A UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                FORM 10-QSBA[X]

           QUARTERLY REPORT UNDER SECTION 13 OR 15(d)OF THE SECURITIES
       EXCHANGE ACT OF 1934For the quarterly period ended June 30, 2003OR

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

                           Commission File No. 0-20956

                            HFB FINANCIAL CORPORATION

A Tennessee Corporation                                        I.R.S. Employer
                                                               Identification
                                                               No. 61-1228266

        Address                                               Telephone Number
        -------                                               ----------------

1602 Cumberland Avenue                                         (606) 248-1095
Middlesboro, Kentucky  40965

Indicate by check mark whether the registrant (1) has filed all reports required
by Section 13 or 15(d) of the  Securities  and  Exchange  Act of 1934 during the
preceding  twelve  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 .


The number of shares of the  registrant's $1 par value common stock  outstanding
at August 11, 2003 was 1,301,101.



There are a total of 19 pages filed in this document.




<PAGE>
<TABLE>
<CAPTION>


                            HFB FINANCIAL CORPORATION

                                   I N D E X
                                   ---------
                                                                               PAGE NO
PART I - FINANCIAL INFORMATION                                                 -------
Item  1. Financial Statements (unaudited)


<S>                                                                               <C>
         Condensed Consolidated Balance Sheets                                    3

         Condensed Consolidated Statements of Income                              4

         Condensed Consolidated Statement of Stockholders' Equity                 5

         Condensed Consolidated Statements of Cash Flows                          6

         Notes to Condensed Consolidated Financial Statements                   7-8

Item  2. Management's Discussion and Analysis of
         Financial Condition and Results of Operations                         8-13

PART II - OTHER INFORMATION                                                      14


SIGNATURES                                                                       15

Exhibit 31.1   CEO Certification under Section 302 of the Sarbanes-Oxley Act     16

Exhibit 31.2   CFO Certification under Section 302 of the Sarbanes-Oxley Act     17

Exhibit 32.1   CEO Certification under Section 906 of the Sarbanes-Oxley Act     18

Exhibit 32.2   CEO Certification under Section 906 of the Sarbanes-Oxley Act     19
</TABLE>




                                       2

<PAGE>
                    HFB FINANCIAL CORPORATION AND SUBSIDIARY
                           Consolidated Balance Sheets
<TABLE>
<CAPTION>
                                                                                   June 30,          December 31,
                                                                                     2003                2002
                                                                                 (unaudited)
<S>                                                                            <C>                 <C>
Assets
     Cash and cash equivalents                                                 $   4,943,293       $   4,967,188
     Available-for-sale securities                                                58,555,629          70,418,282
     Loans, net of allowance for loan losses of $1,391,433 and
         $1,191,849 at June 30, 2003 and  December 31, 2002, respectively        183,574,995         166,334,655
     Premises and equipment                                                        4,757,816           4,455,209
     Federal Home Loan Bank stock                                                  1,713,100           1,679,700
     Interest Receivable                                                           1,473,887           1,513,376
     Assets held for sale                                                            769,226           1,030,310
     Other assets                                                                    819,413             330,038
     Cash surrender value of life insurance                                        2,876,178           2,806,103
                                                                               -------------       -------------

              Total assets                                                     $ 259,483,537       $ 253,534,861
                                                                               =============       =============

Liabilities
     Deposits
         Non-interest bearing demand                                           $   8,925,737       $   6,398,430
         Savings, NOW and money market                                            27,272,283          26,643,742
         Certificate of deposits                                                 167,511,401         166,243,106
                                                                               -------------       -------------
              Total deposits                                                     203,709,421         199,285,278
     Short-term debt                                                                  25,000           1,375,000
     Long-term debt                                                               29,055,803          26,277,967
     Interest payable                                                                411,548             629,653
     Other liabilities                                                             2,065,621           2,386,636
                                                                               -------------       -------------
              Total liabilities                                                  235,267,393         229,954,534
                                                                               -------------       -------------

Stockholders' Equity
     Issued and outstanding - 1,589,303 shares                                     1,589,303           1,589,303
     Additional paid-in-capital                                                    8,768,874           8,768,874
     Less: Common stock acquired by Rabbi trusts for deferred
                 compensation plans                                                 (500,446)           (500,446)
     Retained earnings                                                            15,809,922          14,867,147
     Accumulated other comprehensive income                                        1,110,489           1,417,447
                                                                               -------------       -------------
                                                                                  26,778,142          26,142,325
     Treasury stock, at cost, 288,202 shares                                      (2,561,998)         (2,561,998)
                                                                               -------------       -------------

              Total stockholders' equity                                          24,216,144          23,580,327
                                                                               -------------       -------------

              Total liabilities and stockholders' equity                       $ 259,483,537       $ 253,534,861
                                                                               =============       =============
</TABLE>


See notes to condensed consolidated financial statements.


                                       3


<PAGE>

                    HFB FINANCIAL CORPORATION AND SUBSIDIARY
                   Condensed Consolidated Statements of Income
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                 Three-months ended               Six-months ended
                                                       June 30,                       June 30,
                                                 2003           2002            2003            2002
<S>                                          <C>             <C>             <C>             <C>
Interest Income
   Loans receivable                          $3,212,022      $2,991,981      $6,391,740      $5,916,275
   Investment securities                        664,128       1,037,890       1,452,197       1,984,850
   Other                                          6,891          11,796          18,034          26,143
                                             ----------      ----------      ----------      ----------
            Total interest income             3,883,041       4,041,667       7,861,971       7,927,268
                                             ----------      ----------      ----------      ----------

Interest Expense
   Deposits                                   1,120,329       1,616,679       2,340,418       3,339,243
   Short term borrowings                           --              --              --              --
   Long term debt                               318,678         249,112         621,062         475,612
                                             ----------      ----------      ----------      ----------
            Total interest expense            1,439,007       1,865,791       2,961,480       3,814,855
                                             ----------      ----------      ----------      ----------

Net Interest Income                           2,444,034       2,175,876       4,900,491       4,112,413
   Provision for loan losses                    105,000         154,127         210,000         222,485
                                             ----------      ----------      ----------      ----------

Net Interest Income After
  Provision for Loan Losses                   2,339,034       2,021,749       4,690,491       3,889,928
                                             ----------      ----------      ----------      ----------

Other Income
   Service charges for deposit accounts         268,228         200,959         503,140         376,595
   Other customer fees                           34,168          10,359          68,396          43,849
   Net realized gain on sales of
    available for sale securities                  --              --             1,243               5
   Other income                                  22,538         122,870          66,682         196,482
                                             ----------      ----------      ----------      ----------
            Total other income                  324,934         334,188         639,461         616,931
                                             ----------      ----------      ----------      ----------

Other Expenses
   Salaries and employee benefits               921,143         774,710       1,809,010       1,427,609
   Net occupancy expenses                        96,206          94,453         194,398         189,553
   Equipment expenses                           135,957         138,124         264,435         270,657
   Data processing fees                          80,872          61,493         143,872         121,420
   Deposit insurance expense                      6,687           8,291          16,384          16,778
   Legal and professional fees                  150,020         178,449         263,976         307,148
   Advertising                                   65,997          61,043         132,097         121,043
   State franchise and deposit taxes             51,475           8,625         102,650          67,075
   Other expenses                               248,925         499,605         564,024         748,188
                                             ----------      ----------      ----------      ----------
            Total other expenses              1,757,282       1,824,793       3,490,846       3,269,471
                                             ----------      ----------      ----------      ----------

Income Before Income Tax                        906,686         531,144       1,839,106       1,237,388
   Income tax expense                           289,435         161,688         571,806         390,424
                                             ----------      ----------      ----------      ----------

Net Income                                   $  617,251      $  369,456      $1,267,300      $  846,964
                                             ==========      ==========      ==========      ==========

Basic Earnings Per Share                     $     0.49      $     0.30      $     1.01      $     0.68
Diluted Earnings Per Share                   $     0.49      $     0.30      $     1.00      $     0.68

</TABLE>


See notes to condensed consolidated financial statements.





                                       4
<PAGE>

                    HFB FINANCIAL CORPORATION AND SUBSIDIARY
            Condensed Consolidated Statement of Stockholders' Equity
                         Six-months ended June 30, 2003

<TABLE>
<CAPTION>
                                                            Additional                                  Compre-
                                                Common        Paid-in      Rabbi        Treasury        hensive          Retained
                                                Stock        Capital       Trusts        Stock          Income           Earnings
                                          ------------------------------------------------------------------------------------------
<S>                                          <C>           <C>          <C>           <C>             <C>             <C>
Balances, December 31, 2002                  $ 1,589,303   $ 8,768,874  $ (500,446)   $ (2,561,998)                   $ 14,867,147

Net income                                                                                            $ 1,267,300        1,267,300

Other comprehensive income, net of tax

  Unrealized gain on securities                                                                          (306,958)
                                                                                                      ------------


Comprehensive income                                                                                  $   960,342
                                                                                                      ============

Cash dividend declared ($.25 per share)                                                                                   (324,525)
                                          ---------------------------------------------------------                   --------------

June 30, 2003 (unaudited)                    $ 1,589,303   $ 8,768,874  $ (500,446)   $ (2,561,998)                   $ 15,809,922
                                          =========================================================                   ==============

</TABLE>


                                            Accumulated
                                              Other              Total
                                          Comprehensive      Stockholders'
                                              Income            Equity
                                          --------------------------------
Balances, December 31, 2002                 $ 1,417,447      $ 23,580,327

Net income                                                      1,267,300

Other comprehensive income, net of tax

  Unrealized gain on securities                (306,958)         (306,958)



Comprehensive income


Cash dividend declared ($.25 per share)                          (324,525)
                                          --------------------------------

June 30, 2003 (unaudited)                   $ 1,110,489      $ 24,216,144
                                          ================================


See notes to condensed consolidated financial statements.











                                       5
<PAGE>




                    HFB FINANCIAL CORPORATION AND SUBSIDIARY
                 Condensed Consolidated Statements of Cash Flows
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                          Six-months Ended
                                                                               June 30,
                                                                        2003              2002
<S>                                                                <C>                <C>
Operating Activities
    Net cash provided by operating activities                      $    718,210       $  1,387,848
                                                                   ------------       ------------

Investing Activities
    Purchases of securities available for sale                      (15,922,541)       (27,114,005)
    Development costs of assets held for sale                              --              (32,321)
    Proceeds from maturities of securities available for sale        22,153,837         15,579,567
    Proceeds  from sales of securities available for sale             4,955,255              5,745
    Net change in loans                                             (17,030,340)       (15,793,135)
    Proceeds from sales of assets held for sale                         107,657          1,006,125
    Proceeds from life insurance                                           --           (2,735,094)
    Purchases of premises and equipment                                (533,427)           (36,225)
                                                                   ------------       ------------
       Net cash used by investing activities                         (6,269,559)       (29,119,343)
                                                                   ------------       ------------

Financing Activities
    Net change in
      Non interest-bearing, interest-bearing and
       savings deposits                                               3,155,848          5,754,862
      Certificates of deposit                                         1,268,295          6,462,929
      Short term borrowings                                          (1,350,000)              --
    Proceeds of long term debt                                        2,825,000          7,500,000
    Repayment of long term debt                                         (47,164)           (41,587)
    Cash dividends                                                     (324,525)          (260,358)
    Proceeds from exercise of options on common stock                      --               24,655
    Purchase of treasury stock                                             --              (77,731)
                                                                   ------------       ------------
       Net cash provided by financing activities                      5,527,454         19,362,770
                                                                   ------------       ------------

Net Change in Cash and Cash Equivalents                                 (23,895)        (8,368,725)

Cash and Cash Equivalents, Beginning of Period                        4,967,188         13,594,073
                                                                   ------------       ------------

Cash and Cash Equivalents, End of Period                           $  4,943,293       $  5,225,348
                                                                   ============       ============

Additional Cash Flows Information
    Interest paid                                                  $  3,179,585       $  3,904,248
    Income tax paid                                                     639,000            275,437
</TABLE>


See notes to condensed consolidated financial statements.




                                       6


<PAGE>









                            HFB FINANCIAL CORPORATION

        Notes to Condensed Consolidated Financial Statements (Unaudited)

1.   Basis of Presentation

     The  unaudited  condensed   consolidated   financial  information  for  the
     three-month  periods  ended June 30, 2003 and 2002  includes the results of
     operations  of HFB Financial  Corporation  (the  "Company")  and its wholly
     owned  subsidiary  Home Federal  Bank  Corporation  ("Home  Federal" or the
     "Bank"). The accompanying unaudited financial statements have been prepared
     in accordance with accounting  principles  generally accepted in the United
     States  of  America  for  interim   financial   statements   and  with  the
     instructions  to Form  10-QSB.  Certain  information  and note  disclosures
     normally included in the company's annual financial  statements prepared in
     accordance  with  accounting  principles  generally  accepted in the United
     States of America  have been  condensed or omitted.  It is  suggested  that
     these  statements  and  notes be read in  conjunction  with  the  financial
     statements  and notes thereto  included in the Company's  annual report for
     the year ended  December 31, 2002 on Form 10-KSB filed with the  Securities
     and Exchange Commission.

     In the  opinion of  management,  the  financial  information  reflects  all
     adjustments  (consisting only of normal recurring  adjustments),  which are
     necessary for a fair  presentation  of the financial  position,  results of
     operations  and cash flows of the Company but should not be  considered  as
     indicative of results for a full year.

     The condensed  consolidated balance sheet of the Company as of December 31,
     2002 has been derived from the audited  consolidated  balance  sheet of the
     Company as of that date.

2.   Non-performing Loans and Problem Assets

     The following  sets forth the activity in the Company's  allowance for loan
     losses for the three-months ended June 30, 2003 and 2002:


<TABLE>
<CAPTION>

                                                                  (Dollars in thousands)

                                                                    2003          2002
                                                                    ----          ----

<S>                                                               <C>           <C>
     Balance January 1                                            $ 1,192       $   780
     Charge offs                                                      (11)          (65)
     Recoveries
                                                                     --              38
     Provision for loan losses                                        210           222
                                                                  -------       -------
     Balance June 30                                              $ 1,391       $   975
                                                                  =======       =======

     Information on impaired loans is summarized below

     At June 30                                                      2003          2002
                                                                  -------       -------

     Impaired loans with an allowance                             $   604       $ 1,122

     Allowance for impaired loans (included in the Company's
        allowance for loan losses)                                $   134       $   365

</TABLE>

                                       7
<PAGE>

<TABLE>
<CAPTION>

     Six-months ended June 30                                       2003          2002
     ------------------------                                       ----          ----


<S>                                                               <C>           <C>
     Average balance of impaired loans                            $   605       $ 1,521
     Interest income recognized on impaired loans                 $     0       $     0
     Cash-basis interest received                                 $     0       $     0
</TABLE>


3.   Earnings per Share

     Earnings per share (EPS) were computed as follows:

         Three Months Ended                            June 30, 2003
                                         ---------------------------------------
                                          Income     Weighted-Average  Per Share
                                                          Shares          Amount
                                         ---------------------------------------

     Net income                          $ 617,251
                                         ---------

     Basic earnings per share
         Income available to common
           stockholders                  $ 617,251      1,259,488      $   0.49
                                                                       ========

     Effect of dilutive securities


         Stock options                         ---          4,988
                                         ---------      ---------

     Diluted earnings per share
         Income available to common
           stockholders and assumed
           conversions                   $ 617,251      1,264,486      $   0.49
                                         =========      =========      ========


     Three Months Ended                                June 30, 2002
                                         ---------------------------------------
                                          Income     Weighted-Average  Per Share
                                                         Shares         Amount
                                         ---------------------------------------


     Net income                          $ 369,456      1,246,604
                                                        ---------

     Basic earnings per share
         Income available to common
           stockholders                  $ 369,456                     $    0.30
                                                                       =========

     Effect of dilutive securities
         Stock options                         ---          3,124
                                         ---------      ---------

     Diluted earnings per share
         Income available to common

           stockholders and assumed
           conversions                   $ 369,456      1,249,728      $    0.30
                                         =========      =========      =========




4.   Stock Options

     At June 30, 2003 the Company has a stock-based  compensation  plan which is
     described  more  fully in the  notes to the  Company's  December  31,  2002
     audited financial statements contained in the



                                       8

<PAGE>


     Company's  annual  report.  The  Company  accounts  for this plan under the
     recognition  and measurement  principles of APB Opinion No. 25,  Accounting
     for Stock Issued to Employees, and related Interpretations.  No stock-based
     employee  compensation  cost is  reflected  in net  income,  as all options
     granted  under  those  plans  had an  exercise  price  that was equal to or
     greater than the market value of the  underlying  common stock on the grant
     date.  Proforma  information is not presented  since all options granted by
     the Company were granted and vested in periods previous to those presented.
     Therefore, no expense would be recognized for the periods presented had the
     Company  applied  the fair value  provisions  of FASB  statement  No.  123,
     Accounting  for   Stock-Based   Compensation,   to   stock-based   employee
     compensation.

5.   Reclassifications

     Reclassifications  of  certain  amounts in the June 30,  2002  consolidated
     statement  have been made to  conform  to the June 30,  2003  presentation.
     These reclassifications had no effect on net income.

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

Special Note Regarding Forward-Looking Statements

Certain  matters   discussed  in  this  Quarterly  Report  on  Form  10-QSB  are
"forward-looking  statements"  intended  to qualify  for the safe  harbors  from
liability  established by the Private Securities  Litigation Reform Act of 1995.
These forward-looking statements can generally be identified as such because the
context of the  statement  will  include  words such as the Company  "believes",
"anticipates",  "expects",  "estimates" or words of similar  import.  Similarly,
statements  that  describe the Company's  future plans,  objectives or goals are
also forward-looking  statements. Such forward-looking statements are subject to
certain risks and uncertainties, which are described in, close proximity to such
statements and which could cause actual results to differ  materially from those
anticipated as of the date of this report. Shareholders, potential investors and
other  readers  are  urged  to  consider   these   factors  in  evaluating   the
forward-looking statements and are cautioned not to place undue reliance on such
forward-looking  statements.  The forward-looking statements included herein are
only made as of the date of this report and the Company undertakes no obligation
to publicly update such forward-looking  statements to reflect subsequent events
or circumstances.

General:

HFB Financial Corporation, a Tennessee Corporation, was formed in September 1992
at the direction of Home Federal Bank,  Federal  Savings Bank for the purpose of
becoming a holding company for the Bank as part of its conversion from mutual to
stock form.  The  Company's  primary  operation is its  investment in the common
stock of the Bank.

The Bank is principally  engaged in the business of accepting  deposits from the
general public and originating permanent loans, which are secured by one-to-four
family  residential  properties  located  in its  market  area.  The  Bank  also
originates  consumer  loans and  commercial  real estate loans,  and maintains a
substantial   investment  portfolio  of  mortgage-backed  and  other  investment
securities.  During the quarter ended December 31, 2001, the Bank converted from
a federal thrift  charter to a state  chartered  commercial  bank as a means for
management to focus more on commercial lending and other activities  permissible
for commercial banks.

The operations of Home Federal are significantly  influenced by general economic
conditions  and the  monetary  and  fiscal  policies  of  government  regulatory
agencies.  Deposit flows and costs of funds are  influenced by interest rates on
competing   investments  and  prevailing  market  rates  of  interest.   Lending
activities  are affected by the demand for financing real estate and other types
of loans,  which in turn are  influenced  by the  interest  rates at which  such
financing  may be  offered  and other  factors  related  to loan  demand and the
availability of funds.

Financial Condition




                                       9
<PAGE>

The  Corporation's  assets increased by 2.37% to $259.5 million at June 30, 2003
compared to $253.5  million at December 31, 2002.  The majority of this increase
is  reflected in  increases  in loans.  The  increase was financed  primarily by
increases  deposits  and  long-term   borrowings  and  decreases  in  investment
securities.

Investment  securities,  available  for sale,  decreased  $11.8 million to $58.6
million at June 30, 2003 from $70.4  million at December  31, 2002  primarily as
the result of increased prepayments on mortgage backed securities "MBSs".

Loans,  net,  increased by $17.3 million to $183.6 million at June 30, 2003 from
$166.3  million  at  December  31,  2002 as the result of  continued  1-4 family
mortgage loan demand and an increase in commercial real estate loans.  Since the
Bank's  conversion to a commercial  bank,  Management has focused on originating
commercial real estate loans.

At June 30,  2003,  the  allowance  for loan losses was $1.4  million or .76% of
loans  receivable  compared  to $1.2  million  or .71% of  loans  receivable  at
December 31, 2002.

Total deposits increased by $4.4 million to $203.7 million at June 30, 2003 from
$199.3  million at December  31,  2002.  During the three  months ended June 30,
2003,  certificates  of deposit  increased  $1.3  million and NOW  accounts  and
savings deposits increased $3.1 million.

Long-term borrowings increased by $2.8 million to $29.1 million at June 30, 2003
from $26.3  million at  December  31,  2002.  These  proceeds  were from 10 year
advances  and were used to fund the  purchase of  municipal  securities  with an
average maturity of 15 years.

At June 30, 2003,  the Bank met all regulatory  requirements.  Tier I capital to
averaged assets was 8.7%. Tier I capital to  risk-weighted  assets was 14.0% and
total  capital to  risk-weighted  assets was 14.7% at June 30, 2003  compared to
8.4%, 14.5% and 15.3%, respectively, at December 31, 2002.

Results of Operations for the Three-months Ended June 30, 2003 and 2002

Net income  increased by $248,000 to $617,000 for the  three-month  period ended
June 30, 2003 from $369,000 for the three-month  period ended June 30, 2002. The
primary  reasons  for the  increase  were a $268,000  increase  in net  interest
income,  a $49,000  decrease  in the  provision  for loan  losses  and a $68,000
decrease in other  expense  offset by a $9,000  decrease  in other  income and a
$128,000 increase in income tax expense.

Interest income decreased by $159,000 for the three-month  period ended June 30,
2003 as compared to the  three-month  period  ended June 30,  2002,  primarily a
result of lower yields on earning  assets during the three months ended June 30,
2003.

Interest on loans  increased by $220,000 to $3.212  million for the  three-month
period  ended June 30, 2003 as compared  to $2.992  million for the  three-month
period ended June 30, 2002.  This  increase is mainly  attributable  to a higher
average balance of loans during the three months ended June 30, 2003 even though
the  weighted-average  yield was lower than that of the  quarter  ended June 30,
2002.

Interest  on  investment  securities,  other  dividend  income and  interest  on
deposits with financial  institutions  decreased by $379,000 to $671,000 for the
three-month  period ended June 30, 2003 from $1.050 million for the  three-month
period ended June 30,  2002.  This  decrease is primarily  the result of a lower
average balance of investments  during the three months ended June 30, 2003. The
weighted average yield on investments during the same period was also lower than
that of the three months ended June 30, 2002.

Interest  expense on deposits  decreased  by $497,000 to $1.120  million for the
three-month  period ended June 30, 2003 from $1.617 million for the  three-month
period  ended June 30, 2002 as a result of a  significant  drop in rates paid on
deposit accounts.



                                       10
<PAGE>

Interest  expense on  short-term  and  long-term  debt  increased  by $70,000 to
$319,000 for the  three-month  period ended June 30, 2003 from  $249,000 for the
three-month  period  ended June 30,  2002,  primarily  due to a higher  level of
long-term debt outstanding during the three months ended June 30, 2003.

The provision for loan losses  decreased by $49,000 for the  three-month  period
ended June 30, 2003 as compared to the same period in 2002.  The  provision  was
the result of management's  evaluation of the adequacy of the allowance for loan
losses including  consideration  of recoveries of loans previously  charged off,
the  perceived  risk  exposure  among  loan  types,   actual  loss   experience,
delinquency  rates,  and current economic  conditions.  The Bank's allowance for
loan losses as a percent of total loans at June 30, 2003 was 0.76%.

Non-interest  income decreased by $9,000 to $325,000 for the three-month  period
ended June 30, 2003 as compared  to  $334,000  for the same period in 2002.  The
decrease was largely  attributable  to an increase of $67,000 in service charges
on deposits,  an increase of $28,000 in other customer fees offset by a $100,000
decrease in other  income.  The decrease in other income was  primarily due to a
$88,000 decrease in gain on the sale of real estate and equipment.

Non-interest  expense decreased by $68,000 to $1.757 million for the three-month
period ended June 30, 2003 as compared to $1.825  million for the same period in
2002.

Compensation and benefits  increased by $146,000 to $921,000 for the three-month
period  ended June 30, 2003 as compared to $775,000 for the  three-months  ended
June 30, 2002 primarily as the result of annual increases in salaries, wages and
commissions and a $15,000  increase in the cost of funding the Banks  retirement
plan.  In  addition,  the Banks  staffing  was  increased  due to growth and the
opening of a branch office in Jacksboro,  Tennessee in January 2003. At June 30,
2003, the Bank had 75 full time equivalent  employees compared to 63 at June 30,
2002.

Data  processing  expenses  increased by $20,000 to $81,000 for the  three-month
period  ended June 30, 2003 as compared  to $61,000 for the  three-months  ended
June 30,  2002 as the result of the  addition  of a new branch  office and other
specialized programming requests.

Legal and professional fees decreased by $28,000 to $150,000 for the three-month
period ended June 30, 2003 from $178,000 for the  three-month  period ended June
30, 2002  primarily  due to a decrease in legal  expenses  for the  three-months
ended June 30, 2003.

Advertising  expense  increased by $5,000 to $66,000 for the quarter  ended June
30, 2003 compared to $61,000 for the quarter  ended June 30, 2002  primarily due
to a higher level of advertising activity in the current period.

State  deposit  and  franchise  taxes  increased  by $42,000 to $51,000  for the
quarter  ended June 30, 2003  compared to $9,000 for the quarter  ended June 30,
2002. As a result of the Banks recent  conversion  from a thrift to a commercial
bank and determining the differences in the method of taxation between banks and
thrifts,  deposit and franchise taxes were over accrued during the quarter ended
June 30, 2002.

Other  expenses  decreased  by $251,000 to $249,000 for the  three-month  period
ended June 30, 2003 from  $500,000  for the  three-month  period  ended June 30,
2002,  primarily  due to a $308,000  decrease  in expenses  associated  with the
acquisition and sale of other real estate owned, a $20,000  increase in printing
supplies  resulting  from a  systems  conversion,  a $24,000  increase  in other
services and fees and a $15,000  increase in telephone  expense due to duplicate
service used during the conversion to a new system.

Income tax expense increased by $128,000 to $289,000 for the three-month  period
ended June 30, 2003  compared to $161,000  for the  three-months  ended June 30,
2002 due a higher  level  of  taxable  income.  The  effective  tax rate for the
Three-months  ended  June 30,  2003 was 31.92%  compared  to 30.44% for the same
period in 2002.

Results of Operations for the Six-months Ended June 30, 2003 and 2002


                                       11
<PAGE>

Net income  increased  by $420,000 to $1.267  million for the  six-month  period
ended June 30, 2003 from $847,000 for the six-month  period ended June 30, 2002.
The primary  reasons for the increase  were a $788,000  increase in net interest
income,  a $12,000  decrease  in the  provision  for loan  losses  and a $22,000
increase in other income  offset by a $221,000  increase in other  expense and a
$181,000 increase in income tax expense.

Interest  income  decreased by $65,000 for the  six-month  period ended June 30,
2003 as compared to the six-month period ended June 30, 2002, primarily a result
of lower yields on earning assets during the six months ended June 30, 2003.

Interest on loans  increased  by $476,000  to $6.392  million for the  six-month
period  ended June 30,  2003 as compared  to $5.916  million  for the  six-month
period ended June 30, 2002.  This  increase is mainly  attributable  to a higher
average  balance of loans  during the six months ended June 30, 2003 even though
the  weighted-average  yield was lower than that of the  quarter  ended June 30,
2002.

Interest  on  investment  securities,  other  dividend  income and  interest  on
deposits with financial institutions decreased by $541,000 to $1.470 million for
the six-month  period ended June 30, 2003 from $2.011  million for the six-month
period ended June 30,  2002.  This  decrease is primarily  the result of a lower
average  balance of  investments  during the six months ended June 30, 2003. The
weighted average yield on investments during the same period was also lower than
that of the six months ended June 30, 2002.

Interest  expense on deposits  decreased  by $999,000 to $2.340  million for the
six-month  period  ended June 30,  2003 from $3.339  million  for the  six-month
period  ended June 30, 2002 as a result of a  significant  drop in rates paid on
deposit accounts.

Interest  expense on  short-term  and  long-term  debt  increased by $145,000 to
$621,000  for the  six-month  period  ended June 30, 2003 from  $476,000 for the
six-month  period  ended  June 30,  2002,  primarily  due to a  higher  level of
long-term debt outstanding during the six months ended June 30, 2003.

The  provision  for loan losses  decreased by $12,000 for the  six-month  period
ended June 30, 2003 as compared to the same period in 2002.  The  provision  was
the result of management's  evaluation of the adequacy of the allowance for loan
losses including  consideration  of recoveries of loans previously  charged off,
the  perceived  risk  exposure  among  loan  types,   actual  loss   experience,
delinquency  rates,  and current economic  conditions.  The Bank's allowance for
loan losses as a percent of total loans at June 30, 2003 was 0.76%.

Non-interest  income  increased by $22,000 to $639,000 for the six-month  period
ended June 30, 2003 as compared  to  $617,000  for the same period in 2002.  The
decrease was mainly  attributable  to an increase of $127,000 in service charges
on deposits,  an increase of $25,000 in other customer fees offset by a $130,000
decrease in other  income.  The decrease in other income was  primarily due to a
$108,000 decrease in gain on the sale of real estate and equipment.

Non-interest  expense  increased by $221,000 to $3.490 million for the six-month
period ended June 30, 2003 as compared to $3.269  million for the same period in
2002.

Compensation  and  benefits  increased  by  $381,000  to $1.809  million for the
six-month  period  ended June 30,  2003 as  compared  to $1.428  million for the
six-months  ended June 30, 2002  primarily as the result of annual  increases in
salaries,  wages and commissions  and a $30,000  increase in the cost of funding
the Banks retirement plan. In addition,  the Banks staffing was increased due to
growth and the opening of a branch  office in  Jacksboro,  Tennessee  in January
2003. At June 30, 2003, the Bank had 78 full time equivalent  employees compared
to 63 at June 30, 2002.

Data  processing  expenses  increased by $23,000 to $144,000  for the  six-month
period ended June 30, 2003 as compared to $121,000 for the six-months ended June
30,  2002 as the  result  of the  addition  of a new  branch  office  and  other
specialized programming requests.



                                       12

<PAGE>

Legal and  professional  fees decreased by $43,000 to $264,000 for the six-month
period ended June 30, 2003 from $307,000 for the six-month period ended June 30,
2002 primarily due to a decrease in legal expenses for the six-months ended June
30, 2003.

Advertising  expense increased by $11,000 to $132,000 for the quarter ended June
30, 2003 compared to $121,000 for the quarter ended June 30, 2002  primarily due
to a higher level of advertising activity in the current period.

State  deposit and  franchise  taxes  increased  by $36,000 to $103,000  for the
quarter  ended June 30, 2003  compared to $67,000 for the quarter ended June 30,
2002. As a result of the Banks recent  conversion  from a thrift to a commercial
bank and determining the differences in the method of taxation between banks and
thrifts,  deposit and franchise taxes were over accrued during the quarter ended
June 30, 2002.

Other expenses  decreased by $184,000 to $564,000 for the six-month period ended
June 30,  2003 from  $748,000  for the  six-month  period  ended June 30,  2002,
primarily due to a $288,000 decrease in expenses associated with the acquisition
and sale of other real estate  owned,  a $33,000  increase in printing  supplies
resulting from a systems  conversion,  a $30,000  increase in other services and
fees and a $26,000 increase in telephone  expense due to duplicate  service used
during the conversion to a new system.

Income tax expense  increased by $181,000 to $571,000 for the  six-month  period
ended June 30, 2003 compared to $390,000 for the six-months  ended June 30, 2002
due a higher level of taxable income.  The effective tax rate for the six-months
ended June 30, 2003 was 31.09% compared to 31.55% for the same period in 2002.

Critical Accounting Policies


Allowance for Loan Losses

The  allowance  for loan losses is  established  as losses are estimated to have
occurred through a provision for loan losses charged to income.  Loan losses are
charged against the allowance when management believes the uncollectibility of a
loan balance is confirmed.  Subsequent  recoveries,  if any, are credited to the
allowance.

The allowance for loan losses is evaluated on a regular basis by management  and
is based upon management's periodic review of the collectibility of the loans in
light of  historical  experience,  the nature and volume of the loan  portfolio,
adverse  situations that may affect the borrower's  ability to repay,  estimated
value of any  underlying  collateral and prevailing  economic  conditions.  This
evaluation  is  inherently   subjective  as  it  requires   estimates  that  are
susceptible to significant revision as more information becomes available.

A loan is considered  impaired when, based on current information and events, it
is probable  that the Bank will be unable to collect the  scheduled  payments of
principal or interest  when due according to the  contractual  terms of the loan
agreement.  Factors  considered by management in determining  impairment include
payment status,  collateral  value and the  probability of collecting  scheduled
principal and interest  payments when due. Loans that  experience  insignificant
payment delays and payment shortfalls  generally are not classified as impaired.
Management  determines the significance of payment delays and payment shortfalls
on a case-by-case  basis,  taking into  consideration  all of the  circumstances
surrounding  the loan and the borrower,  including the length of the delay,  the
reasons for the delay, the borrower's prior payment record and the amount of the
shortfall in relation to the principal and interest owed. Impairment is measured
on a  loan-by-loan  basis for commercial  and  construction  loans by either the
present value of expected future cash flows  discounted at the loan's  effective
interest  rate,  the  loan's  obtainable  market  price or the fair value of the
collateral if the loan is collateral dependent.

                            HFB FINANCIAL CORPORATION

                                     PART II

                                OTHER INFORMATION


                                       13

<PAGE>

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

          No matters  were  submitted to a vote of Security  Holders  during the
          quarter ended June 30, 2003.

Item 5. Other Information

             None

Item 6. Exhibits and Reports on Form 8-K

          a.   Exhibits

               31.1 CEO  Certification  under Section 302 of the  Sarbanes-Oxley
                    Act

               31.2 CFO  Certification  under Section 302 of the  Sarbanes-Oxley
                    Act

               32.1 CEO  Certification  under Section 906 of the  Sarbanes-Oxley
               Act

               32.2 CFO  Certification  under Section 906 of the  Sarbanes-Oxley
               Act

          b.   Reports on Form 8-K

               On August 11, 2003, the Company filed a form 8-K announcing  that
               earnings  for the quarter  ended June 30,  2003 were  released on
               August 8, 2003.

Item 7. Controls and Procedures

A review and evaluation was performed by the Company's management, including the
Company's Chief Executive  Officer (the "CEO") and Chief Financial  Officer (the
"CFO"),  of the  effectiveness  of the design  and  operation  of the  Company's
disclosure  controls  and  procedures  as of a date  within 90 days prior to the
filing of this quarterly report pursuant to Rule 13a-14 of the Securities Act of
1934.  Based on that review and evaluation,  the CEO and CFO have concluded that
the  Company's  current  disclosure  controls  and  procedures,  as designed and
implemented,  were  effective.  There  have been no  significant  changes in the
Company's internal controls or in other factors that could significantly  affect
the Company's  internal  controls  subsequent  to the date of their  evaluation.
There were no significant  material weaknesses  identified in the course of such
review and evaluation and,  therefore,  no corrective measures were taken by the
Company.


                            HFB FINANCIAL CORPORATION

                                   Signatures

                                       14
<PAGE>

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  in its  behalf by the
undersigned, thereunto duly authorized.



                                                  HFB FINANCIAL CORPORATION


                                                  By:  /s/ David B. Cook
                                                       -------------------------
                                                       David B. Cook
                                                       President and
                                                       Chief Executive Officer


                                                  By: /s/ Stanley Alexander, Jr.
                                                      --------------------------
                                                      Stanley Alexander, Jr.
                                                      Chief Financial Officer




Dated August 11, 2003



                                       15