<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 September 30, 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 September 30, 1998 was 1,089,648.



                              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        8-10

ITEM  2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS    10-14


PART II - OTHER INFORMATION                                15


SIGNATURES                                                 16

                            2<PAGE>
<PAGE>
               HFB FINANCIAL CORPORATION AND SUBSIDIARY
                       CONSOLIDATED BALANCE SHEET
                               (Unaudited)
<TABLE>
<CAPTION>
                                                SEPTEMBER 30,      JUNE 30,
                                                   1998             1998
                                                ------------    ------------
ASSETS
<S>                                             <C>             <C>
  Cash and cash equivalents                     $  5,689,624    $  6,947,148
  Trading securities                                 942,326         835,307
  Investment securities
    Available for sale                            26,423,289      26,904,517
    Held to maturity                              19,901,360      20,546,634
                                                ------------    ------------
       Total investment securities                46,324,649      47,451,151 
  Loans                                          121,318,077     117,143,613
      Allowance for loan losses                   (1,037,813)       (972,859)
                                                ------------    ------------
       Net loans                                 120,280,264     116,170,754
  Premises and equipment                           2,248,430       2,220,548
  Real estate owned                                   65,617  
  Federal Home Loan Bank stock                     1,255,900       1,255,900
  Interest receivable                              1,545,011       1,407,901
  Other assets                                       104,178         148,077
                                                ------------    ------------
       Total assets                             $178,455,999    $176,436,786
                                                ============    ============

LIABILITIES
  Deposits
    Interest bearing                            $144,717,719    $144,622,466
    Non-interest bearing                             744,590         258,952
                                                ------------    ------------
       Totals                                    145,462,309     144,881,418
  Short-term borrowings                            6,500,000       6,500,000
  Long-term debt                                   5,646,053       5,661,598
  Interest payable                                 1,287,318         580,621
  Other liabilities                                1,831,634         825,950
                                                ------------    ------------
       Total liabilities                         160,727,314     158,449,587
                                                ------------    ------------
STOCKHOLDERS' EQUITY
  Preferred stock, $1 par value
    Authorized and unissued 
     -- 1,000,000 shares                                  --              --
  Common stock, $1 par value
    Issued and outstanding --
    1,291,694 shares                               1,291,694       1,291,694
  Additional paid-in capital                       6,195,948       6,195,948
  Less: Common stock acquired by ESOP                (12,427)        (41,545)
        Common stock acquired by Rabbi trusts
         for deferred compensation plans            (684,874)       (313,059)
  Treasury stock, at cost, 202,046 shares         (2,030,955)     (2,030,955)
  Retained earnings                               12,678,805      12,754,183
  Accumulated other comprehensive income, 
    net unrealized gain on securities available
    for sale                                         290,494         130,933
                                                ------------    ------------
     Total stockholders' equity                   17,728,685      17,987,199
                                                ------------    ------------
     Total liabilities and stockholders' equity $178,455,999    $176,436,786
                                                ============    ============
</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 
                                            SEPTEMBER 30,    
                                         ----------------------
                                            1998        1997   
                                         ----------  ----------
<S>                                      <C>         <C>       
INTEREST INCOME
  Loans receivable                       $2,508,285  $2,394,912
  Investment securities                     770,909     711,540
  Other dividend income                      27,622      27,054
  Deposits with financial
   institutions                              19,621      35,852
                                         ----------  ----------
     Total interest income                3,326,437   3,169,358
                                         ----------  ----------
INTEREST EXPENSE
  Deposits                                1,830,751   1,604,149
  Short term borrowings                      94,925     108,242
  Long term debt                             84,137      14,313
                                         ----------  ----------
     Total interest expense               2,009,813   1,726,704
                                         ----------  ----------
NET INTEREST INCOME                       1,316,624   1,442,654
  Provision for loan losses                  68,299      67,955
                                         ----------  ----------
NET INTEREST INCOME AFTER PROVISION
 FOR LOAN LOSSES                          1,248,325   1,374,699
                                         ----------  ----------
OTHER INCOME
  Service charges for deposit accounts       93,306      99,518
  Other customer fees                        32,342      11,037
  Net gain (loss) on trading securities    (200,110)    167,823
  Net realized gain (loss) on sales of 
   available for sale securities                  0       7,623
  Other income                                6,342       9,763
                                         ----------  ----------
     Total other income                     (68,120)    295,764
                                         ----------  ----------
OTHER EXPENSES
  Salaries and employee benefits            423,704     469,618
  Net occupancy expenses                     49,851      51,276
  Equipment expenses                         52,867      58,991
  Data processing fees                       67,386      61,833
  Deposit insurance expense                  21,654      21,104
  Legal and professional fees                52,146      37,558
  Advertising                                26,163      20,568
  State franchise and deposit taxes          31,725      31,369
  Other expenses                            187,878     141,167
                                         ----------  ----------
     Total other expenses                   913,374     893,484
                                         ----------  ----------

INCOME BEFORE INCOME TAX                    266,831     776,979
  Income tax expense                        102,487     326,529
                                         ----------  ----------

NET INCOME                               $  164,344  $  450,450
                                         ==========  ==========
BASIC EARNINGS PER SHARE                 $     0.15  $     0.42  
                                         ==========  ==========
DILUTED EARNINGS PER SHARE               $     0.15  $     0.41  
                                         ==========  ==========
WEIGHTED AVERAGE SHARES OUTSTANDING       1,089,648   1,083,626
                                         ==========  ==========

</TABLE>
See notes to consolidated financial statements.

                            4<PAGE>
<PAGE>
           HFB FINANCIAL CORPORATION AND SUBSIDIARY
    CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                  Three months ended September 30, 1998
                         (Unaudited)
<TABLE>
<CAPTION>
                                             ADDITIONAL               
                                  COMMON      PAID-IN      ESOP       RABBI
                                  STOCK       CAPITAL      DEBT*      TRUSTS
                                ----------  ----------  ----------  ----------  
<S>                             <C>         <C>         <C>         <C>         
BALANCES, JUNE 30, 1998         $1,291,694  $6,195,948  $ (41,545)  $(313,059)

Net income  

Other comprehensive income -
  net change in unrealized
  gain on securities available
  for sale                    

Dividends declared

Reduction of ESOP debt                                     29,118

Transitional fair value
  adjustment of rabbi
  trust shares                                                       (371,815)
                                ----------  ----------  ---------   ---------  
BALANCES, SEPTEMBER 30, 1998    $1,291,694  $6,195,948  $ (12,427)  $(684,874) 
                                ==========  ==========  =========   =========  
<CAPTION>
                                                         ACCUMULATED
                                                            OTHER
                                                         COMPREHENSIVE
                                                            INCOME -
                                                         NET UNREALIZED
                                                            GAIN ON
                                                           SECURITIES      TOTAL
                                TREASURY      RETAINED     AVAILABLE    STOCKHOLDERS'
                                 STOCK        EARNINGS     FOR SALE        EQUITY
                               -----------   -----------   ----------    -----------
<S>                            <C>           <C>           <C>           <C>
BALANCES, JUNE 30, 1998        $(2,030,955)  $12,754,183   $ 130,933     $17,987,199

Net income                                       164,344(1)                  164,344

Other comprehensive income -
  net change in unrealized
  gain on securities available
  for sale                                                   159,561 (1)     159,561

Dividends declared                              (239,722)                   (239,722)

Reduction of ESOP debt                                                        29,118

Transitional fair value 
 adjustment of rabbi
 trust shares                                                               (371,815)
                               -----------   -----------   ----------    -----------
BALANCES, SEPTEMBER 30, 1998   $(2,030,955)  $12,678,805   $  290,494    $17,728,685
                               ===========   ===========   ==========    ===========
<FN>
__________
(1)  Components of comprehensive income (total comprehensive 
     income $323,905).
*     Employees Stock Ownership Plan (ESOP)
</FN>
</TABLE>
See notes to consolidated financial statements.

                            5<PAGE>
<PAGE>
            HFB FINANCIAL CORPORATION AND SUBSIDIARY  
              CONSOLIDATED STATEMENT OF CASH FLOWS
                          (Unaudited)
<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED
                                                         SEPTEMBER 30,
                                                    ------------------------- 
                                                       1998           1997
                                                    ----------     ----------
<S>                                                 <C>            <C>
OPERATING ACTIVITIES
  Net income (loss)                                $   164,344     $  450,450
  Adjustments to reconcile net income to net
   cash provided by operating activities
   Provision for loan losses                            68,299         67,955
   Depreciation and amortization
     Property and equipment                             52,800         61,016
     Cost of ESOP and MRP                               29,118         36,238
     Investment securities                              (2,098)         2,282
   FHLB stock dividend                                                (21,300)
   Deferred income tax                                                  7,000
   Net change in
     Trading account securities                       (107,019)      (302,183)
     Interest receivable                              (137,110)      (232,403)
     Interest payable                                  706,697        598,063
     Other assets                                       43,899            573
     Other liabilities                                 543,177        406,630
                                                   -----------     ----------
   Net cash provided by operating
    activities                                       1,362,107      1,074,321
                                                   -----------     ----------
INVESTING ACTIVITIES
  Purchases of securities available for sale        (1,506,953)    (1,702,778)
  Purchases of securities held to maturity            (505,144)   
  Proceeds from maturities of securities
   available for sale                                1,713,380        834,903
  Proceeds from sales of securities available
   for sale                                            520,648      1,284,398
  Proceeds from maturities of securities
   held to maturity                                  1,156,924      1,618,013
  Net change in loans                               (4,243,426)    (3,405,470)
  Purchases of premises and equipment                  (80,683)    
                                                   -----------    -----------
    Net cash used by investing activities           (2,945,254)    (1,370,934)
                                                   -----------     ----------
</TABLE>
                        (continued)

                            6<PAGE>
<PAGE>
            HFB FINANCIAL CORPORATION AND SUBSIDIARY  
         CONSOLIDATED STATEMENTS OF CASH FLOWS--CONTINUED
                          (Unaudited)
<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED
                                                          SEPTEMBER 30,
                                                    ------------------------- 
                                                       1998           1997
                                                    ----------     ----------
<S>                                                 <C>            <C>
FINANCING ACTIVITIES
  Net change in                                    
    Non interest-bearing, interest-bearing
     and savings deposits                          $    75,858     $  (83,354)
    Certificates of deposit                            505,033       (913,637)
    Short term borrowings                                           1,000,000
  Repayment of long-term debt                          (15,545)       (14,347)
  Cash dividends                                      (239,723)      (227,562)
  Common stock acquired by Rabbi trusts                               (11,151)
                                                   -----------     ----------
     Net cash used by financing activities             325,623       (250,051)
                                                   -----------     ----------

NET CHANGE IN CASH AND CASH EQUIVALENTS             (1,257,524)      (546,664)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD       6,947,148      3,794,637
                                                   -----------     ----------

CASH AND CASH EQUIVALENTS, END OF PERIOD           $ 5,689,624     $3,247,973
                                                   ===========     ==========

ADDITIONAL CASH FLOWS INFORMATION
  Interest paid                                    $ 1,066,203     $1,128,642
  Income tax paid                                       21,000        146,314
                                                

</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 month periods ended September 30, 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").   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, 1998 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.   ACCOUNTING PRONOUNCEMENTS     

     The Financial Accounting Standards Board has issued
     Statement No. 130, "Reporting Comprehensive Income,"
     which establishes standards for reporting and display
     of comprehensive income and its components in a full
     set of general-purpose financial statements, 
     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,
     Statement No. 132, "Employers Disclosures About
     Pensions and Other Postretirement Benefits", which
     revises employers disclosures about pension and other
     postretirement plans, and Statement No. 133,
     "Accounting for Derivative Instruments and Hedging
     activities", which requires companies to record
     derivatives on the balance sheet at their fair value. 
    
     Statement No. 130 was effective for the Company for
     the quarter ended September 30, 1998.  Statements No.
     131 and 132 were also effective for the Company
     beginning in fiscal 1999 but did not have any material
     impact on the Company's financial position or results
     of operations.  Statement No. 133 will be effective
     for the Company beginning in fiscal 2000 and is also
     not expected to have a material impact on the
     Company's financial position or results of operations. 
     
3.   DEFERRED COMPENSATION ARRANGEMENTS "RABBI TRUSTS"
     
     Effective September 30, 1998, the Company implemented
     Emerging Issues Tasks Forces "EITF" 97-14 Accounting
     for Deferred Compensation Agreements Where Amounts
     Earned Are Held in a Rabbi Trust and Invested".  This
     EITF requires that deferred compensation obligation
     arrangements where amounts earned by an employee are
     invested in the stock of the employer and placed in a
     "rabbi trust" be recorded as a liability at the fair
     value of the Company shares held rather than at
     original acquisition cost as has previously been the
     case.  The EITF allowed for a transition adjustment of
     the excess of the September 30, 1998 fair value over
     the original cost of Company shares owned to be
     recorded, net of tax, as a onetime adjustment.  This
     excess of fair value over cost amounted to $562,400
     ($371,815 net of tax) at September 30.  All future
     increases/decreases in the deferred compensation
     liability will be recognized in income.
                              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 September 30, 1998        -------------------------------
<S>                                           <C>        <C>         <C>
  Net Income                                 $  164
                                             ------
  Basic Earnings Per Share                                           $    .15
   Income available to common stockholders      164     1,089,648
  Effect of Diluted Securities
    Stock options                                          27,194
                                             --------------------
  Diluted Earnings Per Share
    Income available to common stockholders
          and assumed conversions            $  164     1,115,842    $    .15 
                                             ================================
Three Months  Ended September 30, 1997
  Net Income                                 $  450
                                             ------
  Basic Earnings Per Share                                           $    .42
   Income available to common stockholders      450     1,083,626
  Effect of Diluted Securities
    Stock options                                          27,626
                                             --------------------
  Diluted Earnings Per Share
    Income available to common stockholders
          and assumed conversions            $  450     1,111,282    $    .41
                                             ================================
</TABLE>
5.   NONPERFORMING LOANS AND PROBLEM ASSETS
 
     The following sets forth the activity in the Bank's
     allowance for  loan losses for the three months ended
     September 30, 1998 and 1997:                         
<TABLE>
<CAPTION>
                                                 (Dollars in thousands)
                                                  1998            1997
                                                  ----            ---
<S>                                              <C>              <C>
     Balance at July 1                           $  973           $710
     Charge offs                                      3
     Provision for loan losses                       68             68
                                                 ------           ----
     Balance September 30                        $1,038           $778

     Ratio of net charge offs during the 
       period to average loans outstanding 
       during the period                            .00%           .00%
                                                 ======           ====
</TABLE>

Information on impaired loans is summarized below

     AT SEPTEMBER 30                               1998
                                                   ----
     
     Impaired loans with an allowance              $1,271
     
     Allowance for impaired loans (included in 
        the Company's (allowance for loan losses)  $  356

                              9<PAGE>
<PAGE>      
     
     THREE MONTHS ENDED SEPTEMBER 30                 1998
                                                     ----
     Average balance of impaired loans              $1,271
      
     Interest income recognized on impaired loans        3
     
     Cash-basis interest received                        0
                                                   
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 September 30,
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.

FINANCIAL CONDITION

The Corporation's assets increased by 1.14% to $178.5 million at
September 30, 1998  compared to $176.4 million at June 30, 1998. 
The majority of this increase is reflected in increases in loans
and interest receivable offset by decreases in cash and due from
banks and investment securities.  

Cash and cash equilavents decreased by $1.2 million to $5.7
million at September 30, 1998  from $6.9 million at  June 30,
1998.  This increase was primarily the result of funding
increased loan volume during the three month period ended
September 30, 1998.
 
The Company maintains a portfolio of trading account securities
which is comprised of common stock of other financial
institutions.  The portfolio was $942,000 at September 30, 1998 
compared to $835,000 at June 30, 1998.  Most of this increase
was attributable to increased investment activity in the
portfolio.

The loan portfolio increased by $4.2 million to $121.3 million
at September 30, 1998 from $117.1 million at June 30, 1998 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 three months ended September 30, 1998, the Bank
originated $10.3 million in mortgages.

At September 30, 1998, the allowance for loan losses was $1.038
million or .86% of loans receivable compared to $973,000 or .83%
of loans receivable at June 30, 1998.  During the three months
ended September 30, 1998, the 
                              10<PAGE>
<PAGE>
provision for loan losses was $68,000.  Total nonperforming
assets were $2.5 million or 2.03% of total loans, net at
September 30, 1998 as compared to $717,000 or .62% of total
loans, net at June 30, 1998.  Most of the increase in
nonperforming loans was due to several problem real estate loans
to one borrower totaling $1.3 million, which became over 90 days
past due during the quarter ended September 30, 1998.  The
properties securing these loans are not generating sufficient
cash flow to fund debt service payments and the borrower was 179
days in arrears on the loans at September 30, 1998.  Foreclosure
proceedings have been initiated and should be finalized in the
near future.  Management has continually evaluated the
collectability of these loans and feels that any potential loss
on these loans has been adequately reserved for.
  
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 three months ended
September 30, 1998, management purchased $2.0 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 September 30, 1998,  the Bank
held $26.4 million in  investment securities, available for sale
with a net unrealized gain of $290,000 and $19.9 million in
investment securities held to maturity.

Total deposits increased by $581,000 million to $145.5 million
at September 30, 1998 from $144.9 million at June 30, 1998. 
During the three months ended September 30, 1998, certificates
of deposit increased $505,000 and NOW accounts and savings
deposits increased $76,000.  Deposit growth was slow during the
three months ended September 30, 1998 primarily due to premium
rates offered by a competing institution during the period.  

The Bank's regulatory liquidity ratio was 29.8% at September 30,
1998  as compared to 26.2% at June 30, 1998.  At September 30,
1998 the Bank met all the fully phased-in regulatory capital
requirements under FIRREA.  Tangible, core and risk-based
capital ratios were 9.2%, 9.2% and 20.6% respectively at
September 30, 1998 as compared to 9.1%, 9.1% and 22.5% at June
30, 1998. 
     
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1998 AND 1997

Net income decreased by $286,000 to $164,000 for the three month
period ended September 30, 1998  from $450,000 for the three
month period ended September 30, 1997 .  The primary reasons for
the decrease were a $126,000 decrease in net interest income
offset by a decrease of $364,000 in noninterest income, a
$20,000 increase in noninterest expense and a $224,000 decrease
in income tax expense.

Net interest income decreased by $126,000 for the three month
period ended September 30, 1998 as compared to the three month
period ended September 30, 1997. Interest expense increased
during the quarter, primarily as the result of a higher interest
cost on deposits.

Interest on loans increased by $113,000 to $2.508 million for
the three month period ended September 30, 1998  as compared to
$2.395 million for the three month period ended September 30,
1997.  This increase is mainly attributable to a higher weighted
average balance of loans receivable outstanding.

Interest on investment securities increased by $59,000 to
$771,000 for the three month period ended September 30, 1998
from $712,000 for the three month period ended September 30,
1997.  This increase is primarily the result of higher weighted
average balances during the period.

Interest on deposits with other financial institutions decreased
by $16,000 to $20,000 for the three month period ended September
30, 1998 from $36,000 for the three month period ended September
30, 1997 primarily due to a lower level of interest-bearing cash
balances. 
<PAGE>
Interest on deposits increased by $227,000 to $1.831 million for
the three month period ended September 30, 1998  from $1.604
million for the three month period ended September 30, 1997  as
a result of  higher volume and a 

                             11<PAGE>
<PAGE>
change in the overall deposit mix.  Lower rate savings accounts
declined, while more costly certificates of deposit increased.
  
Interest on short term borrowings and long term debt increased
by $57,000 to $179,000 for the three month period ended
September 30, 1998  from $122,000 for the three month period
ended September 30, 1997  due to higher levels of borrowing.

The provision for loan losses was $68,000 for the three month
periods ended September 30, 1998 and 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 September 30, 1998 was
 .86%.

The Banks non-interest income decreased by $364,000 to ($68,000)
for the three month period ended September 30, 1998 as compared
to $296,000 for the same period in 1997.  The decrease was
attributable to a net decrease in realized and unrealized gains
(losses) on trading account securities and realized gains on
available for sale securities of $375,000 and an increase of
$13,000 in other customer fees and other income. Losses on
trading account securities during the three months ended
September 30, 1998 totaled $200,000 and were primarily the
result of a reduction in the market value of securities included
in the trading account portfolio.  The trading account portfolio
is comprised of common stocks of other financial institutions
which were adversely affected by the recent decline in the
equities market.
  
Non-interest expense increased by $20,000 to $913,000 for the
three month period ended September 30, 1998  as compared to
$893,000 for the same period in 1997.  Compensation and benefits
decreased by $46,000 to $424,000 for the three month period
ended September 30, 1998 as compared to $470,000 for the same
period in 1997.  This decrease is primarily attributable to a
general decrease in salaries and wages.

Occupancy expense decreased by $1,000 to $50,000 for the three
month period ended September 30, 1998  compared to $51,000 for
the same period in 1997 and equipment expense decreased by
$6,000 to $53,000 for the three month period ended September 30,
1998 from $59,000 for the three month period ended September 30,
1997.  These decreases were primarily due to lower depreciation
expense.

Data processing fees increased by $5,000 to $67,000 for the
three month period ended September 30, 1998 from $62,000 for the
three month period ended September 30, 1997  primarily due to an
increased level of data processing services.           
      
Legal and professional fees increased by $15,000 for the three
month period ended September 30, 1998 primarily due to higher
consulting fees.  

Advertising expense increased by $5,000 to $26,000 for the
quarter ended September 30, 1998  compared to $21,000 for the
quarter ended September 30, 1997 primarily due to a new
advertising campaign.
 
Other expenses increased by $47,000 to $188,000 for the three
month period ended September 30, 1998  from $141,000 for the
three month period ended September 30, 1997 as the result of a
$25,000 loss resulting from employee theft.  The remaining
increases were comprised of various other expense categories.    

Income tax expense decreased by $225,000 to $102,000 for the
three month period ended September 30, 1998  compared to
$327,000 for the three months ended September 30, 1997 due to
decreased earnings.

YEAR 2000

The Company has completed an assessment of its computer systems,
including its information and non-information

                               12<PAGE>
<PAGE>
systems, and identified those systems that it believes could be
affected by the Year 2000 issue.  It has also developed an
implementation plan to address the issue and is in the process
of testing its internal mission critical hardware and software
systems to determine if they are Year 2000 compliant.  While the
Company has exposure to several risks related to Year 2000, the
primary risk to the Company of not complying with Year 2000 is
the potential inability to correctly process and record customer
loan and deposit transactions.

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

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

The Company outsources a significant portion of its data
processing to an outside provider.  A worst case scenario for
the Company would likely involve non-compliance with Year 2000
by its primary data processor in such a manner that would leave
the Company in a position where it could not correctly process
and record customer loan and deposit transactions.  While the
Company plans to test its data processing system for compliance
with Year 2000, it cannot guarantee that the systems of this and
other companies on which the Company's systems  rely will be
timely converted and not have a material effect on the Company.

The Company  has, through September 30, 1998, incurred certain
costs related to Year 2000.  A portion of these costs were
incurred in connection with the recent conversion of the
Company's primary data processing system.  Costs incurred
through September 30, 1998 total approximately $326,000 and
include $205,000 for equipment, $65,000 for software, $12,000
for de-conversion fees that were paid to the previous data
processing provider, $38,000 for training and $6,000 for the
initial assessment.  At September 30, 1998, the Company expects
to incur additional costs associated with testing but does not
expect these costs to be material to the Company's financial
condition or results of operations.

 The Company does not have, at September 30, 1998 any material
commitments to purchase new equipment, software or to incur
material costs to modify its existing system and does not
believe that any material amounts of its existing computer
hardware or software is impaired.  The Company has assessed the
impact of Year 2000 on its commercial lending customers, and
believes that the impact, in terms of potential credit exposure,
is not material.  The majority of the Company's commercial
lending portfolio consists of commercial real estate loans that
are made to companies that are not highly technology intensive.

ASSET/LIABILITY MANAGEMENT

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
                              13<PAGE>
<PAGE>
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. 

                              14<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 for three
                          month period ended September 30,
                          1998
             Exhibit 27.2 Restated Financial Data Schedule for
                          three month period ended September
                          30, 1997
          
          
                          15<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:  November 5, 1998

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