HOME FEDERAL BANK, FEDERAL SAVINGS BANK

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                            EMPLOYMENT AGREEMENT WITH
                                  DAVID B. COOK
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     THIS AGREEMENT entered into this 1st day of January 1, 2001, by and between
Home Federal Bank,  Federal  Savings Bank (the  "Bank"),  and David B. Cook (the
"Executive"),  effective on the Effective  Date, is an amendment and restatement
of the  agreement  entered  into by and  between  the Bank and  David B. Cook on
September 19th, 2000.

     WHEREAS,  the parties  desire by this  writing to set forth the  continuing
employment relationship of the Bank and the Executive.

     NOW, THEREFORE, it is AGREED as follows:

     1. Defined Terms

     When used anywhere in this  Agreement,  the following  terms shall have the
meaning set forth herein.

         (a) "Board" shall mean the Board of Directors of the Bank.

         (b) "Change in Control" shall mean any one of the following events: (i)
the  acquisition  of  ownership,  holding  or power to vote more than 25% of the
Bank's or the Company's  voting stock,  (ii) the  acquisition  of the ability to
control the  election of a majority  of the Bank's or the  Company's  directors,
(iii) the acquisition of a controlling influence over the management or policies
of the Bank or the  Company  by any  person  or by  persons  acting as a "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934), or
(iv) during any period of two consecutive  years,  individuals  (the "Continuing
Directors")  who at the  beginning  of  such  period  constitute  the  Board  of
Directors of the Bank or the Company (the "Existing Board") cease for any reason
to constitute at least  two-thirds  thereof,  provided that any individual whose
election  or  nomination  for  election  as a member of the  Existing  Board was
approved by a vote of at least  two-thirds of the  Continuing  Directors then in
office shall be considered a Continuing Director. Notwithstanding the foregoing,
in the case of (i), (ii) and (iii)  hereof,  ownership or control of the Bank by
the Company  itself shall not  constitute  a Change in Control.  For purposes of
this paragraph only, the term "person" refers to an individual or a corporation,
partnership,   trust,   association,   joint  venture,  pool,  syndicate,   sole
proprietorship,  unincorporated  organization  or any other  form of entity  not
specifically listed herein.

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         (c) "Code"  shall mean the Internal  Revenue Code of 1986,  as  amended
from time to time, and as interpreted through applicable rulings and regulations
in effect from time to time.

         (d)  "Code ss.280G  Maximum"  shall  mean  the  product of 2.99 and his
"base amount" as defined in Codess.280G(b)(3).

         (e) "Company" shall mean HFB Financial Corporation.

         (f) "Disability" shall mean, for purposes of this Agreement, a physical
or mental  infirmity  which  impairs the  Executive's  ability to  substantially
perform  his duties  under this  Agreement  and which  results in the  Executive
becoming eligible for long-term  disability  benefits under the Bank's long-term
disability  plan (or, if the Bank has no such plan in effect,  which impairs the
Executive's ability to substantially perform his duties under this Agreement for
a period of 180 consecutive days).

         (g) "Effective Date" shall mean January 1, 2001.

         (h)  "Expiration  Date" shall mean the date on  which  the term of this
Agreement  expires pursuant to Section 5 hereof (taking into account any and all
renewals of such term).

         (i) "Good Reason" shall mean any of the following events, which has not
been  consented to in advance by the Executive in writing:  (i) the  requirement
that the  Executive  move his  personal  residence,  or  perform  his  principal
executive functions,  more than 35 miles from his primary office as of the later
of the Effective Date and the most recent voluntary relocation by the Executive;
(ii) a  material  reduction  in the  Executive's  base  compensation  under this
Agreement as the same may be increased  from time to time;  (iii) the failure by
the Bank to continue to provide the  Executive  with  compensation  and benefits
provided under this Agreement as the same may be increased from time to time, or
with benefits  substantially  similar to those  provided to him under any of the
employee  benefit  plans in which  the  Executive  now or  hereafter  becomes  a
participant,  or the taking of any action by the Bank which  would  directly  or
indirectly  reduce any of such benefits or deprive the Executive of any material
fringe benefit enjoyed by him under this  Agreement;  (iv) the assignment to the
Executive  of  duties  and  responsibilities  materially  different  from  those
normally associated with his position; (v) a failure to reelect the Executive to
the Board of Directors of the Bank;  (vi) a material  diminution or reduction in
the   Executive's    responsibilities   or   authority    (including   reporting
responsibilities)  in connection  with his employment  with the Bank; or (vii) a
material  reduction in the  secretarial or other  administrative  support of the
Executive.

        (j) "Just Cause" shall  mean,  in  the  good faith  determination of the
Board, the Executive's  personal dishonesty,  incompetence,  willful misconduct,
breach of fiduciary  duty  involving  personal  profit,  intentional  failure to
perform stated duties,  willful  violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final cease-and-desist order, or
material breach of any provision of this  Agreement.  No act, or failure to act,
on the Executive's  part

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shall be  considered  "willful"  unless he has acted,  or failed to act, with an
absence of good faith and without a reasonable belief that his action or failure
to act was in the best interest of the Bank.

         (k) "Present  Value" shall   mean   the  applicable  federal  rate,  as
determined in accordance with the rules and regulations under Code ss. 280G.

         (l)  "Protected  Period"  shall mean the period that begins on the date
six months before a Change in Control and ends on the later of the second annual
anniversary of the Change in Control or the expiration date of this Agreement.

         (m) "Trust" shall mean  a  grantor trust that is designed in accordance
with Revenue Procedure 92-64 and has a trustee independent of the Bank.

     2.  Employment.  The  Executive  is  employed  as the  President  and Chief
Executive  Officer of the Bank. The Executive  shall render such  administrative
and  management  services  for the  Bank as are  currently  rendered  and as are
customarily  performed by persons situated in a similar executive capacity.  The
Executive  shall also promote,  by  entertainment  or  otherwise,  as and to the
extent permitted by law, the business of the Bank. The Executive's  other duties
shall be such as the Board may from time to time  reasonably  direct,  including
normal duties as an officer of the Bank.

     3. Base Compensation.  The Bank agrees to pay the Executive during the term
of this Agreement a salary at the rate of $147,500.00 per annum, payable in cash
not less  frequently than monthly.  The Board shall review,  not less often than
annually,  the rate of the  Executive's  salary,  and in its sole discretion may
decide to increase his salary.

     4. Discretionary  Bonuses.  The Executive shall participate in an equitable
manner with all other senior  management  employees of the Bank in discretionary
bonuses  that  the  Board  may  award  from  time to time to the  Bank's  senior
management employees. No other compensation provided for in this Agreement shall
be  deemed  a  substitute  for the  Executive's  right  to  participate  in such
discretionary  bonuses.  Notwithstanding  the  foregoing,  following a Change in
Control, the Executive shall receive discretionary bonuses that are made no less
frequently  than,  and in annual  amounts  not less  than,  the  average  annual
discretionary  bonuses paid to the Executive  during each of the three  calendar
years immediately preceding the year in which such Change in Control occurs.

     5. Other Benefits.

         (a) Participation  in Retirement,  Medical and Other Plans.  During the
term of this  Agreement,  the Executive  shall be eligible to participate in the
following   benefit  plans  maintained  by  the  Bank:  group   hospitalization,
disability,  health, dental, sick leave, life insurance,  travel and/or accident
insurance, auto allowance/auto lease, retirement,  pension, and/or other present
or future qualified plans provided by the Bank, generally, which benefits, taken
as a whole,  must be at least as favorable  as those in effect on the  Effective
Date.  Further,  if the Executive  retires from  employment  with the Bank at or
after age 55 and for a reason other than Just Cause,  the Bank shall provide the
Executive and his legal dependents with medical  insurance  coverage that is not
less

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favorable  than the coverage that the Bank  provides for its officers.  The Bank
shall pay all premiums for this coverage,  shall provide it for the  Executive's
lifetime,  and agrees that this  obligation  shall  survive  expiration  of this
Agreement.

         (b)  Employee Benefits; Expenses.  The Executive shall be  eligible  to
participate  in any fringe  benefits  which are or may become  available  to the
Bank's senior management  employees,  including for example: any stock option or
incentive compensation plans, and any other benefits which are commensurate with
the  responsibilities  and functions to be performed by the Executive under this
Agreement.  The Executive  shall be reimbursed for all reasonable  out-of-pocket
business  expenses  which he shall incur in connection  with his services  under
this  Agreement  upon  substantiation  of such expenses in  accordance  with the
policies of the Bank.

     6. Term. The Bank hereby employs the  Executive,  and the Executive  hereby
accepts such employment under this Agreement,  for the period  commencing on the
Effective  Date and  ending 36 months  thereafter  (or such  earlier  date as is
determined  in  accordance  with  Section  10).  Additionally,  on  each  annual
anniversary  date from the Effective  Date, the  Executive's  term of employment
shall be extended for an additional  one-year  period beyond the then  effective
expiration date, provided the Board determines in a duly adopted resolution that
the performance of the Executive has met the Board's requirements and standards,
and that this Agreement  shall be extended.  Only those members of the Board who
have no personal interest in this Employment Agreement shall discuss and vote on
the approval and subsequent review of this Agreement.

     In the event the Executive serves the full term of this Agreement,  and the
Bank does not offer to renew this  Agreement upon  substantially  the same terms
and  conditions  for an  additional  three- year term,  the  Executive  shall be
entitled to a severance  benefit equal to twelve months of his then current base
monthly salary, plus such vested employee benefits to which the Executive may be
entitled when due and payable.

     7. Loyalty; Noncompetition.

         (a) During  the  period  of  his  employment  hereunder  and except for
illnesses,  reasonable vacation periods,  and reasonable leaves of absence,  the
Executive shall devote all his full business time, attention, skill, and efforts
to the faithful  performance of his duties hereunder;  provided,  however,  from
time to time,  the  Executive  may serve on the boards of directors of, and hold
any other offices or positions in,  companies or  organizations,  which will not
present any  conflict of interest  with the Bank or any of its  subsidiaries  or
affiliates,  or unfavorably  affect the  performance of the  Executive's  duties
pursuant  to this  Agreement,  or will not  violate  any  applicable  statute or
regulation.  "Full  business  time" is  hereby  defined  as that  amount of time
usually  devoted to like  companies by similarly  situated  executive  officers.
During the term of his employment under this Agreement,  the Executive shall not
engage in any business or activity contrary to the business affairs or interests
of the Bank, or be gainfully employed in any other position or job other than as
provided above.

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         (b) Nothing  contained in  this  Section  shall be deemed to prevent or
limit the Executive's  right to invest in the capital stock or other  securities
of any business  dissimilar  from that of the Bank,  or,  solely as a passive or
minority investor, in any business.

     8.  Standards.  The Executive shall perform his duties under this Agreement
in accordance  with such  reasonable  standards as the Board may establish  from
time to time.  The Bank will provide the Executive  with the working  facilities
and staff customary for similar  executives and necessary for him to perform his
duties.

     9. Vacation and Sick Leave. At such reasonable  times as the Board shall in
its discretion permit, the Executive shall be entitled,  without loss of pay, to
absent himself  voluntarily  from the  performance of his employment  under this
Agreement, all such voluntary absences to count as vacation time, provided that:

         (a) The Executive shall be entitled to an annual vacation in accordance
with the policies that the Board periodically  establishes for senior management
employees of the Bank.

         (b) The Executive  shall not receive any additional  compensation  from
the Bank on account of his failure to take a vacation,  and the Executive  shall
not accumulate  unused  vacation or sick leave from one fiscal year to the next,
except in either case to the extent authorized by the Board.

         (c) In addition to the aforesaid paid vacations, the Executive shall be
entitled without loss of pay, to absent himself voluntarily from the performance
of his employment with the Bank for such additional periods of time and for such
valid and  legitimate  reasons  as the Board  may in its  discretion  determine.
Further, the Board may grant to the Executive a leave or leaves of absence, with
or without pay, at such time or times and upon such terms and conditions as such
Board in its discretion may determine.

         (d) In addition,  the  Executive  shall  be  entitled to an annual sick
leave benefit as established by the Board.

     10.  Termination and  Termination  Pay.  Subject to Section 12 hereof,  the
Executive's   employment   hereunder  may  be  terminated  under  the  following
circumstances:

         (a) Death.  The  Executive's  employment  under  this  Agreement  shall
terminate upon his death during the term of this  Agreement,  in which event the
Executive's  estate  shall be  entitled  to  receive  the  compensation  due the
Executive through the Agreement's Expiration Date.

         (b)  Disability.  The  Bank  may  terminate the Executive's  employment
after having  established  the  Executive's  Disability.  The Executive shall be
entitled to the compensation and benefits  provided for under this Agreement for
(i) any period during the term of this Agreement and prior to the  establishment
of the Executive's  Disability  during which the Executive is unable to work due
to the physical or mental  infirmity,  or (ii) any period of Disability which is
prior to the

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Executive's  termination of employment  pursuant to this Section;  provided that
any benefits paid pursuant to the Bank's long term disability plan will continue
as provided in such plan.  During any period that the  Executive  shall  receive
disability benefits and to the extent that the Executive shall be physically and
mentally  able to do so,  he shall  furnish  such  information,  assistance  and
documents so as to assist in the continued  ongoing business of the Bank and, if
able,  shall  make  himself  available  to  the  Bank  to  undertake  reasonable
assignments  consistent  with his prior  position  and his  physical  and mental
health.  The Bank shall pay all reasonable  expenses incident to the performance
of any assignment given to the Executive during the disability period.

         (c) Just Cause.  The Board  may, by written  notice  to the  Executive,
immediately  terminate his employment at any time, for Just Cause. The Executive
shall have no right to receive  compensation  or other  benefits  for any period
after termination for Just Cause.

         (d)  Without  Just Cause;  Constructive  Discharge.  The  Board may, by
written  notice to the  Executive,  immediately  terminate his employment at any
time for a reason other than Just Cause,  in which event the Executive  shall be
entitled  to receive  the  following  compensation  and  benefits  (unless  such
termination  occurs during the Protected Period, in which event the benefits and
compensation  provided for in Section 12 shall apply):  (i) the salary  provided
pursuant to Section 3 hereof, up to the Expiration Date, plus said salary for an
additional 12-month period, and (ii) at the Executive's election either (A) cash
in an  amount  equal  to the  Present  Value  of the  cost to the  Executive  of
obtaining all health,  life,  disability  and other benefits which the Executive
would have been eligible to  participate  in through the  Expiration  Date based
upon the benefit levels  substantially equal to those that the Bank provided for
the  Executive  at the  date of  termination  of  employment,  or (B)  continued
participation  under such Bank benefit plans through the  Expiration  Date,  but
only to the extent the Executive continues to qualify for participation therein;
provided  that in no event shall the total value of the  payments  due under (i)
and (ii) hereof exceed three years' total  compensation.  All amounts payable to
the Executive shall be paid, at the option of the Executive,  either in periodic
payments through the Expiration Date, or in one lump sum within ten days of such
termination  (in which event he shall receive the Present Value of such periodic
payments).

         (e)  Good Reason.  The Executive  shall  be  entitled  to  receive  the
compensation  and benefits  payable under  subsection  10(d) hereof in the event
that he  voluntarily  terminates  employment  within  90 days of an  event  that
constitutes Good Reason,  (unless such voluntary  termination  occurs during the
Protected Period,  in which event the benefits and compensation  provided for in
Section 12 shall apply).

         (f) Voluntary  Termination by Executive.  Subject to Section 12 hereof,
the Executive may voluntarily terminate employment with the Bank during the term
of this Agreement,  upon at least 90 days' prior written notice to the Board, in
which case the Executive shall receive only his compensation,  vested rights and
employee  benefits up to the date of his  termination  (unless such  termination
occurs pursuant to Section 10(e) hereof or within the Protected Period, in which
event the benefits  and  compensation  provided for in Sections  10(d) or 12, as
applicable, shall apply).

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     11. No  Mitigation.  The  Executive  shall not be required to mitigate  the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Executive in any subsequent employment.

     12. Change in Control.

         (a)  Trigger Events.  The Executive shall be entitled  to  collect  the
severance  benefits set forth in subsection  (b) hereof in the event that either
(i) the Executive voluntarily  terminates employment either for any reason other
than Just Cause  within the 30-day  period  beginning on the date of a Change in
Control, (ii) the Executive voluntarily  terminates employment within 90 days of
an event that both  occurs  during the  Protected  Period and  constitutes  Good
Reason,  or (iii)  the  Bank or its  successor(s)  in  interest  terminates  the
Executive's employment without his written consent and for any reason other than
Just Cause during the Protected Period.

         (b) Amount of Severance Benefit.  If the Executive becomes  entitled to
collect severance  benefits pursuant to Section 12(a) hereof, the Bank shall pay
the  Executive  a severance  benefit  equal to the  difference  between the Code
ss.280G Maximum and the sum of any other  "parachute  payments" as defined under
Code  ss.280G(b)(2)  that the  Executive  receives  on  account of the Change in
Control. Said sum shall be paid, at the election of the Executive, either (i) in
one lump sum  within  ten days of the later of the date of the Change in Control
and the  Executive's  last day of  employment  with the Bank,  or (ii)  periodic
payments  over a period of up to sixty months with  interest  accruing on unpaid
amounts at the same rate that would be applied to determine  Present  Value.  In
the event that the  Executive  and the Bank jointly agree that the Executive has
collected an amount exceeding the Code ss.280G Maximum, the parties may agree in
writing  that  such  excess  shall be  treated  as a loan ab  initio  which  the
Executive shall repay to the Bank, on terms and conditions mutually agreeable to
the parties,  together with interest at the applicable federal rate provided for
in Section 7872(f)(2)(B) of the Code.

         (c)  Funding of Grantor  Trust upon Change in Control.  Notwithstanding
any other  provision  of this  Agreement  that may be contrary  or  inconsistent
herewith,  not later than ten business days after a Change in Control,  the Bank
shall (i) deposit in a Trust an amount equal to the Code ss.280G Maximum, unless
the Executive has previously provided a written release of any claims under this
Agreement, and (ii) provide the trustee of the Trust with a written direction to
hold said amount and any investment  return thereon in a segregated  account for
the benefit of the Executive, and to follow the procedures set forth in the next
paragraph as to the payment of such amounts from the Trust.  At any time or from
time to time during the  27-consecutive  month period after a Change in Control,
the  Executive  may  provide  the  trustee  of the Trust  with a written  notice
directing  that the trustee pay to the  Executive  an amount  designated  in the
notice as being payable  pursuant to this Agreement.  Within three business days
after  receiving  said notice,  the trustee of the Trust shall pay the Executive
the  amount  designated  therein  in  immediately  available  funds,  and  shall
thereafter  send the Bank a written  notice  thereof.  Upon the  earlier  of the
Trust's final  payment of all amounts due under the  following  paragraph or the
date 27 months  after the Change in Control,  the trustee of the

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Trust  shall pay to the Bank the  entire  balance  remaining  in the  segregated
account  maintained  for the  benefit  of the  Executive.  The  Executive  shall
thereafter have no further interest in the Trust.

     13.  Indemnification.  The Bank  agrees that its Bylaws  shall  continue to
provide for indemnification of directors,  officers, employees and agents of the
Bank, including the Executive, during the full term of this Agreement, and to at
all times provide adequate insurance for such purposes.

     14.  Reimbursement of Executive for Enforcement  Proceedings.  In the event
that any dispute  arises  between the  Executive and the Bank as to the terms or
interpretation of this Agreement, whether instituted by formal legal proceedings
or otherwise,  including any action that the Executive  takes to defend  against
any action taken by the Bank,  the Executive  shall be reimbursed  for all costs
and expenses,  including reasonable  attorneys' fees, arising from such dispute,
proceedings  or actions,  provided that the Executive  obtains  either a written
settlement  or  a  final   judgement  by  a  court  of  competent   jurisdiction
substantially in his favor. Such reimbursement  shall be paid within ten days of
the  Executive's  furnishing to the Bank written  evidence,  which may be in the
form,  among  other  things,  of a cancelled  check or receipt,  of any costs or
expenses incurred by the Executive.

     15. Federal Income Tax  Withholding.  The Bank may withhold all federal and
state  income or other taxes from any benefit  payable  under this  Agreement as
shall be required pursuant to any law or government regulation or ruling.

     16. Successors and Assigns.

         (a)  Bank. This Agreement shall not be assignable by the Bank, provided
that this  Agreement  shall  inure to the  benefit  of and be  binding  upon any
corporate  or other  successor  of the Bank which  shall  acquire,  directly  or
indirectly,   by  merger,   consolidation,   purchase  or   otherwise,   all  or
substantially all of the assets or stock of the Bank, as the case may be.

         (b)  Executive.  Since  the  Bank  is  contracting  for  the unique and
personal  skills  of the  Executive,  the  Executive  shall  be  precluded  from
assigning or delegating his rights or duties  hereunder  without first obtaining
the  written  consent  of the Bank;  provided,  however,  that  nothing  in this
paragraph  shall  preclude (i) the Executive  from  designating a beneficiary to
receive any benefit  payable  hereunder  upon his death,  or (ii) the executors,
administrators,  or other legal  representatives  of the Executive or his estate
from assigning any rights hereunder to the person or persons entitled thereunto.

         (c)  Attachment.  Except as required by law, no right of the  Executive
to receive  payments  under  this  Agreement  shall be subject to  anticipation,
commutation,  alienation,  sale,  assignment,  encumbrance,  charge,  pledge, or
hypothecation or to exclusion, attachment, levy or similar process or assignment
by operation of law, and any attempt,  voluntary or  involuntary,  to effect any
such action shall be null, void and of no effect.

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     17.  Amendments.  No  amendments  or additions to this  Agreement  shall be
binding  unless  made in  writing  and signed by all of the  parties,  except as
herein otherwise specifically provided.

     18. Applicable Law. Except to the extent preempted by Federal law, the laws
of the State of Kentucky shall govern this Agreement in all respects, whether as
to its validity, construction, capacity, performance or otherwise.

     19.  Severability.  The  provisions  of  this  Agreement  shall  be  deemed
severable and the  invalidity  or  unenforceability  of any provision  shall not
affect the validity or enforceability of the other provisions hereof.

     20. Entire  Agreement.  This Agreement,  together with any understanding or
modifications  thereof as agreed to in writing by the parties,  shall constitute
the entire  agreement  between the parties hereto and shall  supersede any prior
agreement between the parties.

     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first hereinabove written.

                                             HOME FEDERAL BANK, FEDERAL
                                             SAVINGS BANK
Witnessed by:


                                             By:
--------------------------------                -------------------------------
Secretary                                       Its Chairman of the Board



                                               EXECUTIVE

Witnessed by:



--------------------------------                -------------------------------
Secretary                                       David B. Cook

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