UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                  FORM 10-QSB


                 [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


               For the quarterly period ended September 30, 1999


                                       OR

              [ ] 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 November 8, 1999 was 1,100,985.

There are a total of 14 pages filed in this document.
<PAGE>

                            HFB FINANCIAL CORPORATION

                                   I N D E X
                                   ---------

                                                                        PAGE NO
                                                                        -------

PART I - FINANCIAL INFORMATION

  ITEM  1.  FINANCIAL STATEMENTS

                 Consolidated Balance Sheet                                 3

                 Consolidated Statement of Income                           4

                 Consolidated Statement of Stockholders' Equity             5

                 Consolidated Statement of Cash Flows                       6

                 Notes to Consolidated Financial Statements               7-8

  ITEM  2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS                8-12

  ITEM 3.   ASSET/LIABILITY MANAGEMENT - QUALITATIVE AND
            QUANTITATIVE DISCLOSURES ABOUT MARKET RISK.                    12

PART II - OTHER INFORMATION                                                13


SIGNATURES                                                                 14

                                       2
<PAGE>
                    HFB FINANCIAL CORPORATION AND SUBSIDIARY
                           Consolidated Balance Sheet
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                 SEPTEMBER 30,      JUNE 30,
                                                                     1999             1999

ASSETS

<S>                                                              <C>              <C>
     Cash and cash equivalents                                     $4,096,818       $3,573,139
     Trading securities                                               980,047        1,014,808
     Investment securities
        Available for sale                                         37,285,150       37,298,664
        Held to maturity                                           22,423,486       21,997,870
                                                                 ------------     ------------
             Total investment securities                           59,708,636       59,296,534
     Loans                                                        118,375,035      121,953,392
        Allowance for loan losses                                    (647,403)      (1,211,594)
                                                                 ------------     ------------
             Net loans                                            117,727,632      120,741,798
     Premises and equipment                                         2,908,447        2,432,475
     Federal Home Loan Bank stock                                   1,346,800        1,346,800
     Interest receivable                                            1,872,573        1,821,970
     Other Assets                                                     284,840          188,876
                                                                 ------------     ------------
             Total assets                                        $188,925,793     $190,416,400
                                                                 ============     ============
LIABILITIES
     Deposits
        Interest bearing                                         $150,368,686     $152,971,687
        Non-interest bearing                                        1,964,521        1,016,069
                                                                 ------------     ------------
          Totals                                                  152,333,207      153,987,756
     Short term borrowings                                          5,525,000        6,500,000
     Long term debt                                                10,580,657       10,597,501
     Interest payable                                               1,359,226          733,041
     Other liabilities                                              1,201,436          847,055
                                                                 ------------     ------------
             Total liabilities                                    170,999,526      172,665,353
                                                                 ------------     ------------
STOCKHOLDERS' EQUITY
     Issued and outstanding - 1,303,031 shares                      1,303,031        1,303,031
     Additional paid-in capital                                     6,303,419        6,303,419
     Less: Common stock acquired by Rabbi trusts for deferred
                Compensation plans                                   (611,329)        (639,767)
     Treasury stock, at cost, 202,046 shares                       (2,030,955)      (2,030,955)
     Retained earnings                                             13,855,005       13,501,715
     Accumulated other comprehensive income, net unrealized
       gain on securities available for sale                         (892,904)        (686,396)
                                                                 ------------     ------------
          Total stockholders' equity                               17,926,267       17,751,047
                                                                 ------------     ------------
          Total liabilities and stockholders' equity             $188,925,793     $190,416,400
                                                                 ============     ============
</TABLE>
See notes to consolidated financial statements.

                                       3
<PAGE>
                    HFB FINANCIAL CORPORATION AND SUBSIDIARY
                        CONSOLIDATED STATEMENT OF INCOME
                                   (Unaudited)

                                                      THREE-MONTHS ENDED
                                                         SEPTEMBER 30,
                                                      1999         1998
INTEREST INCOME
   Loans receivable                              $2,547,663    $2,508,285
   Investment securities                            945,746       770,909
   Other dividend income                             10,156        27,622
   Deposits with financial institutions               2,411        19,621
                                                -----------   -----------
            Total interest income                 3,505,976     3,326,437
                                                -----------   -----------
INTEREST EXPENSE
   Deposits                                       1,767,682     1,830,751
   Short term borrowings                             80,624        94,925
   Long term debt                                   142,805        84,137
                                                -----------   -----------
            Total interest expense                1,991,111     2,009,813
                                                -----------   -----------

NET INTEREST INCOME                               1,514,865     1,316,624
   Provision for loan losses                       (474,486)       68,299
                                                -----------   -----------
NET INTEREST INCOME AFTER
  PROVISION FOR LOAN LOSSES                       1,989,351     1,248,325
                                                -----------   -----------
OTHER INCOME
   Service charges for deposit accounts              94,031        93,306
   Other customer fees                               13,919        19,777
   Net gain on trading securities                   (55,506)     (200,110)
   Other income                                       6,617         6,342
                                                -----------   -----------
            Total other income                       59,061       (80,685)
                                                -----------   -----------
OTHER EXPENSES
   Salaries and employee benefits                   491,522       439,473
   Net occupancy expenses                            54,429        46,781
   Equipment expenses                                50,936        52,867
   Data processing fees                              43,625        67,386
   Deposit insurance expense                         22,427        21,654
   Legal and professional fees                       60,797        52,146
   Advertising                                       54,515        26,163
   State franchise and deposit taxes                 38,580        31,725
   Other expenses                                   238,507       162,614
                                                -----------   -----------
            Total other expenses                  1,055,338       900,809
                                                -----------   -----------

INCOME BEFORE INCOME TAX                            993,074       266,831
   Income tax expense                               408,577       102,487
                                                -----------   -----------
NET INCOME                                         $584,497      $164,344
                                                ===========   ===========

BASIC EARNINGS PER SHARE                              $0.53         $0.15
DILUTED EARNINGS PER SHARE                            $0.53         $0.15

See notes to consolidated financial statements.

                                        4
<PAGE>

                    HFB FINANCIAL CORPORATION AND SUBSIDIARY
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                      Three-months ended September 30, 1999
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                         ACCUMULATED
                                     ADDITIONAL                                                             OTHER        TOTAL
                            COMMON     PAID-IN        RABBI      TREASURY    COMPREHENSIVE  RETAINED    COMPREHENSIVE STOCKHOLDERS'
                            STOCK      CAPITAL        TRUSTS       STOCK        INCOME      EARNINGS        INCOME       EQUITY
                          ---------------------------------------------------------------------------------------------------------
<S>                       <C>          <C>          <C>         <C>           <C>          <C>           <C>          <C>
BALANCES, JUNE 30, 1999   $1,303,031   $6,303,419   $(639,767)  $(2,030,955)               $13,501,715   $(686,396)   $17,751,047

Net income                                                                    $584,497         584,497                    584,497

Other Comprehensive
  income -
Net change in
  unrealized gain
  on securities
  Available for sale                                                          (206,508)                   (206,508)      (206,508)
                                                                              --------
Comprehensive Income                                                          $377,989
                                                                              ========

Dividends declared                                                                            (231,207)                   (231,207)

Net change in fair
  value of rabbi
  trust shares                                         28,438                                                               28,438

                          --------------------------------------------------               ---------------------------------------
BALANCES,
 SEPTEMBER 30, 1999       $1,303,031   $6,303,419   $(611,329)  $(2,030,955)               $13,855,005   $(892,904)    $17,926,267
                          ==================================================               =======================================
</TABLE>

                                       5
<PAGE>
                    HFB FINANCIAL CORPORATION AND SUBSIDIARY

                      CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                             THREE-MONTHS ENDED
                                                                                SEPTEMBER 30,
                                                                             1999            1998
OPERATING ACTIVITIES
<S>                                                                       <C>             <C>
    Net cash provided by operating activities                             $1,658,218      $1,362,107
                                                                        ------------     -----------
INVESTING ACTIVITIES
  Purchases of securities available for sale                              (1,433,217)     (1,506,953)
  Proceeds from maturities of securities available for sale                1,107,699       1,713,380
  Purchases of securities held to maturity                                (1,490,313)       (505,144)
  Proceeds from sales of securities available for sale                            --         520,648
  Proceeds from maturities of securities held to maturity                  1,071,853       1,156,924
  Net change in loans                                                      3,014,166      (4,243,426)
  Purchases of premises and equipment                                       (527,127)        (80,683)
                                                                        ------------    ------------
    Net cash used by investing activities                                  1,743,061      (2,945,254)
                                                                        -------------   ------------
FINANCING ACTIVITIES
  Net change in
    Non interest-bearing, interest-bearing and
      saving  deposits                                                       264,855          75,858
    Certificates of deposit                                               (1,919,404)        505,033
    Short term borrowings                                                   (975,000)             --
   Repayment of long-term debt                                               (16,844)        (15,545)
  Cash dividends                                                            (231,207)       (239,723)
                                                                        ------------    ------------
    Net cash provided by financing activities                             (2,877,600)        325,623
                                                                        ------------    ------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                      523,679      (1,257,524)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                             3,573,139       6,947,148
                                                                        ------------    ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                  $4,096,818      $5,689,624
                                                                        ============    ============
ADDITIONAL CASH FLOWS INFORMATION
  Interest paid                                                           $1,141,498      $1,066,203
  Income tax paid                                                            130,505          21,000
</TABLE>
See notes to consolidated financial statements.

                                       6
<PAGE>
                            HFB FINANCIAL CORPORATION

             Notes to Consolidated Financial Statements (Unaudited)

1.   BASIS OF PRESENTATION

         The unaudited  consolidated  financial  information for the three month
         periods  ended  September  30,  1999 and 1998  includes  the results of
         operations of HFB Financial  Corporation (the "Company") and its wholly
         owned  subsidiary  Home  Federal  Bank,  Federal  Savings  Bank  ("Home
         Federal"  or  the  "Bank").   The  accompanying   unaudited   financial
         statements  have been prepared in accordance  with  generally  accepted
         accounting  principles  for interim  financial  statements and with the
         instructions to Form 10-QSB.  These statements and notes should be read
         in conjunction with the financial statements and notes thereto included
         in the Company's annual report for the year ended June 30, 1999 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 results of operations for such
         periods but should not be  considered  as  indicative  of results for a
         full year.

2.   ACCOUNTING PRONOUNCEMENTS

         The  Financial Accounting Standards Board has issued Statement No. 133,
         "Accounting  for Derivative Instruments and Hedging activities",  which
         requires companies  to record derivatives on the balance sheet at their
         fair  value.  Statement  No. 133 was  to be  effective  for the Company
         beginning  in fiscal 2000,  but was  amended by SFAS No. 137.  SFAS No.
         137,    "Accounting    for   Derivative    Instruments   and    Hedging
         Activities-Deferral of the Effective Date of FASB Statement No. 133  an
         amendment of FASB  Statement No. 133"  deferred the effective  date  of
         the adoption of SFAS No. 133 to fiscal years  beginning after  June 15,
         2000.  SFAS No. 137 is not  expected to have a material  impact  on the
         Company's financial position or results of operations.

3.   NONPERFORMING LOANS AND PROBLEM ASSETS

         The following sets forth the activity in the Bank's  allowance for loan
         losses for the three-months ended September 30, 1999 and 1998:

                                                          (Dollars in thousands)

                                                             1999       1998
                                                             ----       ----

Balance July 1                                             $1,212       $973
Charge offs                                                   (92)        (3)
Recoveries                                                      1
Provision for loan losses                                    (474)        68
                                                            -----         --
Balance September 30                                         $647     $1,038

Information on impaired loans is summarized below

AT SEPTEMBER 30                                              1999
                                                             ----

Impaired loans with an allowance                             $467

Allowance for impaired loans (included in the Company's      $214
    Allowance for loan losses)

                                       7
<PAGE>

THREE-MONTHS ENDED SEPTEMBER                                 1999
                                                             ----

Average balance of impaired loans                          $1,224
Interest income recognized on impaired loans                  $55
Cash-basis interest received                                  $55


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 is the holding company of Home Federal Bank,  Federal
Savings Bank a federal stock savings bank located in Middlesboro,  Kentucky. The
Corporation's  primary  operation is its'  investment in the common stock of the
Bank. All references to the Corporation include 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.

The  operations  of  Home  Federal,  and  savings  institutions  generally,  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.  Just as the  Bank's
operations are influenced by regulatory authorities, so are its liquidity levels
and capital resources.

Home  Federal  Bank  has  branch  offices  in  Harlan,  Kentucky  and  Tazewell,
Tennessee.  On October 15, 1999, the Bank successfully  acquired a National City
Bank branch location in Harlan, Kentucky from National City Bank of Kentucky for
a premium of $459,000.  The acquisition included  approximately $17.1 million in
deposits.

                                       8
<PAGE>

FINANCIAL CONDITION

The  Corporation's  assets  decreased by .78% to $188.9 million at September 30,
1999 compared to $190.4 million at June 30, 1999.

Cash and cash  equivalents  increased by $524,000 to $4.097 million at September
30, 1999 from $3.573  million at June 30, 1999.  This increase was primarily due
to anticipated cash needs for the year 2,000.

The Corporation  maintains a portfolio of  trading-account  securities  which is
comprised of common stock of other  financial  institutions.  The balance of the
portfolio was $980,000 at September 30, 1999 compared to $1.014  million at June
30,  1999.  Most of this  decrease was  attributable  to a decline in the market
value of the underlying securities.

The Corporation's loan portfolio  decreased by $3.6 million to $118.4 million at
September 30, 1999 from $122.0 million at June 30, 1999 due to a decline in loan
demand  and the  repayment  of  $904,000  of  impaired  loans.  The  Corporation
continues to maintain a high percentage of its loan portfolio in adjustable-rate
residential mortgages.

At September  30, 1999,  the  allowance  for loan losses was $647,000 or .55% of
loans  receivable  compared to $1.2 million or .99% of loans  receivable at June
30, 1999. During the three-months  ended September 30, 1999,  Management reduced
the  allowance by $474,000 due to the  repayment of $904,000 on impaired  loans.
Total  non-performing  assets were $973,000 or .82% of total loans at the end of
the same period as compared to $1.9  million or 1.56% of total loans at June 30,
1999. The decrease in non-performing loans was primarily due to the repayment of
$874,000 on several  problem real estate loans to one borrower that totaled $1.4
million.  Over the past year,  Management has  aggressively  worked to help this
borrower find new financing with another lender. This refinancing was the source
of the $874,000 principal  reduction and reduced the borrowers  outstanding debt
to $455,000.  At September  30, 1999,  $99,000 was included in the allowance for
loan losses, specifically as a reserve for the remaining loans to this borrower.

Premises and equipment  increased by $476,000 to $2.908 million at September 30,
1999  compared to $2.432  million at June 30,  1999,  primarily  due to progress
payments  made on the Bank's new  operations  center,  which is currently  under
construction.

Total deposits decreased by $1.7 million to $152.3 million at September 30, 1999
from $154.0 million at June 30, 1999.  During the  three-months  ended September
30, 1999,  certificates  of deposit  decreased $1.9 million,  primarily due to a
higher degree of  competitiveness  in the local market. NOW accounts and savings
deposits increased $200,000.

Short- term  borrowings  decreased  $975,000 to $5.525  million at September 30,
1999 from $6.5  million at June 30, 1999  primarily  due to the  decrease in the
loan portfolio during the period.

The  Bank's  regulatory  liquidity  ratio was  39.3% at  September  30,  1999 as
compared to 27.4% at June 30, 1999.  At September  30, 1999 the Bank met all the
regulatory  capital  requirements to be considered "well capitalized" under bank
regulations.  Tangible,  core and risk-based  capital ratios were 9.4%, 9.4% and
23.3%  respectively  at September  30, 1999 as compared to 9.1%,  9.1% and 22.5%
respectively, at June 30, 1999.

RESULTS OF OPERATIONS FOR THE THREE-MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

Net income  increased by $420,000 to $584,000 for the  three-month  period ended
September 30, 1999 from $164,000 for the three-month  period ended September 30,
1998.  The primary  reasons  for the  increase  were a $198,000  increase in net
interest income, a $543,000  decrease in provision for loan losses,  an increase
of  $140,000 in  non-interest  income,  an increase of $155,000 in  non-interest
expense, and a $306,000 increase in income tax expense.

Net  interest  income  increased by $198,000  for the  three-month  period ended
September  30, 1999 as compared to the  three-month  period ended  September 30,
1998, as the result of a higher volumes and the  recognition of interest  income
on several non-accrual loans.

                                       9
<PAGE>
Interest on loans  increased  by $39,000 to $2.547  million for the  three-month
period  ended  September  30,  1999  as  compared  to  $2.508  million  for  the
three-month   period  ended   September  30,  1998.   This  increase  is  mainly
attributable  to the  collection  of $55,000 in interest  income on  non-accrual
loans.

Interest  on  investment  securities  and other  dividend  income  increased  by
$157,000 to $956,000 for the  three-month  period ended  September 30, 1999 from
$799,000 for the  three-month  period ended September 30, 1998. This increase is
primarily the result of higher average balances during the period.

Interest on deposits with other financial  institutions  decreased by $18,000 to
$2,000 for the three-month  period ended September 30, 1999 from $20,000 for the
three-month  period ended  September 30, 1998  primarily due to a lower level of
interest-bearing cash balances.

Interest on deposits  decreased by $63,000 to $1.768 million for the three-month
period ended September 30, 1999 from $1.831 million for the  three-month  period
ended September 30, 1998 as a result of a lower cost of funds.

Interest on short term  borrowings  and long term debt  increased  by $44,000 to
$223,000 for the  three-month  period ended September 30, 1999 from $179,000 for
the  three-month  period ended September 30, 1998 primarily due to higher levels
of long-term  borrowing.  Long-term borrowings increased $5.0 million during the
quarter ended March 31, 1999.

The  provision for loan losses  decreased  $543,000 for the  three-month  period
ended  September  30, 1999 as  compared  to the same period in 1998.  During the
quarter  ended  September  30, 1999, a total of $904,000 of impaired  loans were
paid off.  The amount  charged off for those loans was  significantly  less than
what was  specifically  reserved  for these  loans and  resulted  in a  $474,000
reduction in the overall allowance. 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 September 30, 1999 was .55%.

The Corporation's  non-interest  income increased by $140,000 to $59,000 for the
three-month  period ended  September  30, 1999 as compared to $(81,000)  for the
same period in 1998.  The increase was primarily  attributable  to a decrease in
trading  account  realized and  unrealized  losses of $145,000 and a decrease of
$6,000 in other fee income.  The  Corporation  has a portfolio of  approximately
$1.0 million in common stock of other financial  institutions.  The market value
of these stocks has fluctuated substantially during the past year, due to market
volatility.

Non-interest expense increased by $155,000 to $1.055 million for the three-month
period ended  September  30, 1999 as compared to $900,000 for the same period in
1998.  Compensation  and  benefits  increased  by  $52,000 to  $491,000  for the
three-month period ended September 30, 1999 as compared to $439,000 for the same
period in 1998. This increase is primarily attributable to a decrease of $49,000
in the portion of salaries and wages that are being deferred as loan origination
costs net of amortization, an increase in compensation of $30,000 and a decrease
of $27,000 in employee retirement expense.

Occupancy  expense  increased  by $7,000 to $54,000 for the  three-month  period
ended  September  30,  1999  compared  to  $47,000  for the same  period in 1998
primarily due to higher maintenance expense.

Data processing fees decreased by $23,000 to $44,000 for the three-month  period
ended September 30, 1999 from $67,000 for the three-month period ended September
30, 1998, primarily due to conversion expenses incurred during the quarter ended
September 30, 1998.

Advertising  expense increased by $29,000 to $55,000 for the three-month  period
ended  September  30, 1999 as compared  to $26,000  for the  three-months  ended
September 30, 1998,  primarily due to a higher level of  advertising  during the
period.

                                       10
<PAGE>
State franchise and deposit taxes increased by $7,000 to $39,000 for the quarter
ended September 30, 1999 compared to $32,000 for the quarter ended September 30,
1998 primarily due to a higher level of deposits.

Other expenses increased by $76,000 to $239,000 for the three-month period ended
September 30, 1999 from $163,000 for the three-month  period ended September 30,
1998  primarily  as the result of an  increase  of $35,000 in other real  estate
owned expense.  The remaining net increase was due to increases in various other
expense  categories,  primarily  postage  expense,  telephone  expense and check
imaging services.

Income tax expense increased by $306,000 to $408,000 for the three-month  period
ended  September  30,  1999  compared  to $102,000  for the  three-months  ended
September 30, 1998 due to higher earnings.

YEAR 2000

The Company has completed an assessment of its computer  systems,  including its
information and  non-information  systems,  and identified those systems that it
believes  could be  affected by the Year 2000 issue.  It has also  developed  an
implementation  plan to address  the issue and has tested  the  majority  of its
internal mission critical hardware and software systems to determine if they are
Year 2000 compliant.  While the Company has exposure to several risks related to
Year 2000,  the primary risk to the Company of not  complying  with Year 2000 is
the  potential  inability  to  correctly  process and record  customer  loan and
deposit transactions.

The Company believes that it has met the requirements that have been established
for the  banking  industry  by the  Federal  Financial  Institution  Examination
Council  "FFIEC".  These  standards  require  that a  series  of  procedures  be
performed by financial institutions within established time frames to reduce the
risk of noncompliance  with the Year 2000 issue. While the Company believes that
it has met all of the FFIEC  requirements  and that its mission critical systems
are in compliance with Year 2000, it can give no assurance that this will occur.

The Company has developed a business resumption contingency plan that would take
effect if its  internal  systems,  or the systems of those  material  vendors on
which it is reliant, would not be compliant with Year 2000 requirements.

The  Company  outsources  a  significant  portion of its data  processing  to an
outside  provider.  A worst case scenario for the Company  would likely  involve
non-compliance  with Year 2000 by its primary  data  processor  in such a manner
that would leave the Company in a position where it could not correctly  process
and  record  customer  loan and  deposit  transactions.  While the  Company  has
successfully  tested its primary data processing system for compliance with Year
2000, it cannot  guarantee that the systems of this and other companies on which
the  Company's  systems  rely will be timely  converted  and not have a material
effect on the Company.  Other parties whose year 2000  compliance may effect the
Company  include the Federal Home Loan Bank of Cincinnati,  the Federal  Reserve
Bank of Cincinnati, vendors who support loan and deposit documentation software,
the  operations  of the  Company's  ATM  network,  and these third  parties have
indicated their  compliance or intended  compliance.  Where it is possible to do
so, the Company has performed testing with these third parties. Where testing is
not possible,  the Company will rely on certifications  from vendors and service
providers.  A failure  to resolve  year 2000  issues by  governmental  agencies,
utilities  and  telecommunications  companies  on whom the Company is  dependent
could also  adversely  effect the Company.  There can be no assurances  that the
Company's year 2000 plan will  effectively  address the year 2000 issue, or that
the impact of any  failure of the  Company's  third-party  vendors  and  service
providers  to be year  2000  compliant  will not have a  material  effect on the
Company's business, financial condition or results of operations.

The Company  has,  through  September  30, 1999,  incurred  certain  costs,  not
including  salary  expense,  related to Year 2000. A portion of these costs were
incurred in connection with the recent  conversion of the Company's primary data
processing system. Costs incurred through September 30, 1999 total approximately
$326,000 and include $205,000 for equipment,  $65,000 for software,  $12,000 for
de-conversion  fees that were paid to the  previous  data  processing  provider,
$38,000 for training  and $6,000 for the initial  assessment.  At September  30,
1999, the

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<PAGE>

Company   expects  to  incur   additional   costs   associated  with  Year  2000
preparedness,  but does not expect  these costs to be material to the  Company's
financial condition or results of operations.

The Company does not have, at September 30, 1999,  any material  commitments  to
purchase  new  equipment,  software  or to incur  material  costs to modify  its
existing  system for year 2000 compliance and does not believe that any material
amounts of its existing computer  hardware or software is impaired.  The Company
has assessed the impact of Year 2000 on its  commercial-lending  customers,  and
believes  that the  impact,  in  terms  of  potential  credit  exposure,  is not
material. The majority of the Company's commercial lending portfolio consists of
commercial  real  estate  loans that are made to  companies  that are not highly
technology intensive.

ASSET/LIABILITY  MANAGEMENT - QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT
MARKET RISK

Key components of a successful  asset/liability  strategy are the monitoring and
managing of interest rate  sensitivity  of both the  interest-earning  asset and
interest-bearing  liability  portfolios.   Home  Federal  has  employed  various
strategies  intended to minimize  the  adverse  effect of interest  rate risk on
future  operations  by  providing  a better  match  between  the  interest  rate
sensitivity of its assets and liabilities.  In particular, the Bank's strategies
are intended to stabilize  net interest  income for the  long-term by protecting
its interest rate spread against  increases in interest  rates.  Such strategies
include the origination of adjustable-rate mortgage loans secured by one-to-four
family  residential  real estate and the origination of consumer and other loans
with greater interest rate sensitivities than long-term,  fixed-rate residential
mortgage loans. Although customers typically prefer fixed-rate mortgage loans in
a low interest rate environment, Home Federal has been successful in originating
adjustable-rate  loans in recent  years.  In addition,  the Bank has used excess
funds to invest in  various  short-term  investments  including  mortgage-backed
securities  with terms of seven  years or less,  U.S.  Government  Treasury  and
Agency  securities  with  terms of  fifteen  years or less and other  short-term
investments.

Asset/liability  management in the form of structuring cash instruments provides
greater flexibility to adjust exposure to interest rates. During periods of high
interest rates,  management believes it is prudent to offer competitive rates on
short-term deposits and less competitive rates for long-term  liabilities.  This
posture  allows the Bank to benefit  quickly  from  declines in interest  rates.
Likewise,  offering more competitive rates on long-term  deposits during the low
interest rate periods allows the Bank to extend the re-pricing  and/or  maturity
of its liabilities thus reducing its exposure to rising interest rates.

The Bank, other than its investment  securities trading account, does not have a
trading  account  for any class of  financial  instrument  nor does it engage in
hedging activities or purchase high-risk  derivative  instruments.  Furthermore,
the Bank is not  subject to foreign  currency  exchange  rate risk or  commodity
price risk.

The Bank uses interest rate sensitivity analysis to measure its interest rate by
computing  changes  in net  portfolio  value  of its  cash  flows  from  assets,
liabilities  and  off-balance  sheet  items in the  event of a range of  assumed
changes in market  interest  rates.  Net portfolio  value  represents the market
value of  portfolio  equity and is equal to the market value of assets minus the
market value of liabilities,  with adjustments made for off-balance sheet items.
This analysis assesses the risk of loss in market risk sensitive  instruments in
the event of a sudden and sustained 100 to 400 basis point  increase or decrease
in market interest rates with no effect given to any steps that management might
take to counter the effect of that interest rate  movement.  Using data compiled
by the OTS,  the Bank  receives a report  that  measures  interest  rate risk by
modeling  the change in net  portfolio  value over a variety  of  interest  rate
scenarios.  The most recent interest sensitivity analysis the Bank received from
the OTS measured the Bank's interest risk at June 30, 1999.

                                       12
<PAGE>
                            HFB FINANCIAL CORPORATION

                                     PART II

                                OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

             None

ITEM 2.   CHANGES IN SECURITIES

             None

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

             None

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE
             OF SECURITY HOLDERS

             None

ITEM 5.   OTHER INFORMATION

             None

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

             a. Exhibits

                None

             b. Reports on Form 8-K

                None

                                       13
<PAGE>
                            HFB FINANCIAL CORPORATION

                                   Signatures

In accordance with the requirements of the Securities  Exchange Act of 1934, the
registrant has caused this report to be signed on 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: November 5, 1999


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