SIGNATURES


     Pursuant to the  requirement  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.



                                    CLASSIC BANCSHARES, INC.
                                    REGISTRANT





Date:    November 15, 1999          /s/ David B. Barbour
                                    --------------------------------------------
                                    David B. Barbour, President, Chief Executive
                                     Officer and Director (Duly Authorized
                                     Officer)





Date:    November 15, 1999         /s/ Lisah M. Frazier
                                   ---------------------------------------------
                                   Lisah M. Frazier, Senior Vice President,
                                    Treasurer and Chief Financial Officer
                                   (Principal Financial Officer)







                                     21



<PAGE>

                                INDEX TO EXHIBITS



         Exhibit
         Number

         27                Financial Data Schedule


                                       22