FORM 10-Q

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

(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  0-18832 

                 First Federal Financial Corporation of Kentucky
             (Exact Name of Registrant as specified in its charter)

                 Kentucky                                61-1168311  
        (State or other jurisdiction         (IRS Employer Identification No.)
      of incorporation or organization)

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

                                  (502)765-2131
              (Registrants's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes    X     No 
     ----       ----  
                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.
                 Class                      Outstanding as of January 31, 1999  
              -----------                 -------------------------------------

               Common Stock                         4,127,112  shares

                     This document is comprised of 15 pages.


<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY




                                      INDEX


PART I - Financial Information                                      Page Number

   Item 1 - Financial Statements

            Consolidated Statements of Financial Condition as
            of December 31, 1998 (Unaudited) and June 30, 1998.           3

            Consolidated Statements of Income for the Three Months
            and Six Months Ended December 31, 1998 and 1997
            (Unaudited).                                                  4

            Consolidated Statements of Comprehensive Income for the
            Three Months and Six Months Ended December 31, 1998 and
            1997 (Unaudited).                                             5

            Consolidated Statements of Cash Flows for the Six
            Months Ended December 31, 1998 and 1997 (Unaudited).          6

            Notes to Consolidated Financial Statements.                   7


   Item 2 - Management's Discussion and Analysis of the Consolidated
            Statements of Financial Condition and Results of Operations.  8


PART II - Other Information                                               13

SIGNATURES                                                                15

<PAGE>
<TABLE>
<CAPTION>
                                                    

                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                                                        December 31,        June 30,
          ASSETS                                                           1998               1998
                                                                        -----------         --------
                                                                        (unaudited)     
<S>                                                                   <C>                <C>    
                                                                                           
Cash and cash equivalents                                              $19,361,128         $4,992,588   
Interest bearing deposits                                                  517,078          4,157,124   
Securities:                                                                                             
     Securities held-to-maturity (fair value approximates                                               
      $41,749,000 and $24,935,000 at December 31, 1998                                                  
      and  June 30, 1998, respectively.)                                41,564,654         24,639,484   
      Securities available-for-sale, at fair value                       3,344,467          1,934,412   
 Loans receivable, net                                                 386,886,843        355,306,342   
 Real estate owned:                                                                                
      Acquired through foreclosure                                         228,323            133,584   
      Held for development                                                 618,851            642,491   
 Investment in Federal Home Loan Bank stock                              3,091,900          2,983,800   
 Premises and equipment                                                 11,477,308         10,747,145   
 Other assets                                                              552,394          1,329,890   
 Excess of cost over net assets of affiliate purchased                  11,294,872          2,784,409             
                                                                        ----------        -----------    
          Total Assets                                                $478,937,818       $409,651,269 
                                                                      ============       ============
                                                               
LIABILITIES & STOCKHOLDERS' EQUITY                               
----------------------------------                              
Liabilities:                                                        
  Savings deposits                                                    $393,252,742       $306,702,649 
  Advances from Federal Home Loan Bank                                  23,159,559         43,248,855    
  Accrued interest payable                                               1,078,691            358,435       
  Accounts payable and other liabilities                                 2,536,329          2,576,839      
  Deferred income taxes                                                  2,351,562          2,076,104 
                                                                         ---------          ---------
           Total Liabilities                                           422,378,883        354,962,882   
                                                                       -----------        ----------- 
Stockholders' Equity:                                                                                                
  Serial preferred stock, 5,000,000 shares authorized                                                 
     and unissued                                                          --                  --
  Common stock, $1 par value per share;  authorized                                                   
      10,000,000 shares;  issued and outstanding  4,127,112             
      shares on December  31, 1998 and 4,129,612 shares                 
      on June 30, 1998                                                   4,127,112          4,129,612   
  Additional paid-in capital                                             3,185,372          3,253,664           
  Retained earnings - substantially restricted                          47,880,631         46,208,807   
  Net unrealized holding gain on securities available-for-sale,                                            
      net of tax                                                         1,365,820          1,096,304          
                                                                        ----------         ----------
      Total Stockholders' Equity                                        56,558,935         54,688,387   
                                                                        ----------         ----------         
      Total Liabilities & Stockholders' Equity                        $478,937,818       $409,651,269    
                                                                      ============       ============                          
</TABLE>
                                                                              
See notes to consolidated financial statements.

                                        3

<PAGE>
<TABLE>
<CAPTION>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

                                          Three Months Ended                  Six Months Ended
                                              December 31,                       December 31,
                                                                                           
                                        1998             1997              1998             1997
                                       -----            -----             -----            -----      
<S>                                <C>              <C>               <C>             <C>   
Interest income:
 Interest on loans                  $8,069,729       $7,270,383        $15,776,543     $14,359,868      
 Interest and dividends 
  on investments and deposits          894,713          422,576          1,898,589         854,817
                                       -------          -------          ---------      ----------
      Total interest income          8,964,442        7,692,959         17,675,132      15,214,685
                                     ---------        ---------         ----------      ----------
Interest expense:                                                        
 Savings deposits                    4,480,944        3,389,315          8,708,291       6,636,878
 Federal Home Loan Bank advances       309,921          603,222            708,725       1,184,213
                                     ---------        ---------          ---------       ---------                     
      Total interest expense         4,790,865        3,992,537          9,417,016       7,821,091 
                                     ---------        ---------          ---------       --------- 
                      
  Net interest income                4,173,577        3,700,422          8,258,116       7,393,594
  Provision for loan losses             60,000           30,000            120,000          90,000
                                     ---------        ---------          ---------       ---------                      
     Net interest income after
     provision for loan losses       4,113,577        3,670,422          8,138,116       7,303,594              
                                     ---------        ---------          ---------       ---------                  
Other income:                                                                                                   
  Customer service fees on
   deposit accounts                    448,408          323,703            835,903         636,948
  Other income                         471,963          290,987            823,320         600,922
  Gain on sale of investment            94,933                0            203,200         116,945
                                       -------          -------            -------         -------                 
      Total other income             1,015,304          614,690          1,862,423       1,354,815  
                                     ---------          -------          ---------       ---------                      
Other expense:                                                                                                           
  Employee compensation
   and benefits                      1,146,482          925,429          2,238,429       1,813,564    
  Office occupancy and
   equipment expense                   323,535          232,525            631,140         470,058    
  Federal insurance premiums            44,363           44,387             92,623          88,613    
  Marketing and advertising             98,751           98,226            200,776         184,622    
  Outside services and data 
   processing                          234,082          151,899            412,756         295,413    
  State franchise tax                   79,357           75,939            158,714         149,978          
  Other expense                        845,965          539,385          1,810,232         975,812      
                                     ---------        ---------          ---------       ---------                      
      Total other expense            2,772,535        2,067,790          5,544,670       3,978,060   
                                     ---------        ---------          ---------       ---------
                                      
Income before taxes                  2,356,346        2,217,322          4,455,869       4,680,349                       
Income taxes                           818,253          764,921          1,545,468       1,624,181   
                                    ----------       ----------         ----------      ----------                       
Net Income                          $1,538,093       $1,452,401         $2,910,401      $3,056,168   
                                    ==========       ==========         ==========      ==========   
Weighted average common
 shares outstanding                  4,128,987        4,148,785          4,129,255       4,158,049                         
Net income per share of            
 common stock (Note 2)                   $0.37            $0.35              $0.70           $0.74   
                                         =====            =====              =====           =====         
Dividends per share of common stock      $0.15            $0.14              $0.30           $0.28      
                                         =====            =====              =====           =====
</TABLE>
                                                                               
See notes to consolidated financial statements. 
                                                                            
                                                                            
                                       4


<PAGE>
<TABLE>
<CAPTION>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                   (Unaudited)




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

                                                                   1998              1997                1998              1997
                                                                   ----              -----               ----              ----
                                                                 
<S>                                                           <C>                  <C>                <C>               <C>    

Net Income                                                     $1,538,093          $1,452,401         $2,910,401        $3,056,168
                                                               ----------          ----------         ----------        ----------
Other comprehensive income, net of tax:
   Unrealized gains on securities arising during period           271,574               4,639            269,516           169,323 
    Less:  reclassification adjustment for accumulated
      gains included in net income                                (94,933)                  0           (203,200)         (116,945)
                                                                  --------              -----           ---------         ---------
    Unrealized gains on securities                                176,641               4,639             66,316            52,378
                                                                  --------              -----           ---------         ---------
                                                                                                                                   
Total Comprehensive Income                                     $1,714,734          $1,457,040         $2,976,717        $3,108,546
                                                                ==========         ==========          ==========        ==========


</TABLE>

See notes to consolidated financial statements.

                                       5


<PAGE>
<TABLE>
<CAPTION>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                                   (Unaudited)

                                                                      
                                                                     Six Months Ended
                                                                        December  31,            
                                                                    1998              1997
<S>                                                             <C>               <C>   
Operating Activities:
  Net income                                                     $ 2,910,401      $3,056,168
  Adjustments to reconcile net income to
   net cash provided by operating activities:
    Provision for loan losses and real estate owned                  120,000          90,000
    Provision for depreciation                                       376,297         292,290
    Net change in deferred loan fees and costs                       111,867          94,043
    Federal Home Loan Bank stock dividends                          (108,100)       (102,300)
    Amortization of discounts on securities held-to-maturity         (36,611)        (61,806)
    Amortization of acquired intangible assets                       365,447         120,036
    Gain on sale of investments available-for-sale                  (203,200)       (116,945)
    Increase (Decrease) in interest payable                          720,256          (4,340)
    Decrease in other assets                                         777,496          82,786
    Increase in accounts payable and other liabilities               234,948         543,100
                                                                   ---------       ---------   
Net cash provided by operating activities                          5,268,801       3,993,032
                                                                   ---------       ---------

Investing Activities:
   Sale of securities available-for-sale                             211,237       3,479,138
   Purchases of securities available-for-sale                     (1,010,000)        (36,082)
   Purchases of securities held-to-maturity                      (46,855,000)     (5,000,000)
   Principal collections on securities held-to-maturity           30,026,461       6,101,993
   Net increase in loans to customers                            (20,543,389)    (16,866,565)
   Purchases of premises and equipment                            (1,106,460)       (742,477)
   Sales of real estate acquired in settlement of loans               92,000         382,948
   Decrease in real estate held for development                       23,640           --     
                                                                  ----------     -----------

Net cash used in investing activities                            (39,161,511)    (12,681,045)
                                                                 -----------     -----------

Financing Activities:
   Advances from (repayments to) Federal Home Loan Bank          (20,089,296)        (51,239)
   Net increase in customer savings deposits                      14,055,347       9,025,646
   Dividends paid                                                 (1,238,509)     (1,164,663)
   Proceeds from stock options exercised                               --              --
   Common stock repurchased                                          (70,792)       (625,275)
   Collection on advance to ESOP                                       --             14,685
   Cash proceeds from acquisition                                 51,964,454           --  
                                                                  ----------       ---------
Net cash provided by financing activities                         44,621,204       7,199,154
                                                                  ----------       ---------                    

Increase (Decrease) in cash and cash equivalents                   10,728,49      (1,488,859)
Cash and cash equivalents, beginning of year                       9,149,712       9,175,713
                                                                  ----------      ----------
Cash and cash equivalents, end of period                         $19,878,206      $7,686,854
                                                                 ===========      ==========
</TABLE>

See notes to consolidated financial statements.

                                       6

<PAGE>



                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY

                   Notes to Consolidated Financial Statements


1.       Interim Financial Statements

         First Federal Financial Corporation of Kentucky  ("Corporation") is the
         parent to its wholly owned  subsidiary,  First Federal  Savings Bank of
         Elizabethtown  ("Bank").  The Corporation has no material income, other
         than that generated by the Bank.

         In the opinion of management,  these unaudited  consolidated  financial
         statements include all adjustments necessary for a fair presentation of
         its  financial  position as of December 31, 1998 and the results of its
         operations and its cash flows for the three month and six month periods
         then ended. All such adjustments were of a normal recurring nature.

         The results of  operations  for the three  month and six month  periods
         ended December 31, 1998 and 1997 are not necessarily  indicative of the
         results for the full years.

         It is suggested that these financial  statements be read in conjunction
         with the financial statements,  accounting policies and financial notes
         thereto  included in the Appendix to the Company's 1998 Proxy Statement
         which has been previously filed with the Commission.

2.       SFAS "Earnings Per Share,"  establishes new standards for computing and
         presenting earnings per share. The reconciliation of the numerators and
         denominators of the basic and diluted EPS computations is as follows:

                                   Three Months Ended         Six Months Ended
                                      December 31,              December 31,
                                   ------------------         ----------------
                                   1998         1997          1998        1997
                                   ----         ----          ----        ----
                                              (Dollars in thousands)

  Net income available
    to common shareholders         $1,538       $1,452       $2,910      $3,056
                                   ======       ======       ======      ======

  Basic EPS:
    Weighted average common 
     shares                     4,128,987    4,148,785    4,129,255   4,158,049
                                =========    =========    =========   =========


  Diluted EPS:
     Weighted average common 
      shares                    4,128,987    4,148,785    4,129,255   4,158,049
     Dilutive effect of stock
      options                      22,131       30,237       21,446      28,739
     Weighted average common    ---------    ---------    ---------   ---------
       and incremental shares   4,151,118    4,179,022    4,150,701   4,186,788
                                =========    =========    =========   =========

  Earnings Per Share:

      Basic                         $0.37        $0.35        $0.70       $0.74
                                    =====        =====        =====       =====
      
      Diluted                       $0.37        $0.35        $0.70       $0.73
                                    =====        =====        =====       =====


                                       7

<PAGE>


            MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

First Federal Financial Corporation of Kentucky ("Corporation") is the parent to
its  wholly  owned  subsidiary,  First  Federal  Savings  Bank of  Elizabethtown
("Bank").  The Bank has operations in the Kentucky communities of Elizabethtown,
Radcliff, Bardstown, Munfordville,  Shepherdsville, Mt. Washington, Brandenburg,
Flaherty, and Paducah.

The  following  discussion  and  analysis  covers  any  material  changes in the
financial  condition since June 30, 1998 and any material changes in the results
of  operations  for the three month and six month periods  ending,  December 31,
1998.  This  discussion  and  analysis  should  be  read  in  conjunction   with
"Managements  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations" included in the 1998 Annual Report to Shareholders.


PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The  information set forth in this report  includes  forward-looking  statements
within the meaning of the Private Securities  Litigation Reform Act of 1995. For
this purpose,  the words  "believes,"  "anticipates,"  "plans,"  "expects,"  and
similar  expressions  are  intended  to  identify  forward-looking   statements.
Although the Corporation believes that the forward-looking  statements are based
upon  reasonable  assumptions,  the  statements are subject to certain risks and
uncertainties  that  could  cause the  Corporation's  actual  results  to differ
materially from those indicated by the forward-looking statements. Among the key
factors that may have a direct bearing on the  Corporation's  operating  results
are  fluctuations  in the economy;  the relative  strengths  and weakness in the
consumer  and  commercial  credit  sectors  and in the real estate  market;  the
actions  taken by the Federal  Reserve for the purpose of managing  the economy;
the Corporation's  success in assimilating acquired branches and operations into
the Bank's existing operations;  the Bank's success in converting its systems to
integrate  new  hardware  and  software   without   material   disruption;   the
Corporation's  ability to offer competitive  banking products and services;  the
continued  growth of the markets in which the  Corporation  operates  consistent
with  recent  historical  experience;   the  enactment  of  federal  legislation
affecting the operations of the Corporation;  and the  Corporation's  ability to
expand into new markets  and to maintain  profit  margins in the face of pricing
pressure.

Acquisition
On July 24, 1998,  the Bank  completed  its  acquisition  of three bank branches
located in Meade  County,  Kentucky  from Bank One,  Kentucky,  N.A.  Two of the
branches  are  located  in  Brandenburg,  Kentucky  and the  third  branch is in
Flaherty, Kentucky.

In the  transaction,  the Bank  acquired  certain  assets  and  assumed  certain
liabilities associated with the acquisition of the Meade County banking centers.
The transaction  resulted in recording of assets of $11,870,000,  liabilities of
$72,500,000  and core  deposit  intangibles  of  approximately  $8,670,000.  The
consideration paid for the assets totaled approximately  $20,500,000,  which was
determined  based on a premium  for the core  deposits of the  acquired  banking
centers plus the book or cash value of certain  other  transferred  assets.  The
acquisition  was funded by reducing  proceeds due for the net  liability  amount
assumed.

Results of Operations
Three Month Period Ended  December 1998 vs. 1997 - Net income was  $1,538,000 or
$0.37 per share for the three month period ended  December 31, 1998, as compared
to  $1,452,000  or $0.35 per share for the same  period in 1997.  The  following
discussion  outlines  the  material  differences  in income and expenses for the
three month period ended December 31, 1998, as compared to 1997.

Net interest  income  increased by $473,155 in 1998 as compared to 1997 in spite
of the  declining  net interest  margin which was 3.78% for the 1998 period,  as
compared to 3.97% for the 1997  period.  The purchase of three  banking  centers
during the quarter ended September 30, 1998, contributed  approximately $380,000
to the  total  increase  in net  interest  income  for  the  1998  quarter.  The
Corporation's  cost of funds  decreased by 26 basis  points in 1998  compared to
1997, due to lower rates paid on short-term customer deposits.


                                       8

<PAGE>


Average  interest-earning  assets increased by $68 million from $366 million for
the 1997 period to $434 million for the 1998 period due to the  interest-earning
assets acquired from the three Meade County banking centers.  Average loans were
$43 million  higher and  averaged  $385 million  during 1998,  while the average
yield on loans decreased by 12 basis points to 8.32%.

Average  interest-bearing  liabilities  increased  by $84  million to an average
balance  of  $414  million  for  the  1998  period  due to the  interest-earning
liabilities acquired from the three banking centers.  Customer deposits averaged
$391  million  during  1998,  an increase of $102  million  compared to the 1997
quarter.  The acquisition  contributed  approximately $72.5 million to the total
deposit growth.

Total other income was  $1,015,304 for the three months ended December 31, 1998,
as compared to $614,690 for the 1997 period,  an increase of $400,614.  Gains on
investment  sales were $94,933 for 1998 period while no sales of securities were
recorded  during  the 1997  period.  Customer  service  fees  charged on deposit
accounts increased by $124,705 during 1998 due to a growth in customer accounts.
Income from government lending operations  increased by $108,942 from $90,928 in
1997 to $199,870 in 1998 due to a growth in VA and FHA loans.  Other  sources of
income such as brokerage commissions,  loan fees, and other customer transaction
fees increased by $72,034 due to growth in deposit  relationships  with existing
customers and new customers as a result of the acquisition.

Total other expense was $2,772,535 for the three month period ended December 31,
1998,  as compared to  $2,067,790  for the 1997 period,  an increase of 704,745.
Compensation  and  benefits  increased  by $221,000 in 1998 as compared to 1997,
$133,000 of the increase is due to the additional associates gained in the three
branch   acquisition  while  the  other  $88,000  increase  is  due  to  routine
inflationary  salary raises and new associate  positions required to service the
normal  customer  growth of the Bank.  Office  occupancy and equipment  expenses
increased  by $91,000 in 1998 as compare to 1997.  Approximately  $66,000 of the
increase  is due to the  acquisition  of the  three  banking  centers  while the
remaining  $25,000  is due to  inflationary  increases  in other  occupancy  and
equipment related  expenses.  Expenses directly related to data processing costs
and outside service fees increased by $82,183 in 1998 as compared to 1997 due to
asset growth and new services provided by the Bank. All other expenses increased
by $310,562  in 1998  compared to 1997.  Expenses  directly  related to customer
checking  accounts  increased  due to a  higher  volume  of  accounts.  Expenses
directly related to telephone, marketing, postage, and supplies increased due to
expanded services and products offered to customers.

Six Month Period Ended December 31, 1998 vs. 1997 - Net income was $2,910,000 or
$0.70  per  share  for  the  six  month   period   ended   December   31,  1998.
Acquisition-related  costs in  connection  with the  purchase  of three  banking
centers  during the quarter ended  September 30, 1998, in the amount of $193,000
(net of tax) were charged  against  earnings for that quarter.  Excluding  these
costs, net earnings for the six month period ended December 31, 1998, would have
been  $3,099,000 or 0.75 per share compared to $3,056,000 or $0.74 per share for
the same period in 1997.

Net interest  income  increased by $864,522 in 1998 as compared to 1997 in spite
of the  declining  net  interest  margin  which was 3.77% for the 1998 period as
compared to 4.04% for the 1997 period. The purchase of the three banking centers
contributed  approximately $647,171 to the total increase in net interest income
for the 1998  period.  The  Corporation's  cost of funds  decreased  by 21 basis
points in 1998 compared to 1997, due to lower rates paid on short-term  customer
deposits.

Average  interest-earning  assets increased by $72 million from $360 million for
the 1997 period to $433 million for the 1998 period due to the  interest-earning
assets acquired from the three Meade County banking centers.  Average loans were
$41 million  higher and  averaged  $378 million  during 1998,  while the average
yield on loans decreased by 18 basis points to 8.28%.

Average  interest-bearing  liabilities  increased  by $83  million to an average
balance  of $409  million  for 1998 due to the  purchase  of the  three  banking
centers.  Customer  deposits  averaged $386 million  during 1998, an increase of
$100  million  compared  to  the  1997  period.   The  acquisition   contributed
approximately $72.5 million to the total deposit growth.

                                       9

<PAGE>


Total other income was $1,862,423 for the six months ended December 31, 1998, as
compared to $1,354,815  for the 1997 period,  an increase of $507,608.  Gains on
investment  sales were $203,200 for 1998 period as compared to gains of $116,945
for the 1997 period. Customer service fees charged on deposit accounts increased
by  $198,955  during  1998 due to  growth  in  customer  accounts.  Income  from
government  lending  operations  increased by $98,258  from  $216,526 in 1997 to
$314,784  in 1998 due to a growth in VA and FHA loans.  Other  sources of income
such  as  loan  fees,  other  customer   transaction  fees,  and  trust  account
commissions  increased by $124,140 due to growth in deposit  relationships  with
existing   customers  and  new  customers  as  a  result  of  the  three  branch
acquisition.

Total other expense was  $5,544,670  for the six months ended December 31, 1998,
as compared  to  $3,978,060  for the 1997  period,  an  increase of  $1,566,610.
Compensation  and  benefits  increased  by $424,865 in 1998 as compared to 1997,
$320,143 of the  increase  is due to the  acquisition  while the other  $104,722
increase  is due to new  associate  positions  required  to  service  the normal
customer growth of the Bank. Office occupancy and equipment  expenses  increased
by $161,082 in 1998 as compared to 1997.  Approximately $116,315 of the increase
is due to the purchase of the three banking centers while the remaining  $44,767
is due to  inflationary  increases  in other  occupancy  and  equipment  related
expenses.   Operating  costs  related  to  the  acquisition  such  as  supplies,
marketing,  data processing costs, and legal expenses resulted in an increase to
other expense of $291,869.  Also, due to the  acquisition,  the  amortization of
goodwill  increased by $245,411 from  $120,036 in 1997 to $365,447 in 1998.  All
other expenses increased by $443,383 in 1998 compared to 1997. Expenses directly
related  to  customer  checking  accounts  increased  due to a higher  volume of
accounts.  Expenses  directly  related to postage,  telephone,  data  processing
costs,  marketing,  and supplies  increased due to asset growth and new services
provided by the Bank.


                                       10

<PAGE>

Non-Performing Assets
Management  periodically evaluates the adequacy of the allowance for loan losses
based on the Bank's past loan loss  experience,  known and inherent risks in the
portfolio,  adverse  situations that may effect the borrower's  ability to repay
and other  factors.  During  the six  month  period  ended  December  31,  1998,
management chose to add $120,000 to the reserve for loan loss.  Although current
loan  charge-offs and  delinquencies  are consistent  with previous  years,  the
reserve was increased to compensate for the Bank's continued strong loan growth.
The Bank experienced an insignificant  amount of uncollectible  loans during the
periods  indicated  in  the  table  below.   Approximately  38%  of  the  Bank's
non-performing assets are secured by  one-to-four-family  residences at December
31, 1998.


                                       Three Months Ended      Six Months Ended
                                           December 31,           December 31, 
                                        1998          1997     1998        1997
                                        ----          ----     ----        ----

                                                  (Dollars in thousands)

Allowance for loan losses:
   Balance, beginning of period        $2,123     $1,766      $1,853     $1,715
   Balance acquired in merger            --          --          205        --
   Provision for loan losses               60         30         120         90
   Charge-offs                           (190)       (10)       (197)       (25)
   Recoveries                               9          9          21         15 
                                       ------     ------      ------     ------
   Balance, end of period              $2,002     $1,795      $2,002     $1,795
                                       ======     ======      ======     ======

Net loans outstanding at period end                         $386,887   $344,029
 Non-performing loans at quarter end:
   Collateralized by one-to-four family homes               $    713   $  1,066
   Other non-performing loans                               $    926   $    526
Ratios:
   Non-performing loans to total loans                           .42%       .46%
   Allowance for loan losses to non-performing
      loans                                                      122%       113%
   Allowance for loan losses to net loans                        .52%       .52%
   Non-performing assets to total assets                         .52%       .48%



Liquidity & Capital Resources
Loan demand  continued  to be strong  during the six months  ended  December 31,
1998, as net loans increased from $355 million at June 30, 1998, to $387 million
at December 31. The acquisition of the Meade County banking centers  contributed
$11 million to the total loan growth of $32 million,  while the Bank  achieved a
11.4% growth rate in its existing loan customer  base, or $21 million in net new
loans.  The Meade  County  acquisition  also  contributed  $72.5  million in new
customer  deposits.  The acquisition  coupled with a $14.1 million growth in the
Bank's customer  deposits  resulted in a total deposit increase of $86.6 million
during the six month period ended December 31, 1998.

Current regulations require the Corporation's subsidiary,  First Federal Savings
Bank, to maintain  minimum  specific levels of liquid assets,  (currently 4%) of
cash and eligible investments to the savings deposits and short-term borrowings.
At December  31, 1998,  the Bank's  liquid  assets were 11.92% of its  liquidity
base.  The Bank  intends  to  continue  to fund loan  growth  (outstanding  loan
commitments were $9.5 million at December 31, 1998) and any declines in customer
deposits  through  additional  advances from the FHLB. At December 31, 1998, the
Bank has an unused  approved line of credit in the amount of $13.2 million,  and
the  potential to  significantly  increase its  indebtedness  with the FHLB,  if
necessary, due to the Bank's strong financial condition.

                                       11


<PAGE>


The Office of Thrift Supervision's  capital regulations require the Bank to meet
three capital standards. As indicated below, the Bank substantially exceeded the
regulatory requirements for each category at December 31, 1998.

                                             (Dollars in thousands)


                                Tangible            Core         Risk-Weighted

Actual capital                   $42,668          $42,668           $44,670

Regulatory requirement             9,299           18,597            25,986
                                 --------         --------        ---------


Excess                           $33,369          $24,071           $18,684
                                 =======          =======           =======




Year 2000
Recognizing the need to ensure its operations will not be adversely  impacted by
Y2K failures,  the Bank has developed a proactive  plan for  minimizing its risk
and  updating a majority of its computer  hardware  and software  systems in the
process.  Upon completion of the plan, management believes that the consequences
of Y2K issues will not have a material effect on the Bank's business, results of
operations and financial  condition.  The Bank has entered into  agreements with
hardware  and  software  vendors to  systematically  replace and verify that all
hardware and software is Y2K compliant.  An equally  important  objective of the
complete  overhaul  of  the  systems  is to  enhance  the  Bank's  technological
capabilities.  The  anticipated  benefits  of the  new  systems  include  faster
customer  service,  the  flexibility  to offer a wider range of new products and
services and the capability to offer electronic  banking services in the future.
Communication  systems will be converted to fully  integrated wide area network,
thereby connecting all banking centers electronically to one another. Management
anticipates  that all  remaining  Y2K issues  will be  resolved  and all related
contingency costs will be reliably estimable by March 1999. Management currently
anticipates that implementation costs will approximate $140,000, net of tax, and
that equipment upgrade costs, including both technological  enhancements and Y2K
related costs, will approximate $260,000, net of tax.

                                       12


<PAGE>


                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY



Part II. Other Information

         Item 1.   Legal Proceedings
                            Not Applicable

         Item 2.   Changes in Securities
                            Not Applicable

         Item 3.   Defaults Upon Senior Securities
                            Not Applicable

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

                  The Corporation's 1998 Annual Meeting of Shareholders was held
                  on November 11, 1998.

                  At the  meeting,  the  directors  listed below were elected as
                  directors of the  Corporation for terms expiring at the annual
                  meeting in the year set forth to each of their names.


                                        Name                  Term Expires

                             Robert M. Brown                      2001

                             Burlyn Pike                          2001

                             J. Alton Rider                       2001

                             J. Stephen Mouser                    1999

                             Michael  L. Thomas                   1999


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


                                  Name                        Term Expires

                             Wreno M. Hall                        1999

                             Walter D. Huddleston                 1999

                             B. Keith Johnson                     2000

                             Irene B. Lewis                       2000

                             Kennard Peden                        2000


                                       13

<PAGE>


         The voting  results  for the  matters  brought  before the 1998  Annual
         Meeting are as follows:

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


      Name                  Votes For         Abstentions     Broker Nonvotes

  Robert M. Brown         3,292,923.677             0            29,504

  Stephen Mouser          3,252,090.677             0            29,504

  Burlyn Pike             3,253,061.569             0            29,504

  J. Alton Rider          3,253,423.677             0            29,504

  Michael L. Thomas       3,244,725.677             0            29,504

  M. Dennis Young         3,197,994.555             0            29,504


2. Proposal to Approve the 1998 Stock Option and Incentive Compensation Plan.



         For                Against          Abstentions       Broker Nonvotes

     2,889,713             876,960            161,175               500


         Item 5.   Other Information
                            Not applicable

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





                                       14


<PAGE>



                 FIRST FEDERAL FINANCIAL CORPORATION OF KENTUCKY



Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.





DATE: February 11, 1999           BY: (S) B. Keith Johnson                
                                      -----------------------------------------
                                          President and Chief Executive Officer


DATE: February 11, 1999           BY: (S) Richard L. Muse                       
                                      -----------------------------------------
                                          Vice President and Comptroller



                                       15