<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 December 31, 1997

                          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 December 31, 1997 was 1,083,626.


There are a total of 18 pages filed in this document.<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
<PAGE>
<PAGE>
                     PART 1 - FINANCIAL INFORMATION
               HFB FINANCIAL CORPORATION AND SUBSIDIARY
                       CONSOLIDATED BALANCE SHEET
                               (Unaudited)
<TABLE>
<CAPTION>
                                                DECEMBER 31,       JUNE 30,
                                                    1997             1997
                                                ------------    ------------
ASSETS
<S>                                             <C>             <C>
Cash and due from banks                         $  5,014,345    $  3,794,637
Trading account securities                         1,085,200         795,555
Investment securities
  Available for sale                              26,050,140      25,112,540
  Held to maturity                                18,816,975      20,206,502
                                                ------------    ------------
     Total investment securities                  44,867,115      45,319,042 

Loans                                            110,632,365     105,694,555
  Allowance for loan losses                         (846,095)       (710,168)
                                                ------------    ------------
     Net loans                                   109,786,270     104,984,387
Premises and equipment                             2,085,978       2,167,393
Federal Home Loan Bank stock                       1,212,100       1,169,100
Interest receivable                                1,280,515       1,074,282
Other assets                                         217,346         152,571
                                                ------------    ------------
     Total assets                                165,548,869     159,456,967
                                                ============    ============

LIABILITIES
  Deposits
    Interest bearing                            $135,018,409    $131,130,405
    Non-interest bearing                           2,383,515       2,072,137
                                                ------------    ------------
     Total                                       137,401,924     133,202,542
Short-term borrowings                              8,500,000       7,500,000
Long-term debt                                       691,769         720,753
Interest payable                                     538,018         548,233
Other liabilities                                  1,119,177         918,412
                                                ------------    ------------
     Total liabilities                           148,250,888     142,889,940
                                                ------------    ------------
STOCKHOLDERS' EQUITY
  Preferred stock, $1 par value
    Authorized and unissued 
     -- 1,000,000 shares                                  --              --
  Common stock, $1 par value
    Issued and outstanding 
     -- 1,285,673 shares                           1,285,673       1,285,673
  Additional paid-in capital                       6,098,357       6,094,551
  Less: Common stock acquired by ESOP                (83,620)       (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                               12,279,378      11,717,514
  Net unrealized gain on securities available
   for sale                                          137,508           9,875
                                                ------------    ------------
     Total stockholders' equity                   17,297,981      16,567,027
                                                ------------    ------------
     Total liabilities and stockholders' equity $165,548,869    $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        SIX MONTHS ENDED
                                           DECEMBER 31,              DECEMBER 31, 
                                         ----------------------   -----------------------
                                            1997        1996         1997         1996  
                                         ----------  ----------   ----------   ----------
<S>                                      <C>         <C>          <C>          <C>
INTEREST INCOME
  Loans receivable                       $2,385,871  $2,163,827    $4,780,783  $4,258,188
  Investment securities                     717,012     676,114     1,428,552   1,331,879
  Other dividend income                      16,063      22,526        43,117      42,664
  Deposits with financial
   institutions                              49,168      34,659        85,020      78,514
                                         ----------  ----------    ----------  ----------
     Total interest income                3,168,114   2,897,125     6,337,472   5,711,244
                                         ----------  ----------    ----------  ----------
INTEREST EXPENSE
  Deposits                                1,650,570   1,569,498     3,254,719   3,145,191
  Short term borrowings                     123,203      29,846       231,445      50,819
  Long term debt                             14,020      15,157        28,333      30,608
                                         ----------  ----------    ----------  ----------
     Total interest expense               1,787,794   1,614,501     3,514,498   3,226,618
                                         ----------  ----------    ----------  ----------
NET INTEREST INCOME                       1,380,320   1,282,625     2,822,974   2,484,627
  Provision for loan losses                  67,972       9,430       135,927      87,177
                                         ----------  ----------    ----------  ----------
NET INTEREST INCOME AFTER PROVISION
 FOR LOAN LOSSES                          1,312,348   1,273,194     2,687,047   2,397,449
                                         ----------  ----------    ----------  ----------
OTHER INCOME
  Service charges for deposit accounts      104,862      76,758       204,380     149,518
  Other customer fees                        16,400      21,902        27,437      32,089
  Net gain on trading securities             38,539      67,463       206,362     120,633
  Net realized gain (loss) on sales
   of available for sale securities           1,254       8,665         8,877       8,665
  Other income                               11,425      11,745        21,188      24,878
                                         ----------  ----------    ----------  ----------
     Total other income                     172,479     186,534       468,243     335,784
                                         ----------  ----------    ----------  ----------
OTHER EXPENSES
  Salaries and employee benefits            469,849     398,379       963,867     840,275
  Net occupancy expenses                     43,374      60,510        81,050     115,151
  Equipment expenses                         69,228      56,338       141,819     107,779
  Data processing fees                       63,197      54,888       125,030     103,349
  Deposit insurance expense                  20,969      56,712        42,073     127,381
  SAIF special assessment                                                         705,859
  Legal and professional fees                47,276      60,198        84,834     110,905
  Advertising                                49,325      35,838        69,893      60,336
  State franchise and deposit taxes          30,920      35,170        62,289      75,030
  Other expenses                            143,948     123,396       260,715     228,869
                                         ----------  ----------    ----------  ----------
     Total other expenses                   938,085     881,428     1,831,569   2,474,933
                                         ----------  ----------    ----------  ----------

INCOME BEFORE INCOME TAX                    546,742     578,300     1,323,721     258,300
  Income tax expense                        207,765     203,075       534,294      95,200
                                         ----------  ----------    ----------  ----------

NET INCOME                               $  338,977  $  375,225    $  789,427  $  163,100
                                         ==========  ==========    ==========  ==========
NET INCOME PER SHARE 
  Basic                                    $  .31      $  .36        $  .73      $  .16
  Diluted                                  $  .30      $  .34        $  .71      $  .15
</TABLE>
See notes to consolidated financial statements.

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

Net earnings  

Dividends Declared

Reduction of ESOP debt                                     41,802

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, DECEMBER 31, 1997     $1,285,673  $6,098,357  $ (83,620)  $ (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                                     789,427                     789,427

Dividends Declared                              (227,563)                   (227,563)

Reduction of ESOP debt                                                        41,802

Stock issued under MRP                                                         7,000

Stock purchased by Rabbi
 trusts                                                                      (11,151)

Net change in unrealized
 gain on securities
 available for sale                                           127,633        127,633

Tax benefit of employee
 benefit plans                                                                 3,806
                               -----------   -----------   ----------    -----------
BALANCES, DECEMBER 31, 1997    $(2,030,955)  $12,279,378   $  137,508    $17,297,981
                               ===========   ===========   ==========    ===========
</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 STATEMENTS OF CASH FLOWS
                          (Unaudited)
<TABLE>
<CAPTION>
                                                        SIX MONTHS ENDED
                                                           DECEMBER 31,
                                                    ------------------------- 
                                                       1997           1996
                                                    ----------     ----------
<S>                                                 <C>            <C>
OPERATING ACTIVITIES
  Net income (loss)                                 $  789,427     $  163,100
  Adjustments to reconcile net income to net
   cash provided by operating activities
   Provision for loan losses                           135,927         87,177
   Depreciation and amortization
     Property and equipment                            122,033        115,419
     Cost of ESOP and MRP                               48,802         41,885
     Investment securities                              10,177         11,486
   FHLB stock dividend                                 (43,000)       (38,600)
   Deferred income tax                                   7,000         34,950
   Net change in
     Trading account securities                       (289,645)      (347,979)
     Interest receivable                              (206,233)        28,099
     Interest payable                                  (10,215)        32,753
     Other assets                                      (64,776)        51,833
     Other liabilities                                 125,032         96,725
   Other                                                               (9,003)
                                                    ----------     ----------
   Net cash provided by operating
    activities                                         624,529        267,845
                                                    ----------     ----------
INVESTING ACTIVITIES
  Purchases of securities available for sale        (3,168,965)    (3,992,032)
  Purchases of securities held to maturity          (1,621,117)    (2,496,012)
  Proceeds from maturities of securities
   available for sale                                  663,911        759,661
  Proceeds from sales of securities available
   for sale                                          1,784,398      2,504,062
  Proceeds from maturities of securities
   held to maturity                                  3,001,694      1,628,336
  Net change in loans                               (4,937,809)    (3,985,030)
  Purchases of premises and equipment                  (40,618)       (23,377)
                                                    ----------     ----------
    Net cash used by investing activities           (4,336,506)    (5,604,392)
                                                    ----------     ----------
</TABLE>
                        (continued)

                            6<PAGE>
<PAGE>
            HFB FINANCIAL CORPORATION AND SUBSIDIARY  
         CONSOLIDATED STATEMENTS OF CASH FLOWS--CONTINUED
                          (Unaudited)
<TABLE>
<CAPTION>
                                                        SIX MONTHS ENDED
                                                           DECEMBER 31,
                                                    ------------------------- 
                                                       1997           1996
                                                    ----------     ----------
<S>                                                 <C>            <C>
FINANCING ACTIVITIES
  Net change in                                    
    Non interest-bearing, interest-bearing
     and savings deposits                          $  (171,037)    $  540,710
    Certificates of deposit                          4,370,420      3,587,644
    Short term borrowings                            1,000,000      1,871,500
  Repayment of long-term debt                          (28,984)        26,750
  Cash dividends                                      (227,563)      (201,228)
  Purchase of stock                                         --       (204,550)
  Sale of common stock                                      --         30,000
  Common stock acquired by Rabbi trusts                (11,151)            --
                                                    ----------     ----------
     Net cash used by financing activities           4,931,685      5,650,826
                                                    ----------     ----------

NET CHANGE IN CASH AND CASH EQUIVALENTS              1,219,708        314,279

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

CASH AND CASH EQUIVALENTS, END OF PERIOD             5,014,345      5,058,951
                                                    ==========     ==========

ADDITIONAL CASH FLOWS INFORMATION
  Interest paid                                     $3,524,713     $3,191,906
  Income tax paid                                      530,196          2,002
                                                

</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 six month periods ended December 31, 1997 and
     1996 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.   NONPERFORMING LOANS AND PROBLEM ASSETS
     
     Management reviews the Bank's loans on a regular basis.
     After residential mortgage loans become past  due more than
     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.   


                              8<PAGE>
<PAGE>

The following sets forth information with respect to the Bank's
non-performing assets at December 31, 1997 and June 30, 1997:

<TABLE>
<CAPTION>
                                               December 31,        June 30,
                                                  1997               1997
                                               ------------     ------------
                                                  (Dollars in thousands)
<S>                                              <C>              <C>
Accruing loans which are contractually
  past due 90 days or more: 
     Real estate                                 $  292           $  365
     Consumer                                        32                3
                                                 ------           ------
                                                 $  327           $  660

Real estate owned                                    53               58
                                                 ------           ------
     Total non-performing assets                 $  377           $  426
                                                 ======           ======
Nonaccrual and 90 days or more past due loans
  as a percentage of total loans, net (1)           .30%             .35%
                                                 ======           ======
Nonaccrual and 90 days or more past due loans
  as a percentage of total assets                   .20%             .23%
                                                 ======           ======
Non-performing assets as a percentage of total
  assets                                            .23%             .27%
                                                 ======           ======
</TABLE>
_______________
(1)  The Bank had no nonaccrual loans at December 31, 1997 and
June 30, 1997.


The Bank has several  potential problem commercial real estate
loans to one borrower at December 31, 1997.  The carrying amount
of these loans is approximately $1.3 million, including a
$131,000 working capital loan 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 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 December 31, 1997.  Management is currently
evaluating the collectibility 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 six months ended December 31,  1997 and
1996: 
                                            1997         1996
                                           ------       ------
                                         (Dollars in thousands)

     Balance at July 1                     $  710       $  671
     Charge offs                               --           70   

     Provision for loan losses                136           87
                                           ------       ------
     Balance December 31                   $  846       $  688

     Ratio of net charge offs during
     the period to average loans
     outstanding during the period            .00%         .07%
                                           ======       ======

                              9<PAGE>
<PAGE>

3.   EARNINGS PER SHARE
 
     Earnings per share were computed as follows:

<TABLE>
<CAPTION>
                                                  Weighted
                                                  Average      Per Share
                                      Income       Shares       Amount 
                                     --------    ----------    ---------
<S>                                   <C>         <C>           <C>
Three Months Ended December 31, 1997
  Net Income                          $  339
                                      ------
  Basic Earnings Per Share                                      $  .31
     Income available to common
      stockholder                        339      1,083,626                   

  Effect of Diluted Securities
     Stock options                        --         27,010
                                                  ---------
  Diluted Earnings Per Share
     Income available to common
      stockholders and assumed
      conversions                     $  339      1,110,636     $  .30
                                      ======      =========     ======
Six Months Ended December 31, 1997                 
  Net Income                          $  789
                                      ------
  Basic Earnings Per Share                                      $  .73
     Income available to common
      stockholder                        789      1,109,669
  Effect of Diluted Securities
     Stock options                                   26,043
                                      ------      ---------
  Diluted Earnings Per Share
     Income available to common
      stockholders and assumed
      conversions                     $  789      1,135,712     $  .71
                                      ======      =========     ======
Three Months Ended December 31, 1996 
  Net Income                          $  375
                                      ------
  Basic Earnings Per Share                                      $  .36
     Income available to common
      stockholder                        375      1,044,998
  Effect of Diluted Securities
     Stock options                                   44,696
                                                  ---------
  Diluted Earnings Per Share
     Income available to common
      stockholders and assumed
      conversions                     $  375      1,089,694     $  .34
                                      ======      =========     ======
Six Months Ended December 31, 1996
  Net Income                          $  163
                                      ------
  Basic Earnings Per Share                                      $  .16
     Income available to common
      stockholder                                 1,048,385
  Effect of Diluted Securities
     Stock options                                   46,372                  
                                      ------      ---------
  Diluted Earnings Per Share
     Income available to common
      stockholders and assumed
      conversions                     $  163      1,094,757     $  .15
                                      ======      =========     ======
</TABLE>
                               10<PAGE>
<PAGE>

4.   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.  

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 December 31,
1997, 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.

YEAR 2000 ISSUES

     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. 
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 3.76% to $165.5
million at December 31, 1997 compared to $159.5 million at June
30, 1997.  The majority of this increase is reflected in cash
and due from banks and loans receivable, which was primarily
funded by an increase in deposits.  

     Cash and cash equivalents increased by $1.2 million to $5.0
million at December 31, 1997 from $3.8 million at June 30, 1997. 
This increase was primarily the result of a decrease in
investment securities and an  increase in deposits during the
six month period ended December 31, 1997.
 
     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 December 31,
1997 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 continues to change due to
volatility in 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 six months ended December 31, 1997, the Bank
originated $24.0 million in mortgages.  Total loans receivable,
net increased 4.57% to $109.8 million at December 31, 1997
compared to $105.0 million at June 30, 1997.

     At December 31, 1997, allowance for loan losses was
$846,000 or .76% of loans receivable compared to $710,000 or
 .67% of loans receivable at June 30, 1997.  During the six
months ended December 31, 1997, the provision for loan losses
was $136,000.  The Bank has several problem real estate loans to
one borrower at December 31, 1997.  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 six months ended
December 31, 1997.  The borrower obtained funds from another
source to make the most recent payments on this indebtedness. 
These loans were brought current on December 31, 1997.  There
has been no improvement in cash flows since June 30, 1997 and
Management continues to closely monitor this credit as to its
collectibility and any possible losses the Bank could incur.


                              12<PAGE>
<PAGE>

     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 six months ended
December 31, 1997, management purchased $4.8 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 December 31, 1997,  the Bank
held $26.1 million in  investment securities, available for sale
with a net unrealized gain of $138,000 and $18.8 million in
investment securities held to maturity.

     Accrued interest receivable increased by $207,000 from
$1.074 million at June 30, 1997 to $1.281 million at December
31, 1997 due to a higher volume of interest-earning assets and
the timing of interest payments.

     Total deposits increased by $4.2 million to $137.4 million
at December 31, 1997 from $133.2 million at June 30, 1997. 
During the six months ended December 31, 1997, certificates of
deposit increased $4.4 million and NOW accounts increased
$468,000, while passbook savings and money market deposit
accounts decreased by $637,000.

     Federal Home Loan Bank advances increased by $1.0 million
during the six months ended December 31, 1997.  These increases
were primarily used to fund increases in lending activities.

     The Bank's regulatory liquidity ratio was 24.87% at
December 31, 1997 as compared to 21.5% at June 30, 1997.  At
December 31, 1997 the Bank met all the fully phased-in
regulatory capital requirements under FIRREA.  Tangible, core
and risk-based capital ratios were 9.7%, 9.7% and 23.3%
respectively at December 31, 1997 as compared to 9.7%, 9.7% and
20.7% at June 30, 1997. 
     
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31,
1997 AND 1996 

     Net earnings decreased by $36,000 to $339,000 for the three
month period ended December 31, 1997 from $375,000 for the three
month period ended December 31, 1996.  The primary reasons for
the increase were a $97,000 increase in net interest income
offset by, a $59,000 increase in provision for loan losses, a
decrease of $14,000 in noninterest income, a $57,000 increase in
noninterest expense and a $5,000 increase in income tax expense.

     Net interest income increased by $97,000 for the three
month period ended December 31, 1997 as compared to the three
month period ended December 31, 1996.  Interest income increased
during the quarter, primarily as the result of a higher level of 
interest-earning assets.  

     Interest on loans increased by $222,000 to $2.386 million
for the three month period ended December 31, 1997 as compared
to $2.164 million for the three month period ended December 31,
1996.  This increase is mainly attributable to a higher weighted
average balance of loans receivable outstanding.

     Interest on investment securities increased by $41,000 to
$717,000 during the three month period ended December 31, 1997
from $676,000 for the three month period ended December 31,
1996, primarily due to higher yields.

     Other dividend income decreased by $7,000 to $16,000  for
the three month period ended December 31, 1997 compared to
$23,000 for the three months ended December 31, 1996, due to the
timing of dividend payments.
<PAGE>
     Interest on deposits with other financial institutions
increased by $14,000 to $49,000 for the three month period ended
December 31, 1997 from $35,000 for the three month period ended
December 31, 1996 due to a higher level of interest-bearing cash
balances. 

     Interest on deposits increased by $81,000 to $1.651 million
for the three month period ended December 31, 1997 from $1.570
million for the three month period ended December 31, 1996 as a
result of  higher volume and a change in the overall deposit
mix.  Lower rate savings accounts declined, while Certificates
of Deposits increased.

                             13<PAGE>
<PAGE>
  
     Interest on short term borrowings and long term debt
increased by $92,000 to $137,000 for the three month period
ended December 31, 1997 from $45,000 for the three month period
ended December 31, 1996 due to higher levels of borrowing.

     The provision for loan losses was $68,000 for the three
month period ended December 31, 1997 as compared to $9,000 for
the three month period ended December 31, 1996.  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 December 31, 1997 was
 .76%.

     The Banks non-interest income decreased by $14,000 to
$173,000 for the three month period ended December 31, 1997 as
compared to $187,000 for the same period in 1996.  The decrease
was attributable to a decrease in realized and unrealized gains
on trading account securities and realized gains on sales of
investment securities, available for sale of $36,000, a decrease
of $6,000 in other customer fees, and an increase of $28,000 in
deposit service charge income.  Trading account securities are
equity securities, which are subject to market fluctuations.

     Non-interest expense increased by $57,000 to $938,000 for
the three month period ended December 31, 1997 as compared to
$881,000 for the same period in 1996.  Compensation and benefits
increased by $72,000 to $470,000 for the three month period
ended December 31, 1997 as compared to $398,000 for the same
period in 1996.  This increase is primarily attributable to a
general increase in salaries and wages  and performance bonuses
paid during the quarter ended December 31, 1997. 

     Occupancy expense decreased by $18,000 to $43,000 for the
three month period ended December 31, 1997 compared to $61,000
for the same period in 1996. This decrease was mainly the result
of decreased property taxes and depreciation expense.
     
     Equipment expense increased by $13,000 to $69,000 for the
three month period ended December 31, 1997 from $56,000 for the
three month period ended December 31, 1996 primarily due to
higher depreciation expense.

     Data processing expense increased by $8,000 to $63,000 for
the three month period ended December 31, 1997 from $55,000 for
the three month period ended December 31, 1996 primarily due to
an increased level of data processing services.  In addition,
the Bank has entered into an agreement with a new vendor for
data processing services beginning in March 1998.  As a result,
the Bank will incur 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.                               

     SAIF deposit insurance premiums decreased by $36,000 to
$21,000 for the three month period ended December 31, 1997 as
compared to $57,000 for the three month period ended December
31, 1996 due to lower SAIF premiums.   
  
     Professional services decreased by $13,000 for the three
month period ended December 31, 1997 primarily due to lower
accounting and consulting fees.  Most of this decrease was
attributable to fees paid to consultants for recommendations to
improve the Bank's operational procedures during the quarter
ended December 31, 1996. 

     Advertising expense increased by $13,000 to $49,000 for the
quarter ended December 31, 1997 compared to $36,000 for the
quarter ended December 31, 1996 primarily due to the Bank's new
logo campaign launched in the quarter ended December 31, 1997.


                               14<PAGE>
<PAGE>

     State franchise and deposit taxes decreased by $4,000 to
$31,000 for the three month period ended December 31, 1997
compared to $35,000 for the three month period ended December
31, 1996 due to a change in the Bank's estimated liability. 

     Other expense increased by $21,000 to $144,000 for three
the month period ended December 31, 1997 from $123,000 for the
three month period ended December 31, 1996 as the result of
small increases in several expense categories.    

     Income taxes increased by $5,000 to $208,000 for the three
month period ended December 31, 1997 compared to $203,000 for
the three months ended December 31, 1996 due to higher earnings.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
AND 1996

     Net earnings increased by $626,000 to $789,000 for the six
month period ended December 31, 1997 from $163,000 for the six
month period ended December 31, 1996.  The primary reasons for
the decrease were a $338,000 increase in net interest income, an
increase of $132,000 in noninterest income, a decrease of
$644,000 in noninterest expense offset by an increase of $49,000
in the provision for loan losses and an increase of $439,000 in
income tax expense.

     Net interest income increased by $338,000 for the six month
period ended December 31, 1997 as compared to the six month
period ended December 31, 1996.  During the six months ended
December 31, 1997, 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 $523,000 to $4.781 million
for the six month period ended December 31, 1997 as compared to
$4.258 million for the six month period ended December 31, 1996. 
This increase is mainly attributable to a higher weighted
average balance of loans receivable outstanding.

     Interest on investment securities increased by $97,000 to
$1.429 million during the six month period ended December 31,
1997 from $1.332 million for the six month period ended December
31, 1996 primarily due to higher yields.

     Interest on deposits with other financial institutions
increased by $6,000 to $85,000 for the six month period ended
December 31, 1997 from $79,000 for the six month period ended
December 31, 1996 due to higher levels of interest-bearing cash
balances. 

     Interest on deposits increased by $110,000 to $3.255
million for the six month period ended December 31,  1997 from
$3.145 million for the six month period ended December 31, 1996
as a result of higher volume and a change in the overall deposit
mix.  Lower rate savings accounts declined, while Certificates
of Deposits increased.

     Interest on short term borrowings and long term debt
borrowed funds increased by $179,000 to $260,000 for the six
month period ended December 31, 1997 from $81,000 for the six
month period ended December 31, 1996 due to higher levels of
borrowing.

     The provision for loan losses increased by $49,000 for the
six month period ended December 31, 1997  compared to the six
month period ended December 31, 1996.  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 December 31, 1997 was
 .76%.

     The Banks non-interest income increased by $132,000 to
$468,000 for the six month period ended December 31, 1997 as
compared to $336,000 for the same period in 1996.  Gains from
the sale of trading account securities and


                              15<PAGE>
<PAGE>

investment securities, available for sale increased by $86,000
for the six months ended December 31, 1997 as compared to the
six month period ended December 31, 1996.  Service charges on
deposit accounts increased by $54,000 and other customer fees
decreased by $5,000.  Other noninterest income decreased by
$4,000 for the six months ended December 31, 1997 with no
significant change in any other single category.  

     Non-interest expense increased by $643,000 to $1.832
million for the six month period ended December 31, 1997 as
compared to $2.475 million for the same period in 1996. 
Compensation and benefits increased by $124,000 to $964,000 for
the six month period ended December 31, 1997 as compared to
$840,000 for the same period in 1996.  This increase is
primarily due to a general increase in salaries and wages and
performance bonuses paid in the quarter ended December 31, 1997. 

     Occupancy expense decreased by $34,000 to $81,000 for the
six month period ended December 31, 1997 compared to $115,000
for the same period in 1996. This decrease was mainly the result
of decreased repairs and maintenance and depreciation expenses.

     Equipment expense increased by $34,000 to $142,000 for the
six month period ended December 31, 1997 from $108,000 for the
six month period ended December 31, 1996 primarily due to
increased depreciation expense associated with the New Tazewell
branch.
     
     Data processing expense increased by $8,000 to $63,000 for
the three month period ended December 31, 1997 from $55,000 for
the three month period ended December 31, 1996 primarily due to
an increased level of data processing services.  In addition,
the Bank has entered into an agreement with a new vendor for
data processing services beginning in March 1998.  As a result,
the Bank will incur 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 $42,000
for the six month period ended December 31, 1997 from $127,000
for the six month period ended December 31, 1996 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 December 31, 1996.
     
     Professional services decreased by $26,000 to $85,000 for
the six month period ended December 31, 1997 compared to
$111,000 for the same period in 1996.  Most of this decrease was
attributable to fees paid to consultants  for recommendations to
improve the Banks operational procedures in six month period
ended December 31, 1996.     

     Advertising expense increased by $10,000 to $70,000 for the
six months ended December 31, 1997 compared to $60,000 for the
six months ended December 31, 1996 primarily due to the Bank's
new logo campaign launched in the quarter ended December 31,
1997.
 
     State franchise and deposit taxes decreased by $13,000 to
$62,000 for the six month period ended December 31, 1997 from
$75,000 for the six month period ended December 31, 1996 due to
a change in the Bank's estimated liability.
 
     Other expense increased by $32,000 to $261,000 for six the
month period ended December 31, 1997 from $229,000 for the six
month period ended December 31, 1996.  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 $439,000 to $534,000 for the six
month period ended December 31, 1997 compared to $95,000 for the
six month period ended December 31, 1996 due to higher earnings.


                              16<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
             
             None   
          
          
<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:  February 10, 1998