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 June 30, 1998

     OR

[X]  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 
     incorporation or organization)               Identification Number)


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 10,  1998,  there were  1,322,500  shares of the  Registrant's
common stock issued and 1,299,590 shares 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 June 30, 1998 (Unaudited)
         and March 31, 1998                                                3

         Consolidated Statements of Income for the three months
         ended June 30, 1998 and 1997                                      4

         Consolidated Statements of Stockholders' Equity for the three
         months ended June 30, 1998 (Unaudited)
         and Year Ended March 31, 1998                                     5

         Consolidated Statements of Cash Flows for the three months 
         ended June 30, 1998 and 1997                                     6-7

         Notes to Consolidated Financial Statements                       8-9

Item 2.  Management's Discussion and Analysis of Financial 
         Condition  and Results of Operations                            10-14

PART II. OTHER INFORMATION                                                15

         Signatures                                                       16

         Index to Exhibits                                                17


                                       2

<PAGE>

                            CLASSIC BANCSHARES, INC.
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                         June 30,         March 31,
                                                                           1998             1998
                                                                       -------------    -------------
                                                                        (Unaudited)
<S>                                                                    <C>              <C>          
ASSETS
  Cash and due from bank                                               $   2,931,378    $   2,500,841
  Federal funds sold and securities purchased under resell agreement         100,000        1,131,414
  Certificates of deposits in other financial institutions                   293,000          293,000
  Investment securities available for sale                                21,169,540       18,176,807
  Mortgage-backed securities available for sale                            9,638,263        7,830,714
  Loans receivable, net                                                   92,337,320       90,100,000
  Real estate acquired in the settlement of loans                            271,390          229,390
  Accrued interest receivable                                              1,003,176          851,767
  Federal Home Loan Bank and Federal Reserve Bank stock                    1,329,350        1,297,150
  Premises and equipment, net                                              4,605,631        4,468,002
  Cost in excess of fair value of net assets acquired (goodwill),
    net of accumulated amortization                                        2,872,074        2,902,869
  Other assets                                                             1,432,745        1,338,572
                                                                       -------------    -------------
TOTAL ASSETS                                                           $ 137,983,867    $ 131,120,526
                                                                       =============    =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
  Deposits                                                             $ 108,399,557    $ 104,926,667
  Securities sold under agreement to repurchase                            2,915,700        3,521,799
  Advances from Federal Home Loan Bank                                     2,862,000             --
  Other short-term borrowings                                              1,046,838          273,697
  Accrued expenses and other liabilities                                     433,239          402,090
  Accrued interest payable                                                   435,353          390,409
  Accrued income taxes                                                       216,602             --
  Long-term debt                                                             525,000          550,000
  Deferred income taxes                                                      634,268          648,802
                                                                       -------------    -------------
              Total Liabilities                                        $ 117,468,557    $ 110,713,464
                                                                       -------------    -------------
Commitments and contingencies

Stockholders' Equity
  Common stock, $.01 par value, 1,322,500 shares
    issued and 1,299,590 outstanding                                   $      13,225    $      13,225
  Additional paid-in capital                                              12,753,789       12,753,789
  Retained earnings - substantially restricted                             8,965,519        8,853,606
  Net unrealized gain (loss) on securities available for sale                293,341          297,125
  Unearned ESOP shares                                                      (834,970)        (834,970)
  Unearned RRP shares                                                       (371,879)        (371,879)
  Minimum pension liability adjustment                                        (9,835)          (9,954)
  Treasury stock, at cost                                                   (293,880)        (293,880)
                                                                       -------------    -------------
              Total Stockholders' Equity                               $  20,515,310    $  20,407,062
                                                                       -------------    -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $ 137,983,867    $ 131,120,526
                                                                       =============    =============
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       3

<PAGE>

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


<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED
                                                                               JUNE 30,
                                                                      --------------------------
                                                                        1998           1997
                                                                      -----------    -----------
<S>                                                                   <C>            <C>        
INTEREST INCOME
  Loans                                                               $ 1,917,470    $ 1,794,072
  Investment securities                                                   337,221        393,296
  Mortgage-backed securities                                              142,343        151,422
  Other interest earning assets                                            18,398         31,019
                                                                      -----------    -----------
             Total Interest Income                                      2,415,432      2,369,809
                                                                      -----------    -----------
INTEREST EXPENSE
  Interest on deposits                                                  1,117,267      1,029,987
  Interest on FHLB advances                                                43,909         82,458
  Interest on other borrowed funds                                         66,067         67,901
                                                                      -----------    -----------
             Total Interest Expense                                     1,227,243      1,180,346
                                                                      -----------    -----------
             Net Interest Income                                        1,188,189      1,189,463

Provision for loss on loans                                                25,000         47,500
                                                                      -----------    -----------
             Net interest income after
              provision for loss on
              loans                                                     1,163,189      1,141,963
                                                                      -----------    -----------
NON-INTEREST INCOME
  Service charges and other fees                                          111,374         73,557
  Gain on sale of securities                                                  563            497
  Other income                                                             33,405         34,130
                                                                      -----------    -----------
             Total Non-Interest Income                                    145,342        108,184
                                                                      -----------    -----------
NON-INTEREST EXPENSES
  Employee compensation and benefits                                      496,640        449,509
  Occupancy and equipment expense                                         138,240        116,297
  Federal deposit insurance premiums                                        8,683          7,355
  (Gain) loss on foreclosed real estate                                        39            557
  Amortization of goodwill                                                 30,795         30,795
  Other general and administrative
     expenses                                                             372,284        316,095
                                                                      -----------    -----------
             Total Non-Interest Expense                                 1,046,681        920,608
                                                                      -----------    -----------
INCOME (LOSS) BEFORE INCOME TAXES                                         261,850        329,539

             Income tax expense (benefit)                                  64,811         92,497
                                                                      -----------    -----------
NET INCOME                                                            $   197,039    $   237,042
                                                                      ===========    ===========
OTHER COMPREHENSIVE INCOME, NET OF TAX
  Unrealized holding (loss) gain from available-for-sale securities   $    (3,784)   $    77,113
  Minimum pension liability adjustment                                        119            352
                                                                      -----------    -----------
             Total Other Comprehensive Income                              (3,665)        77,465
                                                                      -----------    -----------
COMPREHENSIVE INCOME                                                  $   193,374    $   314,507
                                                                      ===========    ===========
Basic earnings per share                                              $      0.17    $      0.20
                                                                      ===========    ===========
Diluted earnings per share                                            $      0.16    $      0.20
                                                                      ===========    ===========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       4

<PAGE>

                            CLASSIC BANCSHARES, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                                             ACCUMULATED OTHER
                                                                                            COMPREHENSIVE INCOME
                                                                                      -------------------------------
                                                                                       NET UNREALIZED      MINIMUM        
                                                          ADDITIONAL                   GAIN (LOSS) ON      PENSION        
                                            COMMON         PAID-IN        RETAINED     AVAILABLE FOR      LIABILITY            
                                             STOCK         CAPITAL        EARNINGS    SALE SECURITIES     ADJUSTMENT           
                                          ------------   ------------   ------------  ---------------   -------------
<S>                                       <C>            <C>            <C>             <C>             <C>          
Balance at April 1, 1997                  $     13,225   $ 12,689,158   $  8,172,085    $    (58,614)   $    (11,376)

  Net income for the year
   ended March 31, 1998                           --             --        1,020,486            --              --   
  Dividend paid                                   --             --         (338,965)           --              --   
  ESOP shares earned                              --           49,796           --              --              --   
  RRP shares earned                               --             --             --              --              --   
  RRP shares forfeited                            --              337           --              --              --   
  Tax benefit from RRP                            --           14,498           --              --              --   
  Purchased 20,000 treasury shares                --             --             --              --              --   
  Change in unrealized gain
   (loss) on securities available
   for sale                                       --             --             --           355,739            --   
  Amortization of minimum
    pension liability adjustment                  --             --             --              --             1,422
                                          ------------   ------------   ------------    ------------    ------------
Balances at March 31, 1998                      13,225     12,753,789      8,853,606         297,125          (9,954)

  Net income for the three months
   ended June 30, 1998                            --             --          197,039            --              --   
Other comprehensive income, net of tax:
  Change in unrealized gain
    (loss) on securities available
    for sale                                      --             --             --            (3,784)           --   
  Amortization of minimum
    pension liability adjustment                  --             --             --              --               119
  Dividend paid                                   --             --          (85,126)           --              --   
                                          ------------   ------------   ------------    ------------    ------------
Balances at June 30, 1998                 $     13,225   $ 12,753,789   $  8,965,519    $    293,341    $     (9,835)
                                          ============   ============   ============    ============    ============
<CAPTION>
                                           UNEARNED         UNEARNED       TREASURY
                                          ESOP SHARES      RRP SHARES        STOCK           TOTAL  
                                          ------------    ------------    ------------    ------------
<S>                                       <C>             <C>             <C>             <C>         
Balance at April 1, 1997                  $   (918,660)   $   (486,055)   $    (29,963)   $ 19,369,800

  Net income for the year
   ended March 31, 1998                           --              --              --         1,020,486
  Dividend paid                                   --              --              --          (338,965)
  ESOP shares earned                            83,690            --              --           133,486
  RRP shares earned                               --           110,283            --           110,283
  RRP shares forfeited                            --             3,893          (4,230)           --
  Tax benefit from RRP                            --              --              --            14,498
  Purchased 20,000 treasury shares                --              --          (259,687)       (259,687)
  Change in unrealized gain
   (loss) on securities available
   for sale                                       --              --              --           355,739
  Amortization of minimum
    pension liability adjustment                  --              --              --             1,422
                                          ------------    ------------    ------------    ------------
Balances at March 31, 1998                    (834,970)       (371,879)       (293,880)     20,407,062

  Net income for the three months
   ended June 30, 1998                            --              --              --           197,039
Other comprehensive income, net of tax:
  Change in unrealized gain
    (loss) on securities available
    for sale                                      --              --              --            (3,784)
  Amortization of minimum
    pension liability adjustment                  --              --              --               119
  Dividend paid                                   --              --              --           (85,126)
                                          ------------    ------------    ------------    ------------
Balances at June 30, 1998                 $   (834,970)   $   (371,879)   $   (293,880)   $ 20,515,310
                                          ============    ============    ============    ============
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       5

<PAGE>

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


<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED
                                                                JUNE 30,
                                                           1998            1997
                                                        -----------    -----------
<S>                                                      <C>            <C>        
OPERATING ACTIVITIES
  Net Income                                             $   197,039    $   237,042
  Adjustments to reconcile net income to net cash
    provided by operating activities:
       Depreciation and amortization                          91,393         71,920
       Provision for loss on loans                            25,000         47,500
       Gain on sale of securities available for sale            (563)          (497)
       Federal Home Loan Bank stock dividends                (17,829)       (16,600)
       Deferred income tax expense (benefit)                 (12,585)          --
       Amortization and accretion of invesment
         securities premiums and discounts, net                9,638          2,788
       Amortization of goodwill                               30,795         30,795
  Decrease (increase) in:
       Accrued interest receivable                          (151,409)      (305,366)
       Other assets                                          (94,173)       142,580
  Increase (decrease) in:
       Accrued interest payable                               44,944         49,244
       Accrued income taxes                                  216,602          9,926
       Accounts payable and accrued expenses                  31,149         49,791
                                                         -----------    -----------
             Net cash provided by operating activities       370,001        319,123
                                                         -----------    -----------
INVESTING ACTIVITIES
  Securities:
       Proceeds from sale, maturities or calls               750,000      1,197,960
       Purchased                                          (3,760,663)      (650,000)
  Mortgage-backed securities:
       Proceeds from sale                                  1,004,062      1,004,375
       Purchased                                          (3,265,025)    (2,187,378)
       Principal payments                                    448,341        177,003
  Certificates of deposits:
      Proceeds from maturities                                  --             --
  Loan originations and principal payments, net           (2,308,675)    (4,462,655)
  Purchases of software                                         --          (10,414)
  Purchases of premises and equipment                       (230,724)      (147,205)
                                                         -----------    -----------
             Net cash used by investing activities        (7,362,684)    (5,078,314)
                                                         -----------    -----------
</TABLE>


          See accompanying notes to consolidated financial statements.


                                       6
<PAGE>

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

<TABLE>
<CAPTION>
                                                                         THREE MONTHS ENDED
                                                                              JUNE 30,
                                                                         1998           1997
                                                                      -----------    -----------
<S>                                                                   <C>            <C>        
FINANCING ACTIVITIES
  Net increase (decrease) in deposits                                   3,472,890     (1,411,617)
  Net proceeds from FHLB borrowings                                     2,862,000      1,560,000
  Repayment of long-term borrowings                                       (25,000)       (25,000)
  Decrease in securities sold under agreement to repurchase              (606,099)    (1,310,499)
  Net increase (decrease)  in term treasury tax and loan borrowings       773,141        (31,641)
  Purchase of treasury stock                                                 --         (190,312)
  Dividends paid                                                          (85,126)       (84,917)
                                                                      -----------    -----------
            Net cash (used) provided by financing activities            6,391,806     (1,493,986)
                                                                      -----------    -----------
(Decrease) increase in cash and cash equivalents                         (600,877)    (6,253,177)
Cash and cash equivalent at beginning of period                         3,632,255      8,834,309
                                                                      -----------    -----------

Cash and cash equivalents at end of period                            $ 3,031,378    $ 2,581,132
                                                                      ===========    ===========
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       7

<PAGE>


                            CLASSIC BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  Principles of Consolidation

     The financial  statements  for 1998 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 June 30, 1998 and March 31, 1998 is for the  Company,  Classic  Bank,
and First National. The consolidated statements of income include the operations
of the Company,  Classic Bank and First National for the three months ended June
30, 1998 and 1997.

(2)  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 June
30,  1998,  and the results of  operations  for all interim  periods  presented.
Operating  results for the three months ended June 30, 1998 are not  necessarily
indicative  of the results  that may be expected for the fiscal year ended March
31, 1999.

     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, 1998.

(3)  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." In
accordance with the Statement, the June 30, 1997 earnings per share presentation
have been restated to conform to SFAS No. 128.

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

     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  1,176,168 and 1,172,954 for the three month period ended June
30,  1998 and  1997.  Weighted  average  number of  shares  used in the  diluted
earnings per share  computations was 1,242,574 and 1,212,900 for the three month
period ended June 30, 1998 and 1997.

                                       8

<PAGE>

(4) Impact of Recent Accounting Pronouncements

     During the three months ended June 30, 1998,  the Company  adopted SFAS No.
130, "Reporting  Comprehensive  Income." SFAS No. 130 establishes  standards for
the reporting and display of comprehensive  income and its components  (revenue,
expenses,  gains  and  losses)  in  a  full  set  of  general-purpose  financial
statements.  SFAS No. 130 is effective for fiscal years beginning after December
15, 1997.

(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 $35,363 and $28,500 for the three  months ended June 30, 1998
and 1997. As of June 30, 1998, the Company  considered 83,497 shares as unearned
ESOP shares with a fair value of $1,429,886.

(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 and options on 19,750
shares at $13.375. 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 49,990  shares.  Ungranted RRP shares (2,910) are included
in treasury  stock at cost.  RRP shares that are granted are  considered  common
stock equivalents.

     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.  No awards have been granted under the Premium Price Stock Option
Plan.

(7) Cash Dividend

     On July 27,  1998,  the Board  declared a cash  dividend  of $.08 per share
payable on August 24, 1998 to shareholders of record on August 10, 1998.

(8) Supplemental Disclosure of Cash Flows Information

                                                     Three months ended June 30,
                                                     ---------------------------
                                                       1998             1997
                                                     --------         --------
   Cash paid for:
        Interest on deposits and borrowings          $263,099         $175,068
        Taxes                                          46,099            -0-
   Transfer from loans to real estate
         acquired through foreclosure                  29,782           18,000


                                       9

<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 $6.9 million,  or 5.3%,  from $131.1
million at March 31, 1998 to $138.0  million at June 30, 1998.  The increase was
due primarily to an increase in loans of $2.2 million, an increase in investment
securities of $2.9  million,  and an increase in  mortgage-backed  securities of
$1.8 million.

     Net loans receivable increased $2.2 million from $90.1 million at March 31,
1998 to $92.3 million at June 30, 1998 due to aggressive origination efforts and
strong loan demand that resulted in  originations of $3.7 million of one to four
family  loans,  $1.6 million in commercial  real estate  loans,  $3.7 million in
commercial  business  loans  and  $3.0  million  in  consumer  loans  offset  by
repayments since March 31, 1998.

     Investment  securities  increased  approximately  $2.9  million  from $18.2
million at March 31,  1998 to $21.1  million at June 30, 1998  primarily  as the
result  of  purchases  of $3.8  million  partially  offset  by  sold  or  called
securities of $750,000.  Mortgage-backed securities increased approximately $1.8
million  from $7.8  million at March 31, 1998 to $9.6  million at June 30, 1998.
The increase  was  primarily  the result of purchases of $3.3 million  partially
offset  by sales of $1.0  million  and  principal  repayments  of  approximately
$448,000.

     Net deposits  increased  $3.5 million from $104.9 million at March 31, 1998
to $108.4 million at June 30, 1998. The increase in deposits was due the opening
of the two new banking  offices in the last quarter of fiscal 1998 and increased
marketing  efforts  within the  Company's  market  area.  Securities  sold under
agreement to repurchase  decreased  $600,000 from $3.5 million at March 31, 1998
to $2.9  million at June 30, 1998.  The decrease was due to a withdrawal  in the
normal course of business.

     Federal Home Loan Bank advances  increased to $2.9 million at June 30, 1998
compared to no advances at March 31, 1998.  Net proceeds from advances were used
to fund loan demand.

     Total stockholders'  equity was $20.4 million at March 31, 1998 compared to
$20.5 million at June 30, 1998.

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 


                                       10

<PAGE>


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.

RESULTS OF  OPERATIONS  - COMPARISON  OF OPERATING  RESULTS FOR THE THREE MONTHS
ENDED JUNE 30, 1998 AND 1997

     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.

     The Company  reported net income of $197,000  during the three months ended
June 30, 1998  compared to net income of $237,000  during the three months ended
June 30,  1997.  The  decrease in income of $40,000  between the two periods was
primarily  the result of an  increase  in  non-interest  expenses  of  $126,000,
partially  offset by a decrease in  provision  for loan  losses of  $22,000,  an
increase in  non-interest  income of $37,000,  and a decrease in income taxes of
$27,000.

     Interest  Income.  Total interest  income  increased  $46,000 for the three
months  ended June 30, 1998 as compared to the three months ended June 30, 1997.
The increase in interest  income for the three month period  resulted  primarily
from an  increase  in the  average  balance of  interest-earning  assets of $2.6
million from $120.4 million at June 30, 1997 to $123.0 million at June 30, 1998.
The increase in the average balance of interest-earning assets was due primarily
to the  increase  in the average  balance of loans,  offset by a decrease in the
average balance of mortgage-backed and investment  securities and other interest
earning assets.  The average yield on  interest-earning  assets was 7.9% for the
three months ended June 30, 1998 and 1997, as the relationship  between long and
short-term rates remained flat.

     Interest  Expense.  Interest expense increased $46,000 for the three months
ended June 30, 1998 as compared  to the same  period in 1997.  Interest  expense
increased for the three month period primarily due to an increase in the average
balance of interest-bearing liabilities. The average balance of interest-bearing
liabilities  increased from $100.9 million at June 30, 1997 to $103.8 million at
June 30, 1998 as a result of an increase in  deposits.  The average rate paid on
interest-bearing  liabilities  was 4.7% for the three months ended June 30, 1998
and 1997.

                                       11

<PAGE>


     Provision for Loan Losses. The Company's  provision for loan losses totaled
$25,000 for the three  months  ended June 30,  1998  compared to $47,500 for the
three months ended June 30, 1997 based on management's overall assessment of the
loan portfolio. The decrease for the three month period was due to a decrease in
charge-offs.  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 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 June 30, 1998  compared to the same period in 1997.
The increase for the three month period was the result of an increase in service
charges and other fees on deposits due to more aggressive pricing strategies.

     Non-interest Expense. Non-interest expense increased $126,000 for the three
months  ended June 30, 1998  compared  to the same period in 1997.  Non-interest
expenses increased for the three month period due to an increase in compensation
and  benefits  of  $47,000;  an increase  in  occupancy  expense of $22,000;  an
increase  in  advertising  expense  of $7,000,  an  increase  in ATM  expense of
$12,000,  an increase in telephone  expense $4,000, an increase in legal fees of
$16,000 and an increase in other general and administrative expenses of $18,000.
The increase in these  expenses was the result of the opening of two new banking
offices during the last quarter of fiscal 1998.

     Income Tax  Expense.  Income tax  expense  decreased  $27,000 for the three
months ended June 30, 1998  primarily due to an decrease in income before income
taxes and 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 June 30, 1998 was $856,000 or .9% of the total loans. The March 31,
1998 allowance for loan loss was $831,000,  or .9% of total loans. The allowance
for loan  losses  at June  30,  1998  was  allocated  as  follows:  $213,000  to
one-to-four  family real estate loans,  $43,000 to commercial real estate loans,
$75,000 to commercial  business  loans,  $160,000 to consumer loans and $365,000
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.


                                       12

<PAGE>


                                           June 30, 1998   March 31, 1998
                                           -------------   --------------
                                               (Dollars in Thousands) 
Non-Accruing Loans                             $112           $308    
Accruing Loans Delinquent 90 Days or More        13             25   
Foreclosed Assets                               271            229   
                                               ----           ----
Total Non-Performing Assets                    $396           $562   
Total Non-Performing Assets as a                                     
         Percentage of Total Assets              .3%            .4%  
                                                              
     Total non-performing  assets decreased $166,000 from March 31, 1998 to June
30, 1998. The decrease in non-performing  assets is the result of an increase in
management's collection efforts.

     Other Assets of Concern.  Other than the non-performing assets set forth in
the table above, as of June 30, 1998,  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.

     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 June 30, 1998 and March 31,
1998,  cash  and  cash  equivalents  totaled  $3.0  million  and  $3.6  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.

     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 June 30,  1998,  the Company
had $2.9 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 June 30, 1998 and March
31, 1998,  Classic Bank's  liquidity  ratios were 4.81% and 4.43%  respectively.
First National,  as a national bank, is not subject to any prescribed  liquidity
requirements.

                                       13

<PAGE>


     At June 30,  1998,  the Company had  outstanding  commitments  to originate
loans of $6.8  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 June 30, 1998, the capital  requirements
applicable to Classic Bank and its actual capital  ratios.  As of June 30, 1998,
Classic Bank exceeded all current regulatory capital standards.


                                         Regulatory             Actual Capital
                                     Capital Requirement          (CB Only)
                                     -------------------          ---------
                                     Amount       Percent       Amount  Percent
                                     ------       -------       ------  -------
                                                 (Dollars in Thousands)
         Risk-Based                   $3,045        8.0%        $8,498   22.3%
         Tier 1 (Core) Capital         2,726        4.0          7,987   21.0


     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 June 30, 1998, the capital
requirements  applicable to First National and its actual capital ratios.  As of
June 30, 1998, First National exceeded all current regulatory capital standards.


                                         Regulatory             Actual Capital
                                     Capital Requirement          (FN Only)
                                     -------------------          ---------
                                     Amount       Percent       Amount  Percent
                                     ------       -------       ------  -------
                                                 (Dollars in Thousands)
    Risk-Based Capital
       (to Risk Weighted Assets)      $3,140        8.0%        $9,066   23.1%
     Tier 1 Capital
       (to Risk Weighted Assets)       1,570        4.0          8,575   21.8


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.

                                       14

<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 27, 1998. 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:

<TABLE>
<CAPTION>
               PROPOSAL                                                               NUMBER OF VOTES
               --------                                                               ---------------
                                                                                                        Broker
                                                                               For        Withheld     Non-votes
                                                                               ---        --------     ---------
<S>                                                                         <C>            <C>             <C>
             Election of the following directors for the terms indicated:

             C. Cyrus Reynolds (three years)                                1,010,693      35,490          0
             David B. Barbour (three years)                                 1,010,693      35,490          0
             Jeffrey P. Lopez (three years)                                 1,010,596      35,587          0

<CAPTION>

                                                                                                        Broker
                                                                   For       Against       Abstain     Non-votes
                                                                   ---       -------       -------     ---------
<S>                                                             <C>          <C>           <C>            <C>
             The approval of the Classic Bancshares,
             Inc. 1998 Premium Price Stock Option
             Growth Plan                                         884,126     148,957       13,100          0

             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, 1999                                     1,008,383     37,000         800           0
</TABLE>


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 June 30, 1998:

                 Press  release,  dated May 29, 1998  announcing  the results of
                 March  31,  1998  quarter  end and  year  end  earnings.  Press
                 release,  dated April 16, 1998  announcing the declaration of a
                 cash dividend.


                                       15

<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:   August 14, 1998               /s/ David B. Barbour
        -------------------------     ------------------------------------------
                                      David B. Barbour, President, Chief 
                                      Executive Officer and Director 
                                      (Duly Authorized Officer)


Date:   August 14, 1998               /s/ Lisah M. Frazier
        -------------------------     ------------------------------------------
                                      Lisah M. Frazier, Senior Vice President, 
                                      Treasurer and Chief Financial Officer 
                                      (Principal Financial Officer)



                                       16

<PAGE>



                                INDEX TO EXHIBITS



  Exhibit
   Number

     27                 Financial Data Schedule