<PAGE>



                       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 December 31, 1998

        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 February 9, 1999,  there were  1,322,500  shares of the  Registrant's
common stock issued and 1,298,100 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 December 31, 1998 (Unaudited)
        and March 31, 1998                                                     3

        Consolidated Statements of Income for the three and nine months
        ended December 31, 1998 and 1997                                       4

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

        Consolidated Statements of Cash Flows for the nine months ended
        December 31, 1998 and 1997                                           6-7

        Notes to Consolidated Financial Statements                           8-9


Item 2. Management's Discussion and Analysis of Financial Condition and    10-16
        Results of Operations

PART II.OTHER INFORMATION                                                     17

        Signatures                                                            18

        Index to Exhibits                                                     19

<PAGE>

<TABLE>
<CAPTION>

                            CLASSIC BANCSHARES, INC.
                          CONSOLIDATED BALANCE SHEETS


                                                     December 31,      March 31,
                                                        1998             1998
                                                     -----------     -----------
                                                     (Unaudited)
<S>                                                  <C>            <C>

ASSETS                                                       
  Cash and due from bank                             $ 2,721,913     $ 2,500,841
  Federal funds sold and securities purchased
   under resell agreement                                      -       1,131,414
  Certificates of deposits in other
   financial institutions                                      -         293,000
  Investment securities available for sale            25,657,526      18,176,807
  Mortgage-backed securities available for sale        4,761,160       7,830,714
  Loans receivable, net                               97,143,302      90,100,000
  Real estate acquired in the settlement of loans        282,722         229,390
  Accrued interest receivable                          1,019,808         851,767
  Federal Home Loan Bank and
   Federal Reserve Bank stock                          1,366,250       1,297,150
  Premises and equipment, net                          4,532,320       4,468,002
  Cost in excess of fair value of net assets
   acquired (goodwill), net of accumulated
   amortization                                        2,809,806       2,902,869
  Other assets                                         1,353,438       1,338,572
                                                   -------------   -------------
TOTAL ASSETS                                       $ 141,648,245   $ 131,120,526
                                                   =============   =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
  Deposits                                         $ 115,432,595   $ 104,926,667
  Securities sold under agreement to repurchase        2,109,570       3,521,799
  Advances from Federal Home Loan Bank                   896,891               -
  Other short-term borrowings                            501,395         273,697
  Accrued expenses and other liabilities                 443,870         402,090
  Accrued interest payable                               435,212         390,409
  Accrued income taxes                                   176,647               -
  Long-term debt                                               -         550,000
  Deferred income taxes                                  764,383         648,802
                                                   -------------   -------------
          Total Liabilities                        $ 120,760,563   $ 110,713,464
                                                   -------------   -------------
Commitments and contingencies

Stockholders' Equity
  Common stock, $.01 par value, 1,322,500 shares
    issued and 1,298,100 outstanding               $      13,225   $      13,225
  Additional paid-in capital                          12,753,789      12,753,789
  Retained earnings - substantially restricted         9,213,033       8,853,606
  Accumulated other comprehensive income                 433,393         287,171
  Unearned ESOP shares                                  (834,970)       (834,970)
  Unearned RRP shares                                   (340,198)       (371,879)
  Treasury stock, at cost                               (350,590)       (293,880)
                                                   -------------   -------------
           Total Stockholders' Equity              $  20,887,682   $  20,407,062
                                                   -------------   -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $ 141,648,245   $ 131,120,526
                                                   =============   =============
          See accompanying notes to consolidated financial statements.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

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


                                               THREE MONTHS ENDED            NINE MONTHS ENDED
                                                   DECEMBER 31,                 DECEMBER 31,
                                            -------------------------    -------------------------
                                                1998          1997           1998          1997
                                            -----------   -----------    -----------   -----------
<S>                                         <C>           <C>            <C>           <C>

INTEREST INCOME
  Loans                                     $ 2,024,654   $ 1,892,380    $ 5,883,790   $ 5,541,428
  Investment securities                         378,211       353,897      1,041,100     1,120,971
  Mortgage-backed securities                     73,798       130,870        327,415       424,384
  Other interest earning assets                   7,101        13,703         80,644        58,029
                                            -----------   -----------    -----------   ----------- 
      Total Interest Income                   2,483,764     2,390,850      7,332,949     7,144,812
                                            -----------   -----------    -----------   -----------
INTEREST EXPENSE
  Interest on deposits                        1,205,290     1,058,765      3,531,031     3,139,859
  Interest on FHLB Advances                      10,432        92,539         67,543       277,372
  Interest on other borrowed funds               46,190        65,153        166,697       196,524
                                            -----------   -----------    -----------   -----------
          Total Interest Expense              1,261,912     1,216,457      3,765,271     3,613,755
                                            -----------   -----------    -----------   -----------
          Net Interest Income                 1,221,852     1,174,393      3,567,678     3,531,057

Provision for loss on loans                      25,000        25,000         65,000       127,500
                                            -----------   -----------    -----------   -----------
          Net interest income after
           provision for loss on
           loans                              1,196,852     1,149,393      3,502,678     3,403,557
                                            -----------   -----------    -----------   -----------
NON-INTEREST INCOME
  Service charges and other fees                123,991       110,844        336,982       269,069
  Gain on sale of securities
   available for sale                                 -        10,437          3,904        28,491
  Pension plan settlement gain                        -             -              -       329,915
  Loss on disposal of assets                          -             -              -       (31,971)
  Other income                                   47,026        34,722        152,689        87,258
                                            -----------   -----------    -----------   -----------   
          Total Non-Interest Income             171,017       156,003        493,575       682,762
                                            -----------   -----------    -----------   -----------
NON-INTEREST EXPENSES
  Employee compensation and benefits            467,084       437,965      1,435,628     1,337,003
  Occupancy and equipment expense               151,013       122,060        438,714       397,728
  Federal deposit insurance premiums              9,144        10,585         26,869        25,209
  Loss (gain) on foreclosed real estate           2,731       (27,645)         3,645        25,595
  Goodwill amortization                          31,134        31,133         93,063        93,063
  Other general and administrative
   expenses                                     417,995       336,429      1,156,696     1,096,122
                                            -----------   -----------    -----------   -----------
          Total Non-Interest Expense          1,079,101       910,527      3,154,615     2,974,720
                                            -----------   -----------    -----------   -----------
INCOME BEFORE INCOME TAXES                      288,768       394,869        841,638     1,111,599

          Income tax expense (benefit)           56,231       113,977        202,278       319,976
                                            -----------   -----------    -----------   -----------
NET INCOME                                  $   232,537   $   280,892    $   639,360   $   791,623
                                            ===========   ===========    ===========   ===========

Basic earnings per share                    $      0.20   $      0.23    $      0.55   $      0.65
                                            ===========   ===========    ===========   ===========
Diluted earnings per share                  $      0.19   $      0.23    $      0.52   $      0.65
                                            ===========   ===========    ===========   ===========

                    See accompanying notes to consolidated financial statements.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                             CLASSIC BANCSHARES, INC.
                                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                                                    ACCUMULATED                             
                                           ADDITIONAL                  OTHER       UNEARNED   UNEARNED            
                                 COMMON     PAID-IN     RETAINED   COMPREHENSIVE     ESOP       RRP       TREASURY  
                                 STOCK      CAPITAL     EARNINGS      INCOME        SHARES     SHARES      STOCK        TOTAL
                                --------  -----------  ----------  -------------  ----------  ---------   --------   -----------
<S>                             <C>       <C>          <C>          <C>           <C>          <C>        <C>       <C>          

Balance at April 1, 1997        $13,225   $12,689,158  $8,172,085    $ (69,990)   $(918,660)  $(486,055)  $(29,963)  $19,369,800

Comprehensive income:
  Net income for 1998                 -             -   1,020,486            -            -           -          -     1,020,486
  Other comprehensive income,
   net of tax:                   
    Change in unrealized gain
     (loss) on securities
     available for sale               -             -           -      336,489            -           -          -       336,489
    Less: Reclassification
     adjustment                       -             -           -       19,250            -           -          -        19,250
    Change in minimum pension
     liability adjustment             -             -           -        1,422            -           -          -         1,422
                                                                                                                     -----------
         Total Comprehensive
           Income                     -             -           -            -            -           -          -       357,161
                                                                                                                     -----------
  Dividend paid                       -             -    (338,965)           -            -           -          -      (338,965)
  ESOP shares earned                  -        49,796           -            -       83,690           -          -       133,486
  RRP shares earned                   -             -           -            -            -     110,283          -       110,283
  RRP shares forfeited                -           337           -            -            -       3,893     (4,230)            -
  Tax benefit from RRP                -        14,498           -            -            -           -          -        14,498
  Purchased 20,000 treasury
    shares                            -             -           -            -            -           -   (259,687)     (259,687)
                                -------   -----------  ----------    ---------    ---------   ---------  ---------   -----------
Balances at March 31, 1998       13,225    12,753,789   8,853,606      287,171     (834,970)   (371,879)  (293,880)   20,407,062

Comprehensive income:
  Net income for the nine
   months ended
   December 31, 1998                  -             -     639,360            -            -           -          -       639,360
  Other comprehensive income,
   net of tax:                                                                                                 
    Change in unrealized gain
     (loss) on securities
     available for sale               -             -           -      136,268            -           -          -       136,268
    Change in minimum pension
     liability adjustment             -             -           -        9,954            -           -          -         9,954
                                                                                                                     -----------
          Total Comprehensive
           Income                     -             -           -            -            -           -          -       146,222
                                                                                                                     -----------
  Dividend paid                       -             -    (279,933)           -            -           -          -      (279,933)
  RRP shares earned                   -             -           -            -            -      31,681          -        31,681
  Purchased 4,200 treasury 
   shares                             -             -           -            -            -           -    (56,710)      (56,710)
                                -------   -----------  ----------    ---------    ---------   ---------  ---------   -----------
Balances at December 31, 1998   $13,225   $12,753,789  $9,213,033    $ 433,393    $(834,970)  $(340,198) $(350,590)  $20,887,682
                                =======   ===========  ==========    =========    =========   =========  =========   ===========

                               See accompanying notes to consolidated financial statements.

</TABLE>


<PAGE>

<TABLE>
<CAPTION>

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

                                                         NINE MONTHS ENDED
                                                            DECEMBER 31,
                                                     ---------------------------
                                                        1998             1997
                                                     -----------     -----------
<S>                                                  <C>             <C>

OPERATING ACTIVITIES
  Net Income                                         $  639,360      $  791,623
  Adjustments to reconcile net income to
   net cash provided by operating
   activities:
    Depreciation and amortization                       285,999         229,840
    Provision for loss on loans                          65,000         127,500
    Provision for loss on foreclosed
     real estate                                              -          50,000
    Gain on sale of securities available
     for sale                                            (3,904)        (28,491)
    Loss on disposal of assets                                -          31,971
    Gain on pension plan settlement                           -        (329,915)
    Federal Home Loan Bank stock dividends              (55,000)        (50,900)
    Deferred income tax expense (benefit)                34,814         118,622
    Loss (gain) on foreclosed real estate                 1,700         (30,353)
    Amortization and accretion of invesment
     securities premiums and discounts, net              71,868           5,687
    Amortization of goodwill                             93,063          93,063
  Decrease (increase) in:
    Accrued interest payable                           (168,041)       (237,271)
    Other assets                                        (14,866)        183,726
    Increase (decrease) in:
    Accrued interest payable                             44,803         131,500
    Accrued income taxes                                176,647           7,314
    Accounts payable and accrued expenses                41,781         201,666
                                                     ----------      ---------- 
            Net cash provided by
             operating activities                     1,213,224       1,295,582
                                                     ----------      ----------  
INVESTING ACTIVITIES
  Securities:
    Proceeds from sale, maturities or calls          10,338,703       8,230,979
    Purchased                                       (17,536,506)     (6,242,157)
  Mortgage-backed securities:
    Proceeds from sale                                5,035,426       1,004,375
    Purchased                                        (3,839,846)     (2,187,378)
    Principal payments                                1,715,222         894,120
  Purchased Federal Home Loan Bank stock                (14,100)              -
  Certificates of deposits with other banks:
    Proceeds from maturities                            293,000               -
  Loan originations and principal
   payments, net                                     (7,119,756)     (7,472,490)
  Proceeds from the sale of foreclosed
   real estate                                           31,700         100,000
  Proceeds from the sale of equipment                         -          53,403
  Purchases of software                                  (6,677)        (26,321)
  Purchases of premises ad equipment                   (352,377)       (828,589)
                                                     ----------      ---------- 
            Net cash used by
             investing activities                   (11,455,211)     (6,474,058)
                                                     ----------      ----------                  

          See accompanying notes to consolidated financial statements.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

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

                                                       NINE MONTHS ENDED
                                                         DECEMBER 31,
                                                 ---------------------------
                                                    1998             1997
                                                 ----------      -----------
<S>                                              <C>             <C>

FINANCING ACTIVITIES
  Net increase (decrease) in deposits            $10,505,928     $  (800,659)
  Net proceeds from FHLB borrowings                  896,891       2,010,000
  Repayment of long-term borrowings                 (550,000)        (75,000)
  Decrease in securities sold under
   agreement to repurchase                        (1,412,229)     (1,426,680)
  Net increase (decrease) in
   short-term borrowings                             227,698         275,464
  Purchase of treasury stock                         (56,710)       (259,687)
  Dividends paid                                    (279,933)       (254,398)
                                                 -----------     ----------- 
        Net cash (used) provided by
         financing activities                      9,331,645        (530,960)
                                                 -----------     ----------- 
(Decrease) increase in cash and
 cash equivalents                                   (910,342)     (5,709,436)
Cash and cash equivalent at
 beginning of period                               3,632,255       8,834,309
                                                 -----------     ----------- 
Cash and cash equivalents at
 end of period                                   $ 2,721,913     $ 3,124,873
                                                 ===========     ===========
Additional cash flows and
 supplementary information
    Cash paid during the period for:
       Interest on deposits and borrowings       $   801,420     $ 1,371,015
       Taxes                                         141,550         255,082
       Assets acquired in settlement of loans         79,400          59,989


          See accompanying notes to consolidated financial statements.

</TABLE>

<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  September  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 and
nine months ended December 31, 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 December 31, 1998, and the results of operations  for all interim  periods
presented. Operating results for the nine months ended December 31, 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  December  31,  1998  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  1,182,513  and  1,166,999  for the three month  period  ended
December 31, 1998 and 1997 and 1,179,391 and 1,170,144 for the nine month period
ended December 31, 1998 and 1997.  Weighted average number of shares used in the
diluted  earnings per share  computations  was  1,236,023  and 1,220,553 for the
three month period ended  December 31, 1998 and 1997 and 1,233,346 and 1,223,698
for the nine month period ended December 31, 1998 and 1997.

<PAGE>



(4)      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 $7,253 and  $30,683 for the three
months  ended  December  31,  1998 and 1997 and $60,545 and $92,999 for the nine
months ended  December 31, 1998 and 1997.  As of December 31, 1998,  the Company
considered  83,497  shares  as  unearned  ESOP  shares  with  a  fair  value  of
$1,231,581.

         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.

(5)      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, options on 4,500 shares at $13.875 and options on October 12,
1998 shares at $13.75.  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 52,700  shares.  Ungranted  RRP shares  (200) 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.

(6)      Cash Dividend
         On January 18,  1999,  the Board  declared a cash  dividend of $.08 per
share  payable on  February  15, 1999 to  shareholders  of record on February 1,
1999.

(7)      Acquisition of Citizens Bank, Grayson

         On January 19, 1999 the Company  announced  the  execution a definitive
agreement  which will result in the acquisition of Citizens Bank,  Grayson.  The
transaction is valued at approximately $4.5 million. In the transaction Citizens
shareholders  will  receive$75 in cash for each share of Citizens  common stock.
The  transaction is subject to the approval of the  shareholders  of Citizens as
well as banking regulators.


<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  $10.5  million,  or 8.0%,  from
$131.1  million at March 31, 1998 to $141.6  million at December 31,  1998.  The
increase was due primarily an increase in loans of $7.0 million, and an increase
in investment securities of $7.5 million, partially offset by a decrease in cash
and  cash  equivalents  of  $1.0  million  and  a  decrease  in  mortgage-backed
securities of $3.0 million.

         Net loans receivable increased $7.0 million from $90.1 million at March
31, 1998 to $97.1  million at December  31, 1998 due to  aggressive  origination
efforts and improved loan demand that resulted in  originations of $12.0 million
of one to four family loans, $4.5 million in commercial real estate loans, $10.9
million in commercial  business  loans and $8.4 million in consumer loans offset
by repayments since March 31, 1998.

         Investment  securities increased  approximately $7.5 million from $18.2
million at March 31, 1998 to $25.7 million at December 31, 1998 primarily as the
result of  purchases  of $17.5  million and an  increase in the market  value of
these  available  for  sale  securities  partially  offset  by  sold  or  called
securities of $10.2.  Mortgage-backed  securities  decreased  approximately $3.0
million  from $7.8  million at March 31, 1998 to $4.8  million at  December  31,
1998.  The  decrease  was  primarily  the result of  purchases  of $3.8  million
partially  offset  by  sales  of  $5.0  million  and  principal   repayments  of
approximately $1.7 million and a decrease in the market value of these available
for sale securities.

         Net deposits  increased  $10.5 million from $104.9 million at March 31,
1998 to $115.4  million at December 31,  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 $1.4 million from $3.5 million at
March 31, 1998 to $2.1 million at December  31, 1998.  The decrease was due to a
withdrawal in the normal course of business.

         Federal Home Loan Bank  advances  increased to $897,000 at December 31,
1998  compared to no advances at March 31, 1998.  Net proceeds from the advances
were used to fund loans.

     Total stockholders'  equity was $20.4 million at March 31, 1998 compared to
$20.9 million at December 31, 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

<PAGE>


"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.

         The Company's  primarily  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.


<PAGE>


         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.

         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. Employee training for contingency plans will be completed by June 30,
1999.

 RESULTS OF  OPERATIONS - COMPARISON  OF OPERATING  RESULTS FOR THE
 THREE AND NINE MONTHS ENDED  DECEMBER 31, 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 $233,000  during the three  months
ended  December  31, 1998  compared  to net income of $281,000  during the three
months ended  December 31, 1997.  The decrease in income of $48,000  between the
two periods was primarily the result of an increase in non-interest  expenses of
$168,000  partially offset by an increase in net interest income of $47,000,  an
increase in  non-interest  income of $15,000,  and a decrease in income taxes of
$58,000.


<PAGE>


         The Company  reported  net income of $639,000 for the nine months ended
December  31, 1998  compared to net income of $792,000 for the nine months ended
December  31, 1997.  The decrease in income of $153,000  between the two periods
was primarily the result of a decrease in non-interest income of $189,000 and an
increase in non-interest expenses of $180,000 partially offset by an increase in
net  interest  income of  $36,000 a decrease  in  provision  for loan  losses of
$62,000, and a decrease in income taxes of $118,000.

         Interest Income.  Total interest income increased  $93,000 and $188,000
for the three and nine months  ended  December 31, 1998 as compared to the three
and nine months ended December 31, 1997. The increase in interest income for the
periods  resulted   primarily  from  an  increase  in  the  average  balance  of
interest-earning assets of $5.8 million from $120.7 million at December 31, 1997
to $126.5 million at December 31, 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 7.7% for the three and nine months  ended  December
31, 1998 compared to 7.9% for the three and nine months ended December 31, 1997.
The decrease was due to a decrease in the average rate earned on loans.

         Interest  Expense.  Interest expense increased $45,000 and $152,000 for
the three and nine months ended December 31, 1998 as compared to the same period
in 1997. 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 $101.1 million at December 31, 1997
to $107.0  million at December  31, 1998 as a result of an increase in deposits.
The average rate paid on interest-bearing  liabilities was 4.7% and 4.6% for the
three and nine months ended December 31, 1998 compared to 4.8% for the three and
nine months ended December 31, 1997.

         Provision  for Loan Losses.  The  Company's  provision  for loan losses
totaled  $25,000 and $65,000 for the three and nine months  ended  December  31,
1998  compared  to $25,000  and  $127,500  for the three and nine  months  ended
December  31,  1997  based  on  management's  overall  assessment  of  the  loan
portfolio.  The  decrease  for the  nine-month  period was due to a decrease  in
charge-offs and  management's  decision to decrease 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
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
$15,000 for the three months ended December 31, 1998 compared to the same period
in 1997. The increase for the  three-month  period is primarily the result of an
increase in service  charges and other fees on deposits of $13,000,  an increase
on fees earned on the origination of secondary market loans of $12,000 offset by
a decrease in the gain on sale of securities of $10,000.

         Non-interest  income  decreased  $189,000  for the  nine  months  ended
December  31, 1998  compared to the same period in 1997.  The  decrease  for the
nine-month  period  was  primarily  the  result of a one time  gain of  $330,000
recorded from the settlement of First National's  pension plan in 1997 offset by
a loss on disposal of assets of $32,000  recorded in 1997.  Non-interest  income
also decreased due to a decrease in the gain on available for sale securities of
$24,000 for the nine months ended December 31, 1998. These decreases were offset
by an increase in service  charges and other fees on deposits of $68,000 for the
nine months  ended  December 31, 1998 and an increase in other income of $65,000
for the nine months ended December 31, 1998. The increase in service charges and

<PAGE>


other fees on deposits was due to an increased  deposit base and more aggressive
pricing  strategies.  The  increase  in other  income  was due  primarily  to an
increase on fees earned from the origination of secondary market loans.

         Non-interest  Expense.  Non-interest expense increased $168,000 for the
three  months  ended  December  31,  1998  compared  to the same period in 1997.
Non-interest expenses increased for the three month period due to an increase in
occupancy and equipment expense of $29,000, an increase in employee compensation
of $29,000, a decrease in gain on foreclosed real estate $25,000, an increase in
stationary,  printing and other supplies of $18,000,  an increase in advertising
expense of $8,000 and an increase in other general and  administrative  expenses
of  $59,000.  These  expenses  increased  as a result of the  opening of two new
banking offices in the first quarter of fiscal 1998.

         Non-interest  expenses  increased  $180,000  for the nine months  ended
December  31, 1998  compared to the same period in 1997.  Non-interest  expenses
increased  for the nine month  period due to an  increase  in  compensation  and
benefits of $98,000 due to an increase in the number of employees as a result of
the opening of two new banking  offices,  an increase in occupancy and equipment
expense of $41,000 as a result of the opening of the two new banking offices, an
increase in ATM expense of $27,000 as the result of an increase in the number of
ATM  locations,  and an increase in marketing and  advertising of $23,000 and an
increase in other  general  and  administrative  expenses  of $13,000  partially
offset by a decrease in the loss on foreclosed real estate of $22,000.

         Income Tax Expense.  Income tax expense  decreased $58,000 and $118,000
for the three  and nine  months  ended  December  31,  1998  primarily  due to a
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 December 31, 1998 was $851,000 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  December  31,  1998 was  allocated  as  follows:
$171,000 to  one-to-four  family real estate loans,  $18,000 to commercial  real
estate loans,  $63,000 to commercial business loans,  $79,000 to consumer loans,
$55,000 to year 2000 and $465,000 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.



<PAGE>

                                            December 31, 1998     March 31, 1998
                                            -----------------     --------------
                                                 (Dollars in Thousands)

Non-Accruing Loans                               $  260               $ 308
Accruing Loans Delinquent 90 Days or More           653                  25
Foreclosed Assets                                   282                 229
                                                 ------                 ---
Total Non-Performing Assets                      $1,195               $ 562
Total Non-Performing Assets as a
         Percentage of Total Assets                  .8%                 .4%

         Total  non-performing  assets increased $633,000 from March 31, 1998 to
December 31, 1998. The loans  delinquent 90 days or more consisted  primarily of
1-4 family mortgages.  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 December 31, 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 December 31, 1998
and March 31,  1998,  cash and cash  equivalents  totaled  $2.7 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  December  31,  1998,  the
Company had $897,000 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 December 31, 1998 and
March  31,  1998,   Classic  Bank's  liquidity  ratios  were  4.67%  and  4.43%,
respectively.  First  National,  as a  national  bank,  is  not  subject  to any
prescribed liquidity requirements.


<PAGE>


         At  December  31,  1998,  the Company had  outstanding  commitments  to
originate  loans of $9.3  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 December 31, 1998,  the
capital  requirements  applicable to Classic Bank and its actual capital ratios.
As of December 31, 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
  (to Risk Weighted Assets)        $3,261       8.0%         $8,503      20.9%
Tier 1 (Core) Capital
  (to Risk Weighted Assets)         2,750       4.0           8,159      20.0

         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 December 31, 1998,  the
capital requirements applicable to First National and its actual capital ratios.
As of December 31, 1998, First National 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)          $3,732       8.0%        $8,801       18.9%
Tier 1 Capital
(to Risk Weighted Assets)           1,866       4.0          8,295       17.8

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.

<PAGE>

                           PART II. OTHER INFORMATION


Item 1.   Legal Proceedings

          None.

Item 2.   Change in Securities

          None.

Item 3.   Defaults Upon Senior Securities

          None.

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

          None.

Item 5.   Other Information

          None.

Item 6.   Exhibits and Reports on Form 8-K

          a.   Exhibits
               Exhibits 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 December 31, 1998:

               Press  release, dated October 28, 1998 announcing the earnings of
               the  September  30,  1998  quarter, declaring a cash dividend and
               announcing the intent to initiate a stock repurchase program.


<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:     February 12, 1999         /s/ David B. Barbour
                                    -----------------------------------------
                                    David B. Barbour, President, Chief
                                    Executive Officer and Director 
                                    (Duly Authorized Officer)




Date:     February 12, 1999         /s/ Lisah M. Frazier
                                    -----------------------------------------
                                    Lisah M. Frazier, Senior Vice President,
                                    Treasurer and Chief Financial Officer
                                    (Principal Financial Officer)   




<PAGE>

                                INDEX TO EXHBITS



Exhibit
Number
-------

  27      Financial Data Schedule