<PAGE>
<PAGE>
                     UNITED STATES

          SECURITIES AND EXCHANGE COMMISSION

                Washington, D.C.  20549

                       FORM 10-Q


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

     For the quarterly period ended March 31, 1998

                          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 March 31, 1998 was 1,085,647.


There are a total of 18 pages filed in this document.
                              1<PAGE>
<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              6-7

   
          Notes to Consolidated Financial Statements        8-11

ITEM  2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS    11-16


PART II - OTHER INFORMATION                                17


SIGNATURES                                                 18

                            2<PAGE>
<PAGE>
                     PART 1 - FINANCIAL INFORMATION
               HFB FINANCIAL CORPORATION AND SUBSIDIARY
                       CONSOLIDATED BALANCE SHEET
                               (Unaudited)
<TABLE>
<CAPTION>
                                                 MARCH 31,         JUNE 30,
                                                   1998             1997
                                                ------------    ------------
ASSETS
<S>                                             <C>             <C>
  Cash and due from banks                       $  8,569,538    $  3,794,637
  Trading account securities                       1,092,969         795,555
  Investment securities
    Available for sale                            27,600,317      25,112,540
    Held to maturity                              20,376,970      20,206,502
                                                ------------    ------------
       Total investment securities                47,977,287      45,319,042 
  Loans                                          114,087,248     105,694,555
  Allowance for loan losses                         (900,572)       (710,168)
                                                ------------    ------------
       Net loans                                 113,186,676     104,984,387
  Premises and equipment                           2,185,716       2,167,393
  Federal Home Loan Bank stock                     1,212,100       1,169,100
  Interest receivable                              1,403,816       1,074,282
  Other assets                                       241,764         152,571
                                                ------------    ------------
       Total assets                             $175,869,866    $159,456,967
                                                ============    ============

LIABILITIES
  Deposits
    Interest bearing                            $140,730,665    $131,130,405
    Non-interest bearing                             753,064       2,072,137
                                                ------------    ------------
       Total                                     141,483,729     133,202,542
  Short-term borrowings                            8,500,000       7,500,000
  Long-term debt                                   5,676,835         720,753
  Interest payable                                 1,278,278         548,233
  Other liabilities                                1,346,400         918,412
                                                ------------    ------------
       Total liabilities                         158,285,242     142,889,940
                                                ------------    ------------
STOCKHOLDERS' EQUITY
  Preferred stock, $1 par value
    Authorized and unissued 
     -- 1,000,000 shares                                  --              --
  Common stock, $1 par value
    Authorized--5,000,000 shares
    Issued and outstanding --
    1,287,694 and 1,285,673 shares                 1,287,694       1,285,673
  Additional paid-in capital                       6,108,462       6,094,551
  Less: Common stock acquired by ESOP                (53,580)       (125,422)
        Common stock acquired by Management 
         Recognition Plan and Supplemental
         Executive Retirement Plan                   (93,950)       (100,950)
        Common stock acquired by Rabbi trusts
         for deferred compensation plans            (294,410)       (283,259)
  Treasury stock, at cost, 202,047 shares         (2,030,955)     (2,030,955)
  Retained earnings                               12,393,656      11,717,514
  Net unrealized gain on securities available
   for sale                                          267,707           9,875
                                                ------------    ------------
     Total stockholders' equity                   17,584,624      16,567,027
                                                ------------    ------------
     Total liabilities and stockholders' equity $175,869,866    $159,456,967
                                                ============    ============
</TABLE>
See notes to consolidated financial statements.

                                        3<PAGE>
<PAGE>
             HFB FINANCIAL CORPORATION AND SUBSIDIARY
                 CONSOLIDATED STATEMENT OF INCOME
                            (Unaudited)
<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED        NINE MONTHS ENDED
                                              MARCH 31,                 MARCH 31,
                                         ----------------------   -----------------------
                                            1998        1997         1998         1997  
                                         ----------  ----------   ----------   ----------
<S>                                      <C>         <C>          <C>          <C>
INTEREST INCOME
  Loans receivable                       $2,529,504  $2,162,884    $7,310,287  $6,421,073
  Investment securities                     694,295     694,724     2,122,847   2,026,603 
  Other dividend income                      33,149      21,352        76,266      64,015
  Deposits with financial
   institutions                              59,548      35,647       144,568     114,161
                                         ----------  ----------    ----------  ----------
     Total interest income                3,316,496   2,914,608     9,653,968   8,625,852
                                         ----------  ----------    ----------  ----------
INTEREST EXPENSE
  Deposits                                1,679,414   1,567,070     4,934,133   4,712,261
  Short term borrowings                     144,674      24,084       376,119     105,217
  Long term debt                             13,722      14,586        42,055      30,037
                                         ----------  ----------    ----------  ----------
     Total interest expense               1,837,810   1,605,740     5,352,307   4,847,515
                                         ----------  ----------    ----------  ----------
NET INTEREST INCOME                       1,478,687   1,308,867     4,301,661   3,778,337
  Provision for loan losses                  64,615       7,016       200,542      94,193
                                         ----------  ----------    ----------  ----------
NET INTEREST INCOME AFTER PROVISION
 FOR LOAN LOSSES                          1,414,072   1,301,852     4,101,119   3,684,144
                                         ----------  ----------    ----------  ----------
OTHER INCOME
  Service charges for deposit accounts       95,567      84,999       299,947     234,518
  Other customer fees                        41,380      10,066        68,817      42,155
  Net gain (loss) on trading securities      (1,048)    109,107       205,314     229,740
  Net realized gain on sales of available
   for sale securities                        4,737       1,963        13,614      10,628
  Other income                                2,447      17,552        23,635      42,430
                                         ----------  ----------    ----------  ----------
     Total other income                     143,083     223,687       611,327     559,471
                                         ----------  ----------    ----------  ----------
OTHER EXPENSES
  Salaries and employee benefits            492,941     371,467     1,456,808   1,211,742
  Net occupancy expenses                     47,368      51,998       128,418     167,148
  Equipment expenses                         65,918      60,839       207,737     168,617
  Data processing fees                       83,596      60,459       208,626     163,807
  Deposit insurance expense                  20,775      20,519        62,848     147,900
  SAIF special assessment                                                         705,859
  Legal and professional fees                37,079      43,755       121,913     154,660
  Advertising                                36,014      24,178       105,907      84,514
  State franchise and deposit taxes          30,112      27,409        92,401     102,439
  Other expenses                            181,892     170,370       442,607     399,240
                                         ----------  ----------    ----------  ----------
     Total other expenses                   995,695     830,993     2,827,265   3,305,926
                                         ----------  ----------    ----------  ----------

INCOME BEFORE INCOME TAX                    561,460     694,546     1,885,181     937,689
  Income tax expense                        208,340     252,316       742,634     347,516
                                         ----------  ----------    ----------  ----------

NET INCOME                               $  353,120  $  442,230    $1,142,547  $  590,173
                                         ==========  ==========    ==========  ==========
NET INCOME PER SHARE 
  Basic                                    $ 0.33      $ 0.40        $ 1.05      $ 0.56
  Diluted                                  $ 0.32      $ 0.39        $ 1.03      $ 0.54
</TABLE>
See notes to consolidated financial statements.

                            4<PAGE>
<PAGE>
           HFB FINANCIAL CORPORATION AND SUBSIDIARY
    CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                  Nine months ended March 31, 1998
                         (Unaudited)
<TABLE>
<CAPTION>
                                             ADDITIONAL               MRP
                                  COMMON      PAID-IN      ESOP       AND        RABBI
                                  STOCK       CAPITAL      DEBT*      SERP**     TRUSTS
                                ----------  ----------  ----------  ----------  ---------
<S>                             <C>         <C>         <C>         <C>         <C>
BALANCES, JUNE 30, 1997         $1,285,673  $6,094,551  $(125,422)  $(100,950)  $(283,259)

Net earnings  

Stock issued upon exercise
  of stock options                   2,021      10,105

Dividends declared

Reduction of ESOP debt                                     71,842

Stock issued under MRP                                                  7,000

Stock purchased by Rabbi
 trusts                                                                           (11,151)

Net change in unrealized
 gain on securities
 available for sale        

Tax benefit of employee
 benefit plans                                   3,806
                                ----------  ----------  ----------  ----------  ---------
BALANCES, MARCH 31, 1998        $1,287,694  $6,108,462  $ (53,580)  $ (93,950)  $(294,410)
                                ==========  ==========  ==========  ==========  =========
<CAPTION>
                                                         NET UNREALIZED
                                                             GAIN ON
                                                           SECURITIES      TOTAL
                                TREASURY      RETAINED     AVAILABLE    STOCKHOLDERS'
                                 STOCK        EARNINGS     FOR SALE        EQUITY
                               -----------   -----------   ----------    -----------
<S>                            <C>           <C>           <C>           <C>
BALANCES, JUNE 30, 1997        $(2,030,955)  $11,717,514   $   9,875     $16,567,027

Net earnings                                   1,142,547                   1,142,547

Stock issued upon exercise
  of stock options                                                            12,126

Dividends declared                              (466,405)                   (466,405)

Reduction of ESOP debt                                                        71,842

Stock issued under MRP                                                         7,000

Stock purchased by Rabbi
 trusts                                                                      (11,151)

Net change in unrealized
 gain on securities
 available for sale                                           257,832        257,832

Tax benefit of employee
 benefit plans                                                                 3,806
                               -----------   -----------   ----------    -----------
BALANCES, MARCH 31, 1998       $(2,030,955)  $12,393,656   $  267,707    $17,584,624
                               ===========   ===========   ==========    ===========
</TABLE>
__________
*  Employees Stock Ownership Plan (ESOP)
** Management Recognition Plan (MRP) and Supplemental Executive
   Retirement Plan (SERP)
See notes to consolidated financial statements.

                            5<PAGE>
<PAGE>
            HFB FINANCIAL CORPORATION AND SUBSIDIARY  
              CONSOLIDATED STATEMENT OF CASH FLOWS
                          (Unaudited)
<TABLE>
<CAPTION>
                                                       NINE MONTHS ENDED
                                                            MARCH 31,
                                                    ------------------------- 
                                                       1998           1997
                                                    ----------     ----------
<S>                                                 <C>            <C>
OPERATING ACTIVITIES
  Net income (loss)                                $ 1,142,547     $  590,173
  Adjustments to reconcile net income to net
   cash provided by operating activities
   Provision for loan losses                           200,542         91,632
   Depreciation and amortization
     Property and equipment                            148,801        174,094
     Cost of ESOP and MRP                               71,842         91,728
     Investment securities                              15,706         15,092
   FHLB stock dividend                                 (43,000)       (58,100)
   Deferred income tax                                   7,000         24,450
   Net change in
     Trading account securities                       (297,414)      (536,740)
     Interest receivable                              (329,534)      (195,244)
     Interest payable                                  730,045        548,732
     Other assets                                      (89,193)        67,697
     Other liabilities                                 285,249        124,390
   Other                                                              (10,966)
                                                   -----------     ----------
   Net cash provided by operating
    activities                                       1,842,591        926,938
                                                   -----------     ----------
INVESTING ACTIVITIES
  Purchases of securities available for sale        (8,151,194)    (8,485,469)
  Purchases of securities held to maturity          (5,897,077)    (2,496,012)
  Proceeds from maturities of securities
   available for sale                                4,176,672      1,062,779
  Proceeds from sales of securities available
   for sale                                          1,784,398      3,505,000
  Proceeds from maturities of securities
   held to maturity                                  5,817,628      2,079,725
  Net change in loans                               (8,402,833)    (5,661,797)
  Purchases of premises and equipment                 (167,124)       (26,377)
                                                   -----------    -----------
    Net cash used by investing activities          (10,839,530)   (10,022,151)
                                                   -----------     ----------
</TABLE>
                        (continued)

                            6<PAGE>
<PAGE>
            HFB FINANCIAL CORPORATION AND SUBSIDIARY  
         CONSOLIDATED STATEMENT OF CASH FLOWS--CONTINUED
                          (Unaudited)
<TABLE>
<CAPTION>
                                                        NINE MONTHS ENDED
                                                            MARCH 31,
                                                    ------------------------- 
                                                       1998           1997
                                                    ----------     ----------
<S>                                                 <C>            <C>
FINANCING ACTIVITIES
  Net change in                                    
    Non interest-bearing, interest-bearing
     and savings deposits                          $   759,194     $  535,266
    Certificates of deposit                          7,521,993      6,775,763
    Short term borrowings                            1,000,000      1,043,934
    Long-term debt                                   4,956,082         40,533
  Cash dividends                                      (446,405)      (413,844)
  Purchase of stock                                         --       (204,550)
  Sale of common stock                                  12,126        221,896
  Common stock acquired by Rabbi trusts                (11,151)            --
                                                   -----------     ----------
     Net cash used by financing activities          13,771,839      7,998,998 
                                                   -----------     ----------

NET CHANGE IN CASH AND CASH EQUIVALENTS              4,774,901     (1,096,215)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD       3,794,637      4,744,672
                                                   -----------     ----------

CASH AND CASH EQUIVALENTS, END OF PERIOD           $ 8,569,538     $3,648,457
                                                   ===========     ==========

ADDITIONAL CASH FLOWS INFORMATION
  Interest paid                                    $ 4,791,713     $4,291,482
  Income tax paid                                      740,196        262,918
                                                

</TABLE>

See notes to consolidated financial statements.

                               7<PAGE>
<PAGE>
               HFB FINANCIAL CORPORATION

Notes to Consolidated Financial Statements (Unaudited)

1.   BASIS OF PRESENTATION:

     The unaudited consolidated financial information for
     the three and nine month periods ended March 31, 1998
     and 1997 includes the results of operations of HFB
     Financial Corporation (the "Corporation") and its
     wholly owned subsidiary Home Federal Bank, Federal
     Savings Bank ("Home Federal" or the "Bank").  HFB
     Financial Corporation  acquired 100 percent of the
     Bank's stock during the completion of the Bank's
     conversion from mutual to stock form on December 28,
     1992.  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-Q.  It
     is suggested that these statements and notes be read
     in conjunction with the financial statements and notes
     thereto included in the Bank's annual report for the
     year ended June 30, 1997 on Form 10-K 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.   NEW ACCOUNTING STANDARDS 

     The Financial Accounting Standards Board has issued
     Statement No. 128, "Earnings Per Share."  This
     statement simplifies the computation of earnings per
     share and requires dual presentation of basic and
     diluted earnings per share on the face of the income
     statement.  The statement is effective for financial
     statements issued for periods ending after December
     15, 1997, with earlier application not permitted.  The
     application of this standard did not have a
     significant impact on the Companies earnings per share
     presentation in this report.
          
     The Financial Accounting Standards Board has also
     issued Statement No. 130, "Reporting Comprehensive
     Income," which establishes standards for reporting and
     display of comprehensive income and its components. 
     In addition, the Financial Accounting Standards Board
     has issued Statement No. 131, "Disclosures about
     Segments of an Enterprise and Related Information,"
     which establishes standards for disclosing information
     about operating segments in interim and annual
     financial statements.  The Company will comply with
     the new disclosure requirements beginning in fiscal
     1999.  The application of these pronouncements will
     not have a material impact on the Company's financial
     condition or results of operations.  
                            8     <PAGE>
<PAGE>
3.   EARNINGS PER SHARE
 
      Earnings per share were computed as follows:
<TABLE>
<CAPTION>                                                  
                                                         Weighted
                                                         Average     Per Share
                                              Income     Shares       Amount
Three Months Ended March 31, 1998             -------------------------------
<S>                                           <C>        <C>         <C>
  Net Income                                 $  353
                                             ------
  Basic Earnings Per Share                                           $    .33
   Income available to common stockholder       353     1,084,367
  Effect of Diluted Securities
    Stock options                                          29,913
                                             --------------------
  Diluted Earnings Per Share
    Income available to common stockholders
          and assumed conversions            $  353     1,114,280    $    .32
                                             ================================
Nine Months  Ended March 31, 1998                 
  Net Income                                 $1,143
                                             ------
  Basic Earnings Per Share                                           $   1.05
   Income available to common stockholder     1,143     1,083,873
  Effect of Diluted Securities
    Stock options                                          29,037
                                             --------------------
  Diluted Earnings Per Share
    Income available to common stockholders
          and assumed conversions            $1,143     1,112,910    $   1.03
                                             ================================

Three Months  Ended March 31, 1997                 
  Net Income                                 $  427
                                             ------
  Basic Earnings Per Share                                           $    .40
   Income available to common stockholder       427     1,058,891
  Effect of Diluted Securities
    Stock options                                          42,221
                                             --------------------
  Diluted Earnings Per Share
    Income available to common stockholders
          and assumed conversions            $  427     1,101,112    $    .39
                                             ================================
Nine Months  Ended March 31, 1997                 
  Net Income                                 $  590
                                             ------
  Basic Earnings Per Share                                           $    .56
   Income available to common stockholder       590     1,051,887
  Effect of Diluted Securities
    Stock options                                          46,622
                                             --------------------
  Diluted Earnings Per Share
    Income available to common stockholders
          and assumed conversions            $  590     1,098,509    $    .54
                                             ================================
</TABLE>
                             9<PAGE>
<PAGE>
4.   NONPERFORMING LOANS AND PROBLEM ASSETS
     
     Management reviews the Bank's loans on a regular
     basis.  After residential mortgage loans become past
     due more that 90 days, the Bank generally establishes
     an allowance for uncollectible interest for the amount
     by which the principal balance and uncollected
     interest exceeds 90% of the appraised value of the
     property.  Commercial and multi-family real estate
     loans generally are placed on non-accrual status if
     the borrower is  placed in bankruptcy proceedings, or
     management concludes that payment in full is not
     likely.  Consumer and commercial loans generally are
     charged off, or an allowance is established for any
     expected loss after they become more than 90 days past
     due.  The Bank accrues interest on delinquent loans
     past due more than 90 days without establishing a
     reserve when management concludes such action is
     warranted, such as in the event the loan is
     exceptionally well collateralized or the borrower
     establishes the temporary nature of the delinquency. 
     Loans are charged off when management concludes that
     they are uncollectible.

     Real estate acquired by the Bank as a result of
     foreclosure is classified as real estate owned until
     such time as it is sold.  When such property is
     acquired, it is recorded at the lower of the unpaid
     principal balance or its fair value less estimated
     selling cost.  Any required write-down of the loan to
     its fair market value upon foreclosure is charged
     against the allowance for loan losses.
     
     The accrual of interest on impaired loans is discontinued
     when, in Management's opinion, the borrower may be unable
     to meet payments as they become due.  When interest accrual
     is discontinued, all unpaid accrued interest is reversed. 
     Interest income is subsequently recognized  only to the
     extent cash payments are received.   

The following sets forth information with respect to the Bank's
non-performing assets at March 31, 1998  and June 30, 1997:
<TABLE>
<CAPTION>
                          (Dollars in thousands)

                                                 March 31,         June 30,
                                                  1998               1997
                                               ------------     ------------
<S>                                              <C>              <C>
Accruing loans which are contractually
  past due 90 days or more: 
     Real estate                                 $  701           $  365
     Consumer                                        33                3
                                                 ------           ------
                                                 $  734           $  660
     Real estate owned                                0               58
                                                 ------           ------
     Total non-performing assets                 $  734           $  426
                                                 ======           ======
Nonaccrual and 90 days or more past due loans
  as a percentage of total loans, net (1)           .64%             .35%
                                                 ======           ======
Nonaccrual and 90 days or more past due loans
  as a percentage of total assets                   .42%             .23%
                                                 ======           ======
Non-performing assets as a percentage of total
  assets                                            .42%             .27%
<FN>                                             ======           ======
_______________
(1)  The Bank had no nonaccrual loans at March 31, 1998 and June 30, 1997.
</FN>
</TABLE>
The Bank has several  potential problem commercial real estate
loans to one borrower at March 31, 1998.  The carrying amount of
these loans is approximately $1.3 million, including a $131,000
working capital loan funded in
                              10<PAGE>
<PAGE>
January 1997.  The properties securing these loans are not
generating sufficient cash flow to fund debt service payments
and the borrower has been 30 to 60 days in arrears on the loan
during the quarter. The borrower has obtained funds from another
source to make the most recent payments on this indebtedness. 
The loans were current on March 31, 1998. Management is
currently evaluating the collectability of these loans and
assessing the possibility of any losses the Bank could
incur. 

The following sets forth the activity in the Bank's allowance
for  loan losses for the nine months ended March 31,  1998 and
1997:  
                (Dollars in thousands)
                                         1998         1997
                                         ----         ----
Balance at July 1                        $710         $671
Charge offs                                10           68
Provision for loan losses                 201           92
                                         ----         ----
Balance March 31                         $901         $695

Ratio of net charge offs during the 
  period to average loans outstanding 
  during the period                       .01%         .07%
                                         ====         ====

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

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 Corporation'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.

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.  As of March 31, 1998,
management is not aware of any current recommendations by the
regulatory authorities, which if implemented, would have a
material effect on the Bank's operations, liquidity or
resources.

The Bank has an ongoing program to insure that its operational
and financial systems will not be adversely affected by year
2000 software failures.  While the Bank believes it is taking
all appropriate steps to assure year 2000 compliance, it is
dependent on vendor compliance to some extent.  The Bank is
requiring its systems and software vendors to represent that the
products and services provided are, or will be, year 2000
compliant, and has planned a program for testing compliance.  On
March 21, 1998, the Bank converted to new core processor and
replaced all of its data processing hardware with year 2000
compliant equipment through the normal course of business. 
During the selection process, special emphasis was placed the
vendors ability to be year 2000 compliance within a reasonable
time frame.   The Bank estimates that the cost to redevelop,
replace or repair its technology will not be material.  
                             11<PAGE>
<PAGE>
ASSET/LIABILITY MANAGEMENT

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 affect 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 ten
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 repricing and/or
maturity of its liabilities thus reducing its exposure to rising
interest rates.

FINANCIAL CONDITION

The Corporation's assets increased by 10.29% to $175.9 million
at March 31, 1998  compared to $159.5 million at June 30, 1997. 
The majority of this increase is reflected in cash and due from
banks, investment securities and loans receivable, which was
primarily funded by an increase in deposits and borrowings.  

Cash and cash equivalents increased by $4.8 million to $8.6
million at March 31, 1998  from $3.8 million at  June 30, 1997. 
This increase was primarily the result of several investment
securities which were called in late March and an increase in
deposits during the nine month period ended March 31, 1998.
 
The Company maintains a portfolio of trading account securities
which is comprised of common stock of other financial
institutions. The portfolio was $1.1 million at March 31, 1998 
compared to $796,000 at June 30, 1997.  Most of this increase
was attributable to market appreciation of the underlying
stocks.

The Bank's asset composition has changed due to lower interest
rates and a strong loan demand.  In the current interest rate
environment, a substantial portion of loans originated were
adjustable-rate residential mortgages.  During the nine months
ended March 31, 1998, the Bank originated $36.9 million in
mortgages.  Seventy four percent of the mortgage loans
originated during the quarter ended March 31, 1998 were
refinancing of existing credits within the Bank's portfolio.
Total loans receivable, net increased 7.81% to $113.2 million at 
March 31, 1998  compared to $105.0 million at June 30, 1997.

At March 31, 1998, the allowance for loan losses was $901,000 or
 .79% of loans receivable compared to $710,000 or .67% of loans
receivable at June 30, 1997.  During the nine months ended March
31, 1998, the provision for loan losses was $201,000.  The Bank
has several problem real estate loans to one borrower at March
31, 1998 .  The carrying amount of these loans is approximately
$1.3 million including a $131,000 working capital loan which was
funded in January 1997.  The properties securing these loans are
not generating sufficient cash flow to fund debt service
payments and the borrower has been 30 to 60 days in arrears on
these loans during the nine months ended March 31, 1998 .  The
borrower obtained funds from another source to make the most
recent payments on this indebtedness.  These loans were brought
current on March 31, 1998.  There have been no improvement in
the credits cash flows since June 30, 1997.   Management
continues to closely monitor this credit as to its
collectability and any
                           12<PAGE>
<PAGE>
possible losses the Bank could incur.
  
The Bank augments its lending activities and increases its asset
yields by investing in mortgage-backed securities "MBSs " and
U.S. Government securities.  During the nine months ended March
31, 1998, management purchased $14.0 million in investment
securities and MBSs.   These purchases were primarily funded by
proceeds from called and maturing investment securities,
principal collected on MBSs and investments, and the sale of
investment securities.  At March 31, 1998,  the Bank held $27.6
million in  investment securities, available for sale with a net
unrealized gain of $268,000 and $20.4 million in investment
securities held to maturity.

Accrued interest receivable increased by $330,000 from $1.074
million at June 30, 1997 to $1.404 million at March 31, 1998 
due to a higher volume of interest-earning assets and the timing
of interest payments.

Total deposits increased by $8.3 million to $141.5 million at
March 31, 1998  from $133.2 million at June 30, 1997.  During
the nine months ended March 31, 1998, certificates of deposit
increased $7.5 million and NOW accounts increased $2.0 million,
while passbook savings and money market deposit accounts
decreased by $1.2 million.

Federal Home Loan Bank advances increased by $1.0 million during
the nine months ended March 31, 1998.  These increases were
primarily used to fund increases in lending activities.

Long-term debt increased by $5.0 million during the nine months
ended March 31, 1998.  This was the result of a arbitrage
matching the debt with mortgage-backed securities.  The
estimated margin on this strategy is estimated to be 113 basis
points.  

Accrued interest payable on deposits increased by $730,000
during the nine months ended March 31, 1998 due to increased
deposits and the timing of interest payments.
 
The Bank's regulatory liquidity ratio was 25.24% at March 31,
1998 as compared to 21.5% at June 30, 1997.  At March 31, 1998
the Bank met all the fully phased-in regulatory capital
requirements under FIRREA.  Tangible, core and risk-based
capital ratios were 9.3%, 9.3% and 22.4% respectively at March
31, 1998  as compared to 9.7%, 9.7% and 20.7% at June 30, 1997. 
     
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND 1997

Net income decreased by $74,000 to $353,000 for the three month
period ended March 31, 1998  from $427,000 for the three month
period ended March 31, 1997.  The primary reasons for the
increase were a $185,000 increase in net interest income offset
by, a $58,000 increase in provision for loan losses, a decrease
of $81,000 in noninterest income, a $164,000 increase in
noninterest expense and a $44,000 decrease in income tax
expense.

Net interest income increased by $185,000 for the three month
period ended March 31, 1998  as compared to the three month
period ended March 31, 1997 because of a higher level of
interest-earning assets.  

Interest on loans increased by $367,000 to $2.530 million for
the three month period ended March 31, 1998  as compared to
$2.163 million for the three month period ended March 31, 1997. 
This increase is mainly attributable to a higher weighted
average balance of loans receivable outstanding.

Other dividend income increased by $12,000 to $33,000  for the
three month period ended March 31, 1998  compared to $21,000 for
the three months ended March 31, 1997, due to the timing of
those dividends.

Interest on deposits with other financial institutions increased
by $24,000 to $60,000 for the three month period ended March 31,
1998  from $36,000 for the three month period ended March 31,
1997 due to a higher level of interest-bearing cash balances. 
                            13<PAGE>
<PAGE>
Interest on deposits increased by $112,000 to $1.679 million for
the three month period ended March 31, 1998  from $1.567 million
for the three month period ended March 31, 1997  as a result of 
higher volume and a change in the overall deposit mix.  Lower
rate savings accounts declined, while Certificates of Deposit
increased.
  
Interest on short term borrowings and long term debt increased
by $105,000 to $158,000 for the three month period ended March
31, 1998  from $53,000 for the three month period ended March
31, 1997 due to higher levels of borrowing.

The provision for loan losses was $65,000 for the three month
period ended March 31, 1998  as compared to $7,000 for the three
month period ended March 31, 1997.  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 March 31, 1998 was .79%.

The Banks non-interest income decreased by $81,000 to $143,000
for the three month period ended March 31, 1998  as compared to
$224,000 for the same period in 1996.  The decrease was
attributable to a net decrease in realized and unrealized gains
on trading account securities and realized gains on sales of
investment securities, available for sale of $107,000, a
increase of $15,000 in other customer fees and other income, and
an increase of $11,000 in deposit service charge income. 
Trading account securities are equity securities, which are
subject to market fluctuations.
  
Non-interest expense increased by $164,000 to $995,000 for the
three month period ended March 31, 1998  as compared to $831,000
for the same period in 1996.  Compensation and benefits
increased by $121,000 to $493,000 for the three month period
ended March 31, 1998 as compared to $372,000 for the same period
in 1996.  This increase is primarily attributable to a general
increase in salaries and wages and overtime incurred in
conjunction with the Bank's change in data processing systems
during the quarter ended March 31, 1998. 

Occupancy expense decreased by $5,000 to $47,000 for the three
month period ended March 31, 1998  compared to $52,000 for the
same period in 1996. This decrease was mainly the result of
decreased property taxes and depreciation expense.
     
Equipment expense increased by $5,000 to $66,000 for the three
month period ended March 31, 1998  from $61,000 for the three
month period ended March 31, 1997  primarily due to higher
depreciation expense.

Data processing expense increased by $23,000 to $83,000 for the
three month period ended March 31, 1998  from $60,000 for the
three month period ended March 31, 1997  primarily due to an
increased level of data processing services.  The Bank has
entered into an agreement with a new vendor for data processing
services which began in March 1998.  As a result, the Bank has
incurred additional expenses during the conversion from its
present system to the new system.  The Bank also expects to be
penalized for breaking its' present contract for ATM processing
services.  Management expects these expenses to be immaterial to
the Company's consolidated financial statements.                 
           
Professional services decreased by $7,000 for the three month
period ended March 31, 1998  primarily due to lower accounting
and consulting fees.  

Advertising expense increased by $12,000 to $36,000 for the
quarter ended March 31, 1998  compared to $24,000 for the
quarter ended March 31, 1997 primarily due to the Bank's new
logo campaign launched in the  last quarter.

State franchise and deposit taxes increased by $3,000 to $30,000
for the three month period ended March 31, 1998 compared to
$27,000 for the three month period ended March 31, 1997 due to a
change in the Bank's estimated liability. 

Other expense increased by $12,000 to $182,000 for three the
month period ended March 31, 1998 from $170,000
                            14<PAGE>
<PAGE>
for the three month period ended March 31, 1997 as the result of
small increases in several expense categories.  

Income taxes decreased by $44,000 to $208,000 for the three
month period ended March 31, 1998  compared to $252,000 for the
three months ended March 31, 1997 due to decreased earnings.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1998
AND 1997

Net income increased by $552,000 to $1.142 million for the nine
month period ended March 31, 1998 from $590,000 for the nine
month period ended March 31, 1997 .  The primary reasons for the
increase were a $523,000 increase in net interest income, an
increase of $52,000 in noninterest income, a decrease of
$478,000 in noninterest expense offset by an increase of
$106,000 in the provision for loan losses and an increase of
$395,000 in income tax expense.

Net interest income increased by $523,000 for the nine month
period ended March 31, 1998  as compared to the nine month
period ended March 31, 1997 .  During the nine months ended
March 31, 1998, the Bank's net interest income increased
primarily as the result of a higher volume of net interest-
earning assets.

Interest on loans increased by $889,000 to $7.310 million for
the nine month period ended March 31, 1998  as compared to
$6.421 million for the nine month period ended March 31, 1997. 
This increase is mainly attributable to a higher weighted
average balance of loans receivable outstanding.

Interest on investment securities increased by $96,000 to $2.123
million during the nine month period ended March 31, 1998 from
$2.027 million for the nine month period ended March 31, 1997 
primarily due to higher yields.
       
Other dividend income increased by $12,000 to $76,000  for the
nine month period ended March 31, 1998  compared to $64,000 for
the nine months ended March 31, 1997, due to the timing of those
dividends.
  
Interest on deposits with other financial institutions increased
by $31,000 to $145,000 for the nine month period ended March 31,
1998  from $114,000 for the nine month period ended March 31,
1997 due to higher levels of interest-bearing cash balances. 

Interest on deposits increased by $222,000 to $4.934 million for
the nine month period ended March 31,  1998 from $4.712 million
for the nine month period ended March 31, 1997 as a result of
higher volume and a change in the overall deposit mix.  Lower
rate savings accounts declined, while Certificates of Deposit
increased.

Interest on short term borrowings and long term debt borrowed
funds increased by $283,000 to $418,000 for the nine month
period ended March 31, 1998  from $135,000 for the nine month
period ended March 31, 1997  due to higher levels of borrowing.

The provision for loan losses increased by $106,000 for the nine
month period ended March 31, 1998   compared to the nine month
period ended March 31, 1997 .  This level of provision was a
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 March 31, 1998 was .79%.

The Banks non-interest income increased by $52,000 to $611,000
for the nine month period ended March 31, 1998  as compared to
$559,000 for the same period in 1996.  Gains from the sale of
trading account securities and investment securities, available
for sale decreased by $21,000 for the nine months ended March
31, 1998 as compared to the nine month period ended March 31,
1997.  Service charges on deposit accounts increased by $65,000
and other customer fees increased by $27,000.  Other noninterest
income decreased by $19,000 for the nine months ended March 31,
1998 with no significant change in any other single category.  
                           15<PAGE>
<PAGE>
Non-interest expense increased by $478,000 to $2.827 million for
the nine month period ended March 31, 1998  as compared to
$3.305 million for the same period in 1996.  Compensation and
benefits increased by $245,000 to $1.457 million for the nine
month period ended March 31, 1998  as compared to $1.212 million
for the same period in 1996.  This increase is primarily due to
a general increase in salaries and wages and overtime associated
with the Bank's recent data processing conversion. 

Occupancy expense decreased by $39,000 to $128,000 for the nine
month period ended March 31, 1998  compared to $167,000 for the
same period in 1996. This decrease was mainly the result of
decreased repairs and maintenance and depreciation expenses.

Equipment expense increased by $39,000 to $208,000 for the nine
month period ended March 31, 1998 from $169,000 for the nine
month period ended March 31, 1997  primarily due to increased
depreciation expense.  
                               
Data processing expense increased by $45,000 to $209,000 for the
nine month period ended March 31, 1998  from $164,000 for the
nine month period ended March 31, 1997 primarily due to an
increased level of data processing services.  In addition, the
Bank entered into an agreement with a new vendor for data
processing services which began in March 1998.  As a result, the
Bank incurred additional expenses during the conversion from its
present system to the new system.  The Bank also expects to be
penalized for breaking its' present contract for ATM processing
services.  Management expects these expenses to be immaterial to
the Company's consolidated financial statements.

Deposit insurance expense decreased by $85,000 to $63,000 for
the nine month period ended March 31, 1998  from $148,000 for
the nine month period ended March 31, 1997  due to lower premium
rates. This was this was the result of the legislation enacted
to recapitalize the SAIF, which required the Bank to pay an
additional one time special assessment of $706,000 during the
quarter ended September 30, 1996.
     
Professional services decreased by $33,000 to $122,000 for the
nine month period ended March 31, 1998  compared to $155,000 for
the same period in 1997.  Most of this decrease was attributable
to fees paid to consultants  for recommendations to improve the
Banks operational procedures in nine month period ended March
31, 1997. 
     
Advertising expense increased by $21,000 to $106,000 for the
nine months ended March 31, 1998  compared to $85,000 for the
nine months ended March 31, 1997  primarily due to the Bank's
new logo campaign launched in the quarter ended March 31, 1998.
 
State franchise and deposit taxes decreased by $10,000 to
$92,000 for the nine month period ended March 31, 1998  from
$102,000 for the nine month period ended March 31, 1997  due to
a change in the Bank's estimated liability.
 
Other expense increased by $44,000 to $443,000 for nine the
month period ended March 31, 1998  from $399,000 for the nine
month period ended March 31, 1997.  The principal components of
this increase were attributable to employee education expense,
printing supplies and expenses associated with automated teller
machines. 

Income taxes increased by $395,000 to $743,000 for the nine
month period ended March 31, 1998  compared to $348,000 for the
nine month period ended March 31, 1997  due to higher earnings.
                            16<PAGE>
<PAGE>
              HFB FINANCIAL CORPORATION

                        PART II

                   OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS

          None

ITEM 2.   CHANGES IN SECURITIES

          None

ITEM 3.   DEFAULTS IN SENIOR SECURITIES

          None

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

          None

ITEM 5.   OTHER INFORMATION

          None

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          a. Exhibits
             
             Exhibit 27.1 Financial Data Schedule
             Exhibit 27.2 Restated Financial Data Schedule
          
          
                          17<PAGE>
<PAGE>
               HFB FINANCIAL CORPORATION

                      Signatures


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:  May 12, 1998

                             18