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, 1999

        OR

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

        For the transition period from ____________  to ___________


        Commission File Number 0-27170


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


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

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

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


     Check here  whether  the issuer (1) has filed all  reports  required  to be
filed by Section 13 or 15 (d) of the Securities  Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days Yes [X] No [ ]

     As  of  August 9, 1999,  there were  1,322,500  shares of the  Registrant's
common stock issued and outstanding.

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


<PAGE>
                            CLASSIC BANCSHARES, INC.

                                      INDEX

                                                                           Page
                                                                          Number

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

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

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

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

        Notes to Consolidated Financial Statements                          9-10


Item 2. Management's Discussion and Analysis of Financial Condition and    11-17
        Results of Operations

PART II.OTHER INFORMATION                                                     18

        Signatures                                                            19

        Index to Exhibits                                                     20


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

<TABLE>
<CAPTION>

                                                                June 30,          March 31,
                                                                  1999              1999
                                                               ----------       ------------
                                                              (Unaudited)
<S>                                                           <C>              <C>
ASSETS
------
  Cash and due from bank                                       $ 4,942,493      $ 3,088,248
  Federal funds sold                                                83,404        1,397,908
  Securities available for sale                                 25,514,250       25,141,436
  Mortgage-backed and related securities available for sale      4,045,950        4,479,136
  Loans receivable, net                                        115,352,232       97,527,492
  Real estate acquired in the settlement of loans                  259,090          225,590
  Accrued interest receivable                                    1,139,605          951,877
  Federal Home Loan Bank and Federal Reserve Bank stock          1,403,150        1,384,450
  Premises and equipment, net                                    5,233,773        4,523,720
  Cost in excess of fair value of net assets acquired
  (goodwill), net of accumulated amortization                    5,879,201        2,779,349
  Other assets                                                   1,177,234        1,239,835
                                                              ------------     ------------
TOTAL ASSETS                                                  $165,030,382     $142,739,041
------------                                                  ============     ============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities
  Non-interest bearing demand deposits                        $ 15,159,482     $  9,600,258
  Savings, NOW, and money market demand deposits                43,903,271       35,674,021
  Other time deposits                                           80,201,102       72,457,492
                                                              ------------     ------------
       Total deposits                                          139,263,855      117,731,771
  Federal funds purchased and securities sold
   under agreements to repurchase                                2,703,553        2,817,154
  Advances from Federal Home Loan Bank                           1,603,520          387,739
  Other short-term borrowings                                      755,804           84,578
  Accrued expenses and other liabilities                           391,035          428,065
  Accrued interest payable                                         512,698          418,642
  Accrued income taxes                                                   -           45,134
  Deferred income taxes                                            285,735          536,978
                                                              ------------     ------------
       Total Liabilities                                      $145,516,200     $122,450,061
                                                              ------------     ------------
Commitments and contingencies

Stockholders' Equity
  Common stock, $.01 par value, 1,322,500 shares
   issued and outstanding                                     $     13,225     $     13,225
  Additional paid-in capital                                    12,806,544       12,806,544
  Retained earnings - substantially restricted                   9,521,426        9,362,668
  Accumulated other comprehensive income                          (504,006)          83,977
  Unearned ESOP shares                                            (785,150)        (785,150)
  Unearned RRP shares                                             (264,492)        (294,332)
  Treasury stock, at cost                                       (1,273,365)        (897,952)
                                                              ------------     ------------
       Total Stockholders' Equity                             $ 19,514,182     $ 20,288,980
                                                              ------------     ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $165,030,382     $142,739,041
------------------------------------------                    ============     ============


</TABLE>

          See accompanying notes to consolidated financial statements.

                                       3
<PAGE>
                            CLASSIC BANCSHARES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)


                                                      THREE MONTHS ENDED
                                                            JUNE 30,
                                                 -----------------------------
                                                     1999             1998
                                                 -----------      ------------
INTEREST INCOME
---------------
  Loans                                          $ 2,228,910      $ 1,917,470
  Investment securities                              396,903          337,221
  Mortgage-backed securities                          59,341          142,343
  Other interest earning assets                       13,480           18,398
                                                 -----------      -----------
         Total Interest Income                     2,698,634        2,415,432
                                                 -----------      -----------
INTEREST EXPENSE
----------------
  Interest on deposits                             1,221,429        1,117,267
  Interest on FHLB advances                           32,355           43,909
  Interest on other borrowed funds                    42,021           66,067
                                                 -----------      -----------
         Total Interest Expense                    1,295,805        1,227,243
                                                 -----------      -----------
         Net Interest Income                       1,402,829        1,188,189

Provision for loss on loans                           35,000           25,000
                                                 -----------      -----------
         Net interest income after
          provision for loss on
          loans                                    1,367,829        1,163,189
                                                 -----------      -----------
NON-INTEREST INCOME
-------------------
  Service charges and other fees                     148,885          111,374
  Gain on sale of securities                               -              563
  Other income                                        41,921           33,405
                                                 -----------      -----------
  Total Non-Interest Income                          190,806          145,342
                                                 -----------      -----------
NON-INTEREST EXPENSES
---------------------
  Employee compensation and benefits                 557,850          496,640
  Occupancy and equipment expense                    172,169          138,240
  Federal deposit insurance premiums                   9,714            8,683
  Loss on foreclosed real estate                         276               39
  Amortization of goodwill                            45,567           30,795
  Other general and administrative
   expenses                                          453,612          372,284
                                                 -----------      -----------
         Total Non-Interest Expense                1,239,188        1,046,681
                                                 -----------      -----------
INCOME (LOSS) BEFORE INCOME TAXES                    319,447          261,850
---------------------------------

         Income tax expense (benefit)                 67,922           64,811
                                                 -----------      -----------
NET INCOME                                       $   251,525      $   197,039
----------                                       ===========      ===========

Basic earnings per share                         $      0.22      $      0.17
                                                 ===========      ===========
Diluted earnings per share                       $      0.21      $      0.16
                                                 ===========      ===========

          See accompanying notes to consolidated financial statements.

                                       4

<PAGE>

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


                                                          THREE MONTHS ENDED
                                                               JUNE 30,
                                                        ------------------------
                                                          1999           1998
                                                        ---------     ----------

Net Income                                              $ 251,525     $ 197,039
                                                        ---------     ---------
  Other comprehensive income, net of tax:
    Unrealized holding gains (losses) on securities
    during the period, net of tax                        (587,983)       (3,784)

    Minimum pension liability adjustment                        -           119
                                                        ---------     ---------
  Other comprehensive income                             (587,983)       (3,665)
                                                        ---------     ---------
Comprehensive Income (Loss)                             $(336,458)    $ 193,374
                                                        =========     =========
Accumulated Other Comprehensive Income                  $(504,006)    $ 283,506
                                                        =========     =========


          See accompanying notes to consolidated financial statements.

                                       5
<PAGE>

<TABLE>
<CAPTION>

                            CLASSIC BANCSHARES, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

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

Balance at April 1, 1998            $ 13,225    $ 12,753,789    $ 8,853,606    $ 297,125
Net income for the year
 ended March 31, 1999                      -               -        885,324            -
Dividend paid                              -               -       (376,262)           -
ESOP shares earned                         -          28,198              -            -
RRP shares earned                          -               -              -            -
RRP shares granted                         -           4,742              -            -
Tax benefit from RRP                       -          19,815              -            -
Purchased 43,894 treasury shares           -               -              -            -
Change in minimum
 pension liability adjustment              -               -              -            -
Change in unrealized gain                  -               -              -            -
 (loss) on available for sale
 securities, net of applicable
 deferred income taxes of $183,259         -               -              -     (213,148)
                                    --------    ------------    -----------   ----------
Balances at March 31, 1999            13,225      12,806,544      9,362,668       83,977

Net income for the three months
 ended June 30, 1999                       -               -        251,525            -
Dividend paid                              -               -        (92,767)           -
RRP shares earned                          -               -              -            -
Purchased 26,106 treasury shares           -               -              -            -
Change in unrealized gain
 (loss) on available for sale
 securities, net of applicable
 deferred income taxes of $257,069         -               -              -     (587,983)
                                    --------    ------------    -----------   ----------
Balances at June 30, 1999           $ 13,225    $ 12,806,544    $ 9,521,426   $ (504,006)
                                    ========    ============    ===========   ==========
</TABLE>

<TABLE>
<CAPTION>
                                        MINIMUM
                                        PENSION
                                       LIABILITY     UNEARNED
                                       ADJUSTMENT   ESOP SHARES    RRP SHARES         STOCK         TOTAL
                                       ----------   -----------    ----------      -----------   ------------
<S>                                    <C>          <C>            <C>             <C>           <C>
Balance at April 1, 1998               $ (9,954)    $ (834,970)    $ (371,879)     $ (293,880)   $ 20,407,062
Net income for the year
 ended March 31, 1999                         -              -              -               -          85,324
Dividend paid                                 -              -              -               -        (376,262)
ESOP shares earned                            -         49,820              -               -          78,018
RRP shares earned                             -              -        114,132               -         114,132
RRP shares granted                            -              -        (36,585)         31,843               -
Tax benefit from RRP                          -              -              -               -          19,815
Purchased 43,894 treasury shares              -              -              -        (635,915)       (635,915)
Change in minimum
 pension liability adjustment             9,954              -              -               -           9,954
Change in unrealized gain                     -              -              -               -               -
 (loss) on available for sale
 securities, net of applicable
 deferred income taxes of $183,259            -              -              -               -        (213,148)
                                       --------     ----------     ----------      ----------    ------------
Balances at March 31, 1999                    -       (785,150)      (294,332)       (897,952)     20,288,980
Net income for the three months
 ended June 30, 1999                          -              -              -               -         251,525
Dividend paid                                 -              -              -               -         (92,767)
RRP shares earned                             -              -         29,840               -          29,840
Purchased 26,106 treasury shares              -              -              -        (375,413)       (375,413)
Change in unrealized gain
 (loss) on available for sale
 securities, net of applicable
 deferred income taxes of $257,069            -              -              -               -        (587,983)
                                       --------     ----------     ----------    ------------    ------------
Balances at June 30, 1999              $      -     $ (785,150)    $ (264,492)   $ (1,273,365)   $ 19,514,182
                                       ========     ==========     ==========    ============    ============

</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,
                                                          ------------------------------
                                                              1999             1998
                                                          ------------     -------------
<S>                                                       <C>               <C>
OPERATING ACTIVITIES
--------------------
   Net Income                                             $    251,525       $   197,039
   Adjustments to reconcile net income to net cash
     provided by operating activities:
        Depreciation and amortization                          125,299            91,393
        Provision for loss on loans                             35,000            25,000
        Gain on sale of securities available for sale                -              (563)
        Federal Home Loan Bank stock dividends                 (18,700)          (17,829)
        Deferred income tax expense (benefit)                   41,217           (12,585)
        Amortization and accretion of invesment
         securities premiums and discounts, net                 23,101             9,638
        RRP shares earned                                       29,840                 -
        Amortization of goodwill                                45,567            30,795
   Decrease (increase) in:
        Accrued interest receivable                           (187,728)         (151,409)
        Other assets                                            53,399           (94,173)
   Increase (decrease) in:
        Accrued interest payable                                94,056            44,944
        Accrued income taxes                                   (45,134)          216,602
        Accounts payable and accrued expenses                  (37,030)           31,149
                                                          ------------       -----------
            Net cash provided by operating activities          410,412           370,001
                                                          ------------       -----------

INVESTING ACTIVITIES
   Securities:
       Proceeds from sale, maturities or calls                       -           750,000
       Purchased                                                     -        (3,760,663)
   Mortgage-backed securities:
       Proceeds from sale                                            -         1,004,062
       Purchased                                                     -        (3,265,025)
       Principal payments                                      379,008           448,341
       Redemption of Federal Reserve Bank Stock                 45,000                 -
       Loan originations and principal payments, net        (9,479,427)       (2,308,675)
       Purchases of software                                    (4,018)                -
       Purchases of premises and equipment                    (153,325)         (230,724)
       Cash invested in purchase of Bank
        subsidiary in excess of cash and
        cash equivalents acquired                           (1,497,572)                -
                                                          ------------       -----------
            Net cash used by investing activities          (10,710,334)       (7,362,684)
                                                          ------------       -----------


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

                                       7
<PAGE>

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

                                                                       THREE MONTHS ENDED
                                                                            JUNE 30,
                                                                   ---------------------------
                                                                       1999            1998
                                                                   -----------     -----------
<S>                                                                <C>             <C>
FINANCING ACTIVITIES
    Net increase in deposits                                       $ 9,534,437     $ 3,472,890
    Net proceeds from FHLB borrowings                                1,215,781       2,862,000
    Repayment of long-term borrowings                                        -         (25,000)
    Decrease in federal funds purchased and securities sold
     under agreements to repurchase                                   (113,601)       (606,099)
    Net increase in short-term borrowings                              671,226         773,141
    Purchase of treasury stock                                        (375,413)              -
    Dividends paid                                                     (92,767)        (85,126)
                                                                   -----------    ------------
           Net cash (used) provided by financing activities         10,839,663       6,391,806
                                                                   -----------    ------------
    Increase (decrease) in cash and cash equivalents                   539,741        (600,877)
    Cash and cash equivalent at beginning of period                  4,486,156       3,632,255
                                                                   -----------    ------------
    Cash and cash equivalents at end of period                     $ 5,025,897    $  3,031,378
                                                                   ===========    ============
    Additional cash flows and supplementary information
        Cash paid during the period for:
            Interest on deposits and borrowings                    $   313,964    $    263,099
            Taxes                                                  $    42,931    $     46,099
        Assets acquired in settlement of loans                     $    25,000    $     29,782
        Net unrealized gain (loss) on securities
         available for sale                                        $  (587,983)   $     (3,784)
        Liabilities assumed and cash paid in acquisition of
         Citizens Bank                                             $16,852,774               -
        Fair value of assets received                              $13,707,355               -
        Amount assigned to goodwill                                $ 3,145,419               -


</TABLE>

          See accompanying notes to consolidated financial statements.


                                       8


<PAGE>

                            CLASSIC BANCSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

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

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


                                      9
<PAGE>

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

     Weighted  average  number of shares  used in the basic  earnings  per share
computations  was 1,127,579 and 1,176,168 for the three-month  period ended June
30,  1999 and  1998.  Weighted  average  number of  shares  used in the  diluted
earnings per share  computations was 1,165,710 and 1,242,574 for the three-month
period ended June 30, 1999 and 1998.

(5)  Employee Stock Ownership Plan (ESOP)
     ------------------------------------
     In conjunction with the Bank's conversion on December 28, 1995, the Company
established an Employee Stock  Ownership Plan (ESOP) which covers  substantially
all  employees.  The ESOP borrowed  $1,058,000  from the Company,  and purchased
105,800 common  shares,  equal to 8% of the total number of shares issued in the
conversion. Classic Bank makes scheduled discretionary contributions to the ESOP
sufficient to service the debt.  Shares are allocated to participants'  accounts
under the shares allocated  method.  The cost of shares committed to be released
and  unallocated  shares is  reported as a reduction  of  stockholders'  equity.
Compensation  expense is recorded  based on the average fair market value of the
ESOP shares when  committed to be released.  Furthermore,  ESOP shares that have
not been  committed to be released are not considered  outstanding.  The expense
under the ESOP was $17,923 and $35,363 for the three  months ended June 30, 1999
and 1998. As of June 30, 1999, the Company  considered 78,515 shares as unearned
ESOP shares with a fair value of $1,099,210.

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

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

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

(7)  Cash Dividend
     -------------
     On July 26,  1999,  the Board  declared a cash  dividend  of $.08 per share
payable on August 23, 1999 to shareholders of record on August 9, 1999.


                                       10

<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 $22.3 million,  or 15.6%,  from $142.7
million at March 31, 1999 to $165.0  million at June 30, 1999.  The increase was
due primarily to an increase in loans of $17.9 million,  an increase in cash and
cash equivalents of approximately $600,000, an increase in investment securities
of $400,000,  an increase in premises and equipment of $700,000,  an increase in
goodwill  of $3.1  million  partially  offset by a decrease  in  mortgage-backed
securities of $400,000.

     Net loans  receivable  increased  $17.9 million from $97.5 million at March
31, 1999 to $115.4  million at June 30, 1999 with $9.0  million of the  increase
attributable  to the  acquisition of Citizens.  The remainder of the increase is
due to aggressive origination efforts and continued loan demand that resulted in
originations  of $6.2  million in  commercial  business  loans,  $4.6 million in
one-to-four  family  mortgage  loans,  $3.2  million in consumer  loans and $3.0
million in  commercial  real estate loans offset by  repayments  since March 31,
1999.

     Investment securities increased  approximately  $400,000 from $25.1 million
at March 31, 1999 to $25.5  million at June 30, 1999 as a result of $1.2 million
of securities  acquired due to the acquisition of Citizens partially offset by a
decrease  in the market  value of these  available  for sale  securities.  These
securities  experienced  approximately  a $700,000  temporary  decline in market
value since March 31, 1999.  This  decrease is due  primarily  to a  significant
increase in interest rates and the duration of the  securities.  Mortgage-backed
securities decreased  approximately $400,000 from $4.5 million at March 31, 1999
to $4.1 million at June 30,  1999.  The  decrease  was  primarily  the result of
principal  repayments  of  approximately  $379,000  and a decrease in the market
value of these available for sale securities.

     Premises and  equipment  increased  approximately  $700,000  primarily as a
result of the acquisition of Citizens.  Goodwill  increased  approximately  $3.1
million as a result of the goodwill  recorded in connection with the acquisition
of Citizens.

     Net deposits  increased $21.6 million from $117.7 million at March 31, 1999
to  $139.3  million  at  June  30,  1999  with  $12.0  million  of the  increase
attributable  to the  acquisition of Citizens.  The remainder of the increase is
the result of aggressive  marketing efforts and an increased deposit base due to
the opening of two additional  banking offices during fiscal 1999.  Non-interest
bearing demand deposits  increased $2.0 million,  savings,  NOW and money market
demand  deposits  increased  $6.3 million,  and other time  deposits  consisting
primarily of certificates of deposit increased $1.3 million.  These increases do
not include the acquisition of the Citizens deposits.

     Federal Home Loan Bank  advances  increased  $1.2 million from  $388,000 at
March 31, 1999 to $1.6 million at June 30, 1999.  Net proceeds from the advances
were used to fund the increase in loans.

     Total stockholders'  equity was $20.3 million at March 31, 1999 compared to
$19.5 million at June 30, 1999. The decrease was due to a decrease in the market
value of available for sale securities,  the purchase of treasury stock and cash
dividends paid partially offset by net income recorded for the period.

                                       11
<PAGE>

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  o  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.

                                       12

<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.  The Company does not anticipate  having
any additional costs.


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

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

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

                                       13

<PAGE>


     The Company  reported net income of $252,000  during the three months ended
June 30, 1999  compared to net income of $197,000  during the three months ended
June 30,  1998.  The  increase in income of $55,000  between the two periods was
primarily  the result of an  increase in net  interest  income of  $215,000,  an
increase in non-interest  income of $45,000  partially  offset by an increase in
provision for loss on loans of $10,000, an increase in non-interest  expenses of
$192,000 and an increase in income taxes of $3,000.

     Interest  Income.  Total interest income  increased  $283,000 for the three
months  ended June 30, 1999 as compared to the three months ended June 30, 1998.
The  increase in  interest  income for the periods  resulted  primarily  from an
increase in the average balance of interest-earning assets of $13.3 million from
$123.0 million at June 30, 1998 to $136.3 million at June 30, 1999. 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, 1999 and 1998.

     Interest  Expense.  Interest expense increased $68,000 for the three months
ended June 30, 1999 as compared  to the same  period in 1998.  Interest  expense
increased for the periods primarily due to an increase in the average balance of
interest-bearing   liabilities.   The   average   balance  of   interest-bearing
liabilities  increased from $103.8 million at June 30, 1998 to $123.3 million at
June 30, 1999 as a result of an increase in deposits and other  borrowings.  The
average rate paid on  interest-bearin  liabilities was 4.3% for the three months
ended June 30, 1999  compared to 4.7% for the three  months ended June 30, 1998.
The decrease in the average rate paid on interest-bearing  liabilities is due to
the continued increase in interest-bearing transaction accounts that pay a lower
rate of interest than the certificate of deposit accounts.

     Provision for Loan Losses. The Company's  provision for loan losses totaled
$35,000 for the three  months  ended June 30,  1999  compared to $25,000 for the
three months ended June 30, 1998 based on management's overall assessment of the
loan portfolio.  The increase for the three-month  period was due to an increase
in charge-offs and  management's  decision to increase the provision as a result
of an evaluation  of the Company's  current  portfolio.  Management  continually
monitors  its  allowance  for loan  losses  and makes  adjustments  as  economic
conditions,  portfolio  quality and portfolio  diversity  dictate.  Although the
Company maintains its allowance for loan losses at a level which it considers to
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  $45,000
for the three  months  ended June 30, 1999  compared to the same period in 1998.
The increase for the  three-month  period is primarily the result of an increase
in service  charges and other fees on  deposits of $38,000,  an increase on fees
earned on the  origination of secondary  market loans and other income of $8,000
offset by a decrease in the gain on sale of securities  of $1,000.  The increase
in service charges and other fee on deposits is the result of increased  product
offerings, an increased deposit base and aggressive pricing strategies.

     Non-interest Expense. Non-interest expense increased $192,000 for the three
months  ended June 30, 1999  compared  to the same period in 1998.  Non-interest
expenses  increased  for the  three-month  period due to an increase in employee
compensation  and benefits of $61,000,  an increase in occupancy  and  equipment
expense of  $34,000,  and an  increase  in  goodwill  amortization  of  $15,000.
Employee  compensation and benefits  increased as a result of an increase in the
net number of  employees  due to the  acquisition  of Citizens and the hiring of
additional employees in order to facilitate the growth of the Company. Occupancy
and equipment  expense increased due to increased costs related to an additional
banking office as a result of the  acquisition of Citizens and additional  costs
as a  result  of  improved  technology  put in place  by the  Company.  Goodwill
amortization  increased  due to the  goodwill  recorded in  connection  with the
acquisition of Citizens.


                                       14

<PAGE>

     Non-interest  expenses  also  increased  due to an increase in  stationary,
printing and other supplies of $23,000, an increase in advertising of $9,000, an
increase in telephone  expense of $7,000 as a result of improved  technology and
an increase in other general and administrative expenses of $43,000.

     Income Tax  Expense.  Income  tax  expense  increased  $3,000 for the three
months ended June 30, 1999  primarily due to an increase in income before income
taxes offset by 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,  1999 was $1.2  million  or 1.1% of the total  loans.  The
March 31, 1999 allowance for loan loss was $861,000,  or .9% of total loans. The
increase in the  allowance  since March 31,  1999 is due to the  acquisition  of
Citizens and the transfer of that  allowance to Classic Bank.  The allowance for
loan losses at June 30, 1999 was allocated as follows:  $264,000 to  one-to-four
family real estate loans,  $31,000 to commercial real estate loans,  $517,000 to
commercial business loans,  $75,000 to consumer loans,  $65,000 to year 2000 and
$248,000 remained unallocated.

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

<TABLE>
<CAPTION>

                                                      June 30, 1999     March 31, 1999
                                                      -------------     --------------
                                                            (Dollars in Thousands)

<S>                                                     <C>                 <C>
Non-Accruing Loans ..................................    $  436              $ 315
Accruing Loans Delinquent 90 Days or More............       445                 91
Foreclosed Assets ...................................       259                226
                                                         ------              -----
Total Non-Performing Assets .........................    $1,140              $ 632
Total Non-Performing Assets as a
         Percentage of Total Assets .................        .7%                .4%

</TABLE>

     Total non-performing  assets increased $508,000 from March 31, 1999 to June
30, 1999.  This increase is due primarily to the acquisition of Citizens and the
inclusion of the acquired loans in non-performing loans.  Management continually
pursues   collection   of  these  loans  in  order  to  decrease  the  level  of
non-performing loans.

                                       15

<PAGE>

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

     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, 1999 and March 31,
1999,  cash  and  cash  equivalents  totaled  $5.0  million  and  $4.5  million,
respectively.  The  Company's  primary  sources of funds  include  principal and
interest  payments on loans (both  scheduled  and  prepayments),  maturities  of
investment  securities and principal payments from  mortgage-backed  securities,
deposits and Federal Home Loan Bank of Cincinnati advances. While scheduled loan
repayments  and proceeds  from  maturing  investment  securities  and  principal
payments on mortgage-backed securities are relatively predictable, deposit flows
and early  repayments are more  influenced by interest rates,  general  economic
conditions and competition. Certificates of deposit as of June 30, 1999 maturing
within one year total $65.8 million.

     Liquidity  management  is both a short-  and  long-term  responsibility  of
management.  The Company  adjusts its  investments  in liquid  assets based upon
management's  assessment  of  expected  loan  demand,   projected  purchases  of
investment  and  mortgage-backed  securities,  expected  deposit  flows,  yields
available on  interest-bearing  deposits,  and liquidity of its  asset/liability
management  program.  Excess liquidity is generally invested in interest-bearing
overnight deposits and other short-term liquid asse 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,  1999,  the Company had $1.6
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, 1999 and March
31, 1999,  Classic Bank's liquidity  ratios were 4.43% and 4.12%,  respectively.
First National,  as a national bank, is not subject to any prescribed  liquidity
requirements.

     At June 30,  1999,  the Company had  outstanding  commitments  to originate
loans of $11.8 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.

                                       16

<PAGE>

     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, 1999, the capital  requirements
applicable to Classic Bank and its actual capital  ratios.  As of June 30, 1999,
Classic Bank exceeded all current regulatory capital standards.

                                        Regulatory             Actual Capital
                                   Capital Requirement            (CB Only)
                                   -------------------         ---------------
                                   Amount      Percent         Amount  Percent
                                   ------      -------         ------  -------
                                             (Dollars in Thousands)
Risk-Based Capital
  (to Risk Weighted Assets)        $4,679            8.0%      $6,049     10.3%
Tier 1 (Core) Capital
  (to Adjusted Total Assets)       3,530             4.0        5,318      6.0


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

     Pursuant to regulations promulgated by the Office of the Comptroller of the
Currency  (the  "OCC"),  national  banks must meet two minimum  capital-to-asset
requirements.  The following table summarizes,  as of 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)        $3,988       8.0%           $8,217   16.5%
Tier 1 Capital
  (to Risk Weighted Assets)         1,994       4.0             7,838   15.7


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.

                                       17


<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

         None.

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, 1999:

               April  22,  1999  announcing  a  cash  dividend,  announcing  the
               completion  of a repurchase of 5% of its shares and the intent to
               initiate another stock repurchase program.

               April 28, 1999 announcing annual earnings.

               May 14, 1999  announcing  the  completion of the  acquisition  of
               Citizens Bank, Grayson.





                                       18


<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 13, 1999            /s/ David B. Barbour
                                    --------------------------------------------
                                    David B. Barbour, President, Chief Executive
                                     Officer and Director (Duly Authorized
                                     Officer)





Date:    August 13, 1999           /s/ Lisah M. Frazier
                                   ---------------------------------------------
                                   Lisah M. Frazier, Senior Vice President,
                                    Treasurer and Chief Financial Officer
                                   (Principal Financial Officer)







                                     19



<PAGE>

                                INDEX TO EXHIBITS



         Exhibit
         Number

         27                Financial Data Schedule


                                       20