SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                              --------------------
                                   FORM 10-KSB

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

For the fiscal year ended June 30, 1999

[ ] TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

For the transition period from __________ to __________

                           Commission File No. 0-20956

                            HFB FINANCIAL CORPORATION

             (Exact name of registrant as specified in its charter)

             Tennessee                                 61-1228266
     ----------------------------                    ----------------
     (State or other jurisdiction                    (I.R.S. employer
    of incorporation or organization)               identification no.)

1602 Cumberland Avenue, Middlesboro, Kentucky                   40965
---------------------------------------------                ----------
   (Address of principal executive offices)                  (Zip Code)

       Registrant's telephone number, including area code: (606) 248-1095

   Securities registered pursuant to Section 12(b) of the Act: Not Applicable

           Securities registered pursuant to Section 12(g) of the Act:

                    Common Stock (par value $1.00 per share)
                    ----------------------------------------
                                 Title of Class

Indicate by check mark whether the registrant (1) has filed all reports required
by  Section  13 or 15(d)  of the  Securities  Exchange  Act of 1934  during  the
preceding 12 months (or 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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-B is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [ X ]

Registrant's revenues for the fiscal year ended June 30, 1999:  $13,882,000

The  registrant's  voting stock is listed on the OTC Bulletin Board published by
the National  Association  of Securities  Dealers ("OTC  Bulletin  Board").  The
aggregate  market  value  of the  voting  stock  held  by  nonaffiliates  of the
registrant,   based  on  the  $13.75  per  share  closing  sales  price  of  the
registrant's  common stock as quoted on the OTC Bulletin  Board on September 23,
1999,  was  $12,914,522.  For purposes of this  calculation,  it is assumed that
directors  and officers of the  registrant  are  affiliates.  As of September 1,
1999, the registrant had 1,100,985 shares of common stock outstanding,  of which
161,747 were held by affiliates.

Transitional Small Business Disclosure Format   Yes             No    X

                       DOCUMENTS INCORPORATED BY REFERENCE

     1. Portions of Annual Report to Stockholders for the Fiscal Year Ended June
30, 1999. (Parts I and II)

     2. Portions of Proxy Statement for the 1999 Annual Meeting of Stockholders.
(Part III)

                                       1
<PAGE>
                                     PART I

ITEM 1.  BUSINESS

GENERAL

     HFB Financial  Corporation  (the "Company") is the sole stockholder of, and
acts as the holding  company for, Home Federal  Savings Bank ("Home  Federal" or
the "Bank").  The Company has no significant  assets other than capital stock of
the Bank and a  portfolio  of trading  account  equity  securities.  The Company
qualifies  as a unitary  savings  and loan  holding  company  and is  subject to
regulation by the Office of Thrift Supervision  ("OTS"). The Company's principal
business is the business of the Bank and its subsidiary.  Therefore,  references
to the  "Company" in this Form 10-KSB are to both the Company and the Bank.  The
Bank  operates  through two full service  offices in the  Southeastern  Kentucky
communities  of  Middlesboro  and Harlan and one full service office in the East
Tennessee community of New Tazewell.  The Company is in the process of acquiring
another branch in Harlan, Kentucky, that includes approximately $17.5 million in
deposits and $478,000 in fixed assets and is subject to regulatory approval.  At
June 30,  1999,  the Company  had total  assets of $190.4  million,  deposits of
$154.0 million,  net loans receivable of $120.7 million and stockholders' equity
of $17.8 million.

     The executive offices of the Company are located at 1602 Cumberland Avenue,
Middlesboro, Kentucky 40965, and the telephone number is (606) 248-1095.

     The Company is engaged  principally  in the business of accepting  deposits
from the general public and originating permanent loans that are secured by one-
to four-family  residential  properties  located in its market area. The Company
also originates consumer loans and commercial real estate loans, and maintains a
substantial   investment  portfolio  of  mortgage-backed  and  other  investment
securities.

     The Company has taken certain  actions in order to address issues  relating
to the Year 2000,  and the proper  functioning  of computer and data  processing
equipment.  For more  information,  see "Item 6. -- Management's  Discussion and
Analysis of Financial Condition and Results of Operations."

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

     Certain   matters   discussed  in  this   document  are  "forward   looking
statements," intended to qualify for the safe harbors from liability established
by the Private Securities  Legislation Reform Act of 1995. These forward looking
statements  can  generally  be  identified  as such  because  the context of the
statement  will  include  words such as the Company  "believes,"  "anticipates,"
"expects," "estimates," or words of similar import.  Similarly,  statements that
describe  the  Company's  future  plans,  objectives  or goals are also  forward
looking statements. Such forward looking statements are subject to certain risks
and uncertainties  which are described in close proximity to such statements and
which could cause actual results to differ  materially from those anticipated as
of the date of this report. Shareholders, potential investors, and other readers
are cautioned not to place undue  reliance on such  forward-looking  statements.
The  forward-looking  statements included herein are only made as of the date of
this report and the Company  undertakes no  obligation  to publicly  update such
forward-looking statements to reflect subsequent events or circumstances.

LENDING ACTIVITIES

     General.  The Company  originates  loans primarily  through its main office
located in Middlesboro,  Kentucky. The principal lending activity of the Company
is the origination of conventional  mortgage loans for the purpose of purchasing
or refinancing owner-occupied, one- to four-family residential properties in its
primary market areas.  Conventional mortgage loans are primarily adjustable-rate
mortgage  loans with a small amount of fixed-rate  mortgage  loans which are not
insured or  guaranteed  by federal  agencies.  The  Company  does not  originate
Federal Housing Administration-insured or Veterans Administration-insured loans.
The Company does originate  consumer loans on a direct basis.  In addition,  the
Company also makes  conventional  mortgage loans for the purpose of constructing
one-  to  four-family   residences   and  loans  to  construct   commercial  and
multi-family real estate.

                                       2
<PAGE>
     The  Company  emphasizes  the  origination  of  adjustable-rate  loans  and
short-term  loans in order to increase the interest rate sensitivity of its loan
portfolio.  However,  the Company also continues to offer long-term,  fixed-rate
conventional  mortgage  loans  (25  year  terms  or  less),  originated  for its
portfolio.

                                       3
<PAGE>
ANALYSIS OF LOAN PORTFOLIO

     Set  forth  below is  selected  data  relating  to the  composition  of the
Company's  loan  portfolio  at the dates  indicated.  As of June 30,  1999,  the
Company had no  concentrations  of loans exceeding 10% of total loans other than
as disclosed below.

                                                               At June 30,
                                                       ------------------------
                                                          1999          1998
                                                       ----------     ---------
                                                         Amount         Amount
                                                              (In thousands)

Real estate loans:
  Single and multi-family mortgage loans...........       95,294      $  94,153
  Commercial real estate loans.....................       10,745         10,411
Real Estate construction loans.....................       12,996          8,636
                                                         -------      ---------
  Total real estate loans..........................      119,035        113,200
                                                         -------      ---------

Consumer loans:
  Loans on deposits................................        1,795          1,995
  Home improvement loans...........................          828          1,176
  Automobile loans.................................        1,109          1,685
  Other(1).........................................        2,180          1,617
                                                         -------      ---------
     Total consumer loans..........................        5,912          6,473
                                                         -------      ---------

Commercial loans...................................           98            353
                                                         -------      ---------

Total gross loans..................................      125,045        120,026

Less:
  Undisbursed portion of mortgage loans............        2,931          2,757
  Allowances for loan losses.......................        1,212            973
  Unamortized discount and deferred loan
    fees, net......................................          160            125
                                                         -------      ---------
Total..............................................      120,742      $ 116,171
                                                         =======      =========

(1)     Includes home equity lines of credit.

     The  following  table sets forth  certain  information  as of June 30, 1999
regarding  the dollar  amount of  principal  repayments  becoming due during the
periods  indicated  for  loans.  Demand  loans,  loans  having  no  schedule  of
repayments  and no stated  maturity,  and  overdrafts are reported as due in one
year or less. The table below does not include any estimate of prepayments which
significantly  shorten the average life of all mortgage  loans and may cause the
Company's actual repayment experience to differ from that shown below.
<TABLE>
<CAPTION>
                                                               Due After One
                                              Due in One       Year through     Due after Five
                                             Year or Less        Five Years          Years            Total
                                             ------------        ----------          -----            -----
                                                               (In thousands)
<S>                                        <C>                <C>               <C>              <C>
Real estate mortgage loans..........       $     5,265        $    23,825       $    76,949      $  106,039
Real estate construction loans......               650              2,924             9,422          12,996
Consumer loans (1)..................             3,082              2,609               221           5,912
Commercial loans....................                73                 25                --              98
                                           -----------        -----------       -----------      ----------
  Total gross loans.................       $     9,070        $    29,383       $    86,592      $  125,045
                                           ===========        ===========       ===========      ==========
</TABLE>
(1) Includes second mortgages and home equity lines of credit.

                                       4
<PAGE>
     The following table sets forth as of June 30, 1999 the dollar amount of all
the loans due after one year  ending  June 30,  1999 and  distinguishes  between
those with predetermined (i.e., fixed) interest rates and those with floating or
adjustable interest rates.

                                                      Floating or
                                     Predetermined    Adjustable
                                        Rate             Rates          Total
                                        ----             -----          -----
                                                     (In thousands)

Real estate mortgage loans.....    $      15,164    $     85,610    $  100,774
Real estate construction loans.            2,117          10,229        12,346
Consumer loans (1).............            2,830              --         2,830
Commercial loans...............               25              --            25
                                   -------------    ------------    ----------
   Total gross loans...........    $      20,136    $     95,839    $  115,975
                                   =============    ============    ==========

     One- to  Four-Family  Real  Estate  Lending.  The  primary  emphasis of the
Company's  lending activity is the origination of conventional  loans secured by
owner  occupied,  one- to  four-family  residential  properties.  The  Company's
conventional  mortgage  loan  originations  are  generally for terms of 10 to 30
years, amortized on a monthly basis, with principal and interest due each month.
Borrowers  may  refinance  or  prepay  loans at their  option  without  penalty.
Conventional  residential  mortgage  loans  granted by the  Company  customarily
contain  "due-on-sale"  clauses  which  permit  the  Company to  accelerate  the
indebtedness of the loan upon transfer of ownership of the mortgaged property.

     The Company's  lending policies  generally limit the maximum  loan-to-value
ratio on mortgage loans secured by  owner-occupied  properties to 81% and 95% of
the lesser of the appraised value or purchase price.  The maximum  loan-to-value
ratio on mortgage loans secured by non-owner-occupied properties and/or used for
refinancing  purposes  is also 80%.  The Company  does  originate  some  81%-95%
loan-to-value  ratio loans. The Company  requires private mortgage  insurance on
these  loans  and  charges a higher  effective  interest  rate on such  loans to
account for the additional risk which 81%-95% loan-to-value ratio loans carry.

     The Company also originates  conventional fixed-rate mortgage loans on one-
to-four family residential properties, the majority of which have a maximum term
to  maturity  of 15 years.  The  Company  originates  and  holds its  fixed-rate
mortgage loans in its portfolio as long-term investments.

     In addition,  the Company  engages in a limited,  but increasing  amount of
construction lending, involving loans to qualified borrowers for construction of
one- to-four  family  residential  properties.  These  properties  are primarily
located in the Company's  market area. All  construction  loans are secured by a
first lien on the  property  under  construction.  Construction/permanent  loans
generally have adjustable interest rates and are underwritten in accordance with
the same terms and requirements as the Company's permanent mortgages, except the
loans generally provide for disbursement in stages during a construction  period
of up to six  months,  during  which  period the  borrower  is  required to make
monthly payments of accrued  interest on the outstanding  loan balance.  Interim
construction  loans  generally  have fixed  interest  rates,  terms of up to six
months and a maximum  loan-to-value  ratio of 80%.  Borrowers  must  satisfy all
credit  requirements which would apply to the Company's  permanent mortgage loan
financing for the subject property.

     The Company also  originates  consumer  loans,  primarily  savings  account
loans,  automobile loans, home equity loans and lines of credit, second mortgage
loans and other consumer  loans secured by mortgages on residences.  The Company
also makes a limited amount of unsecured loans.

     The Company has historically  engaged in a limited amount of commercial and
multi-family  real estate lending.  The Company  generally makes  commercial and
multi-family  real estate loans available on properties in its market area, with
terms of 20 years or less,  loan-to-value  ratios of 80% or less and  adjustable
rates of interest. In addition,  the Company, from time to time, purchases whole
loans or participation  interests in loans on commercial and  multi-family  real
estate located in Kentucky and Eastern Tennessee.

     Asset  Classification  and Allowance for Loan Losses.  Federal  regulations
require  savings  associations  to the  Company  clarifies  its loan assets as a
"substandard,"  "doubtful"  or  "loss,"  if  warranted.   Assets  classified  as
substandard  or doubtful  require a general  allowances  for loan losses.  If an
asset or portion  thereof is classified as loss,  specified  allowances for loan
losses in the amount of 100% of the portion of the asset classified loss must be

                                       5
<PAGE>
established,  or else the loan must be  charged  off.  An asset  which  does not
currently warrant  classification but which possesses weaknesses or deficiencies
deserving  close  attention is required to be designated  as "special  mention."
Currently,  general loss allowances established to cover possible losses related
to assets  classified  substandard or doubtful may be included in determining an
institution's  regulatory capital,  while specific valuation allowances for loan
losses do not qualify as regulatory capital.  The Company has determined that at
June 30, 1999 it had $1.4 million in assets classified as substandard,  $351,000
in assets  classified as doubtful and $655,000 in assets  classified as loss. In
addition,  the Company had  $623,000 in assets  designated  as special  mention.
Depending on their future performance,  it is possible that these loans might be
required to be classified in future periods.

     The following  table sets forth an analysis of the Company's  allowance for
loan losses for the periods indicated.

                                                    For the Year Ended June 30,
                                                  ------------------------------
                                                       1999             1998
                                                       ----             ----
                                                      (Dollars in Thousands)

Balance at Beginning of Period...................  $      973       $      710
                                                   ----------       ----------
Loan charged-offs:
  Consumer.......................................          16               11
Total charge-offs                                          16               11
                                                   ----------       ----------

Recoveries:
  Consumer.......................................           2               --

Total Recoveries.................................           2               --
                                                   ----------       ----------
Net loan recoveries (chargeoffs).................         (14)              --
                                                   ----------       ----------
Provision for Loan Losses........................         253              274
                                                   ----------       ----------

Balance at end of period......................... $     1,212      $       973
                                                  ===========      ===========

Ratio of allowance for losses to
   gross loans receivable........................       .97%              .81%
                                                  ===========      ===========

Ratio of net loan chargeoffs to average loans
  outstanding during the period..................        .01%             .01%
                                                  ===========      ===========

                                       6
<PAGE>
     The  following  table sets forth the  breakdown of the  allowance  for loan
losses by loan  category at the dates  indicated.  Management  believes that the
allowance  can be  allocated  by  category  only on an  approximate  basis.  The
allocation of the allowance to each  category is not  necessarily  indicative of
future losses and does not restrict the use of the allowance to absorb losses in
any category.
<TABLE>
<CAPTION>
                                                         Year Ended June 30,
                                 ---------------------------------------------------------------------
                                              1999                                 1998
                                 --------------------------------     --------------------------------
                                                 % of Loans                             % of Loans
                                                    in Each                              in Each
                                                    Category                             Category
                                                    to Total                             to Total
                                     Amount        Gross Loans            Amount        Gross Loans
                                     ------        -----------            ------        -----------
                                        (Dollars in thousands)

Residential and commercial
<S>                              <C>                 <C>             <C>                 <C>
  Real estate loans............  $    1,210           95.19%          $      970           94.31%
Consumer loans.................           2            4.72                    3            5.39
Commercial loans...............          --             .09                   --             .30
                                 ----------       ---------           ----------       ---------
   Total allowance for
    Loan losses................  $    1,212          100.00%          $      973          100.00%
                                 ==========       =========           ==========       =========
</TABLE>

     Non-Performing  Loans and Other  Problem  Assets.  Management  reviews  the
credit  quality of the Company's  loans on a regular  basis.  After  residential
mortgage  loans  become  past  due  more  than 90 days,  the  Company  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. In accordance with the
agreement,  the  Company  has no further  recourse  to recover  the  deficiency.
Consumer and commercial loans generally are charged off, or any expected loss is
reserved for, after they become more than 90 days past due. The Company  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  Company  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 market  value (less  estimated  selling  cost at the date of
foreclosure).  Any required write-down of the loan to its fair market value upon
foreclosure is charged against the allowance for loan losses.

                                       7
<PAGE>

     The following  table sets forth  information  with respect to the Company's
nonperforming  assets  at  the  dates  indicated.  No  loans  were  recorded  as
restructured  loans  within the meaning of  Statement  of  Financial  Accounting
Standards No. 15, at the dates indicated.

                                                            At June 30,
                                                   ----------------------------
                                                        1999            1998
                                                        ----            ----
                                                       (Dollars in thousands)

Loans accounted for on a nonaccrual basis (1) .... $     1,416      $        --
                                                    ----------       ----------
Accruing loans which are contractually
  past due 90 days or more:  (1)
     Real estate.................................. $       521      $       677
     Consumer.....................................           5               40
     Commercial...................................          --               --
                                                   -----------      -----------
Total of nonaccrual and 90 days
  or more past due loans.......................... $     1,942      $       717
                                                   -----------      -----------
Real Estate owned.................................          --               --
                                                   -----------      -----------
   Total nonperforming assets..................... $     1,942      $       717
                                                   ===========      ===========
Nonaccrual and 90 days or more past due
  Loans as a percentage of total loans, net.......       1.61%             .62%
                                                   ===========      ===========
Nonaccrual and 90 days or more past due
  Loans as a percentage of total assets, net......       1.02%             .41%
                                                   ===========      ===========
Nonperforming assets as a percentage of
  Total assets....................................       1.02%             .41%
                                                   ===========      ===========

(1) Interest on delinquent  loans is accrued to income to the extent  considered
collectible.

     As of June 30,  1999,  the  Company  had a total of  $936,000  in 19 single
family loans classified as  "substandard."  As of June 30, 1999, the Company had
$5,000  in  consumer  loans   classified  and  $441,000  in  two  single  family
residential loans classified as "special mention."

     In addition, the Company had 6 commercial real estate loans to one borrower
totaling $1.0 million,  of which $303,000 had been classified as  "substandard",
$100,000 had been  classified as "doubtful" and $607,000 had been  classified as
"loss." The largest property, a hotel-restaurant  operation, has suffered severe
cash flow  problems.  The borrower is currently  in  bankruptcy  and is actively
working to obtain new financing.  Management believes that these loans have been
adequately  classified  and reserved  for,  but  continues to monitor them as to
their  collectibility  and as to any possible losses the Company could incur, or
additional  reserves  that may need to be  established.  On September  16, 1999,
$875,000 of these loans were paid off by means of financing  by another  lender,
$303,000  of which was  classified  as  substandard  and  $572,000  of which was
classified as loss.

     The Company also had, at June 30,  1999,  loans to  principals  and related
parties of this one borrower totaling  $515,000.  Of these loans,  $181,000 were
classified  as  "special  mention",  $140,000  as  "substandard",   $165,000  as
"doubtful" and $29,000 as "loss".  Through September 23, 1999,  $17,000 has been
paid on the  doubtful  portion of these  loans and  $29,000 has been paid on the
portion classified as "loss".

     At June 30, 1999,  $202,000 would have been  recognized as interest  income
had these loans been in a current status.

     As of June 30, 1999, The Company had no real estate owned.

     At June 30, 1999, the Company had no other loans of a material amount which
were not classified as non-accrual, past due 90 days or more or restructured but
where known  information  about  possible  credit  problems of borrowers  caused
management  to have serious  doubts as to the ability of the borrowers to comply
with  present loan  repayment  terms and could  result in future  disclosure  as
non-accrual, 90 days past due or restructured.

                                       8
<PAGE>
INVESTMENT ACTIVITIES

     The Company is required  under  federal  regulations  to maintain a minimum
amount  of  liquid  assets,  which  can  be  invested  in  specified  short-term
securities,  and is also permitted to make certain other investments.  Liquidity
levels may be  increased or decreased  depending  upon the yields on  investment
alternatives,  management's judgment as to the attractiveness of the yields then
available in relation to other  opportunities,  its expectations of the level of
yield  that  will be  available  in the  future  and its  projections  as to the
short-term  demand for funds to be used in the Company's  loan  origination  and
other activities.

     The  general  objectives  of the  Company's  investment  policy  are to (i)
protect the Company's  depositor  resources,  (ii) maintain  liquidity levels to
meet  the   operational   needs  of  the  Company  and   applicable   regulatory
requirements,  (iii) reduce  credit risk by investing in high  quality,  diverse
investments, (iv) serve as a hedge against significant interest rate shifts, (v)
contribute to earnings in a stable and dependable  manner  without  compromising
the goals of  liquidity  and safety,  and (vi) provide  collateral  for pledging
needs.  The Company's  investment  activities  are  conducted by the  Investment
Committee and  supervised by the Board of  Directors.  An investment  policy has
been  adopted by the Board which  provides  for  maintenance  of the  investment
portfolio for the purpose of providing earnings and ensuring a minimum liquidity
reserve.  In accordance  with the  investment  policy,  management has primarily
invested in U.S. Treasury  securities backed by the full faith and credit of the
United  States and  government  agency  securities,  mortgage-backed  securities
issued by FHLMC,  FNMA,  or GNMA,  federal  funds sold,  and  federally  insured
interest-bearing  deposits in other financial  institutions.  General obligation
and bank qualified bonds of municipalities within the market areas served by the
Company  and which are  considered  to possess  acceptable  credit  and  limited
default risk are also considered for investment.

     The Board of Directors  of the Company has  authorized  the  existence of a
trading account in an amount not to exceed 8% of total assets for the purpose of
taking  advantage of  favorable  short-term  market  conditions.  The  Company's
investment  policy specifies that securities  traded within this account must be
U.S.  Treasury or agency  obligations.  Securities  in the  trading  account are
marked to market on a monthly  basis.  During the year ended June 30, 1999 there
was no trading activity.  At June 30, 1999, there were no securities held in the
Company's trading account.

     The Board of Directors of the Company has  authorized a trading  account of
up to $1.0 million for  investing in common  stocks of publicly  traded  thrifts
which are considered to be undervalued. The Company had $1.0 million invested in
common stock of publicly held thrift institutions at June 30, 1999.

     The Company, in accordance with generally accepted  accounting  principles,
reports its investment securities,  available for sale, at current market value,
with unrealized gains or losses, net of tax effect,  adjusted through equity and
realized  gains or  losses  in  income  when  securities  are  sold.  Investment
securities,  held to maturity, are reported at cost as adjusted for unaccredited
discounts and unamortized premiums.

                                       9
<PAGE>
     The  following  table  sets  forth  the  carrying  value  of the  Company's
investment securities at the dates indicated.

                                                            At June 30,
                                                   ----------------------------
                                                        1999            1998
                                                        ----            ----
                                                      (Dollars in Thousands)

Investment securities, available for sale:

  U.S. Treasury and Federal Agency obligations.....$    25,241      $    18,238
                                                   -----------      -----------

Total investment securities, available for sale....$    25,241      $    18,238
                                                   -----------      -----------
Investment securities, held to maturity:
  U.S. Treasury and Federal Agency obligations.....$     7,731      $     6,497
                                                   -----------      -----------
Total investment securities, held to maturity......$     7,731      $     6,497
                                                   -----------      -----------
Total investment securities, available for
  Sale and held to maturity........................$    32,972      $    24,735
                                                   ===========      ===========

     The  following  table  sets  forth  the   distributions  of  maturities  of
securities at amortized cost at June 30, 1999.
<TABLE>
<CAPTION>
                                                                 At June 30, 1999
                                ------------------------------------------------------------------------------------
                                 One Year          One to        Five to Ten        More than       Total Investment
                                  or Less        Five Years         Years           Ten Years         Portfolio
                                  -------        ----------         -----           ---------         ---------
                                                              (Dollars in thousands)
<S>                             <C>              <C>             <C>               <C>              <C>
Investment securities,
  available for sale:
    U.S. Treasury and
    Federal Agency
    obligations.........        $  2,006         $  4,526        $  13,525         $  5,184         $  25,241
    Total investment
    securities, available for
    sale................           2,006            4,526           13,525            5,184            25,241
                                --------         --------        ---------            -----            ------

Investment securities, held
  to maturity
    U.S. Treasury and
    Federal Agency
    obligations.........             502            1,680            4,513            1,036             7,731
                                --------         --------        ---------         --------         ---------
   Total investment
   securities, held to               502            1,680            4,513            1,036             7,731
   maturity.............        --------         --------        ---------         --------         ---------

   Total investment
   Securities, available for
   sale and held to maturity       2,508            6,206           18,038            6,220            32,972
                                ========         ========        =========         ========         =========

  Weighted average yield            5.91             6.23             6.37             6.61              6.37
                                ========         ========        =========         ========         =========
</TABLE>
                                       10
<PAGE>
MORTGAGE-BACKED SECURITIES ACTIVITIES

     In accordance with the Company's  investment policy,  management invests in
mortgage-backed securities issued by Freddie Mac, Fannie Mae, and Ginnie Mae.

     The  following   table  sets  forth  the   composition   of  the  Company's
mortgage-backed securities portfolio at the dates indicated.
<TABLE>
<CAPTION>

                                                                                          At June 30,
                                                                     -------------------------------------------------------
                                                                              1999                          1998
                                                                     -----------------------    --------------------------
                                                                       Amount         %             Amount          %
                                                                       ------         -             ------          -
                                                                                     (Dollars in thousands)

Mortgage-backed securities, available for sale:
<S>                                                                  <C>             <C>         <C>             <C>
  Freddie Mac.................................................       $      744        2.82%     $     1,375       6.05%
  Fannie Mae..................................................            4,786       18.18            3,912      17.22
  Ginnie Mae..................................................            6,528       24.80            3,380      14.88
                                                                        -------   ---------        ---------    -------
Total mortgage-backed securities available for sale...........           12,058       45.80            8,667      38.15
                                                                        -------   ---------        ---------    -------
Mortgage-backed securities, held to maturity:
  Freddie Mac.................................................            1,074        4.08              581       2.56
  Fannie Mae..................................................            9,921       37.69            9,957      43.83
  Ginnie Mae..................................................            3,272       12.43            3,512      15.46
                                                                        -------   ---------        ---------    -------
Total mortgage-backed securities, held to maturity............           14,267       54.20           14,050      61.85
                                                                        -------   ---------        ---------    -------
Total mortgage-backed securities, available
  for sale and held to maturity...............................           26,325      100.00%          22,717     100.00%
                                                                        =======   =========        =========    =======
</TABLE>
                                       11
<PAGE>
DEPOSIT ACTIVITY AND OTHER SOURCES OF FUNDS

     GENERAL.  Deposits  are a  significant  source of the  Company's  funds for
lending and other  investment  purposes.  In addition to  deposits,  the Company
derives funds from loan principal  repayments and interest payments and maturing
investment  securities.  Loan repayments and interest  payments are a relatively
stable  source of funds,  while deposit  inflows and outflows are  significantly
influenced by general interest rates and money market conditions. Borrowings may
be used on a short-term  basis to compensate for reductions in the  availability
of funds from other  sources,  or on a longer  term basis for  general  business
purposes.

     DEPOSITS.  Deposits are  attracted  principally  from within the  Company's
primary  market area through the  offering of a variety of deposit  instruments,
including passbook and statement  accounts and certificates of deposit.  Deposit
account terms vary,  principally on the basis of the minimum  balance  required,
the time  periods the funds must remain on deposit and the  interest  rate.  The
Company also offers individual retirement accounts ("IRAs") and Keogh Plans.

     The  Company's  policies are designed  primarily to attract  deposits  from
local residents  through its branch network rather than to solicit deposits from
areas  outside its primary  market.  The Company does not accept  deposits  from
brokers due to the  volatility and rate  sensitivity of such deposits.  Interest
rates  paid,  maturity  terms,   service  fees  and  withdrawal   penalties  are
established by the Company on a periodic basis. Determination of rates and terms
are predicated upon funds acquisition and liquidity requirements,  rates paid by
competitors, growth goals and federal regulations.

     The following table sets forth the average  balances and interest rates for
the Company's deposit accounts by type of deposit for the periods indicated.

                                            Year Ended June 30,
                           ----------------------------------------------------
                                    1999                          1998
                           ------------------------    ------------------------
                             Average    Average          Average       Average
                             Amount        Rate           Amount         Rate
                             ------        ----           ------         ----
                                           (Dollars in thousands)

NOW and money market
  deposit accounts......... $  13,423       1.95%      $   11,823        2.18%
Passbook accounts..........     8,008       2.48            9,140        2.72
Certificates...............   127,857       5.29          116,570        5.32
                              -------      -----       ----------      ------
  Total....................   149,288       4.83%         137,533        4.88%
                              =======      =====       ==========      ======

     The following table  indicates the amount of the Company's  certificates of
deposit of  $100,000  or more by time  remaining  until  maturity as of June 30,
1999.  Most of the  Company's  deposits of over  $100,000  come from  individual
depositors in the Company's market area.

                                                                Certificates
                  Maturity Period                                of Deposit
                  ---------------                                ----------
                                                               (In thousands)

     Three months or less                                         $  11,249
     Over three through six months                                    5,632
     Over six through twelve months                                  14,730
     Over twelve months                                               9,015
                                                                  ---------
          Total                                                   $  40,626
                                                                  =========

     Management  attributes the net increase in deposits for the year ended June
30, 1999 to general economic conditions and competition in the local market. The
Company does not offer  premiums for  deposits,  and in the past has not offered
interest  rates  on  deposits  which  exceed  the  average  rates  paid by other
financial  institutions in its market area. Due to aggressive  competition,  the
Company has recently instituted  promotions offering higher rates on deposits to
maintain its market share.  Management anticipates that this trend will continue
over the next twelve months.

                                       12
<PAGE>
     BORROWINGS.  Savings deposits  historically have been the primary source of
funds for the Company's  lending and  investment  activities and for its general
business  activities.  The Company is authorized,  however, to use advances from
the FHLB of Cincinnati to  supplement  its supply of lendable  funds and to meet
deposit withdrawal requirements.  All of the advances are collateralized by FHLB
stock and single family first mortgage loans with aggregate  principal  balances
totaling  150% of the  outstanding  amount of advances.  The FHLB of  Cincinnati
functions as a central  reserve bank providing  credit for savings  institutions
and certain other member  financial  institutions.  As a member,  the Company is
required  to own  capital  stock  in the  FHLB and is  authorized  to apply  for
advances on the  security of such stock and  certain of its home  mortgages  and
other assets  (principally,  securities  which are obligations of, or guaranteed
by, the United States) provided certain  standards  related to  creditworthiness
have been met. The average balance of short term borrowings during the 12 months
ended June 30, 1999 was $7.1 million with a weighted  average rate of 5.26%. The
maximum  balance of short term  borrowings  during the 12 months  ended June 30,
1999 was $7.5 million.

SUBSIDIARY ACTIVITIES

     The  Company's  only  subsidiary is Home Service  Corporation  in which its
investment  was  $1.9  million  at June 30,  1999.  Home  Service  Corporation's
principal  activity is that of ownership and rental of the Company's main office
building  in  Middlesboro,  Kentucky  and  a  branch  office  in  New  Tazewell,
Tennessee.  Home Service Corporation also owns and rents two other properties to
unrelated parties.  These properties are contiguous to the Company's main office
and being held for future expansion.

COMPETITION

     The Company  experiences  substantial  competition  both in attracting  and
retaining savings deposits and in the making of mortgage and other loans.

     Direct   competition   for  savings   deposits  comes  from  other  savings
institutions,  credit  unions,  regional bank holding  companies and  commercial
banks  located in its  primary  market  area.  Significant  competition  for the
Company's  other  deposit  products and services  comes from money market mutual
funds,  brokerage  firms,  insurance  companies and retail  stores.  The primary
factors in competing for loans are interest rates and loan  origination fees and
the range of services offered by various financial institutions. Competition for
origination of real estate loans normally comes from other savings institutions,
commercial banks, mortgage bankers, mortgage brokers and insurance companies.

     The Company's primary competition  comprises the commercial banks near each
of the Company's branch offices. In Middlesboro, where the Company's main office
is located,  primary competition  consists of two banks and one savings bank. In
Harlan,  Kentucky  where a branch  office  is  located,  the  Company's  primary
competition is three banks. In New Tazewell, Tennessee, where a branch office is
located, the Bank's primary competition is three banks.

     The Company is able to compete  effectively  in its primary  market area by
offering competitive interest rates and loan fees, and a wide variety of deposit
products,  and by emphasizing  personal  customer service.  Management  believes
that, as a result of the Company's  commitment to  competitive  pricing,  varied
products and personal  service,  the Company has  developed a solid base of core
deposits  and the loan  origination  quality and volume are among the leaders in
the Company's market area.

EMPLOYEES

     As of June 30,  1999,  the  Company  and its  subsidiary  had 53  full-time
employees,  none of whom was represented by a collective  bargaining  agreement.
The Company believes that it enjoys excellent relations with its personnel.

                                       13
<PAGE>
                                   REGULATION

GENERAL

     As  a  federal  savings  bank,  Home  Federal  is  subject  to  regulation,
supervision  and  regular  examination  by the  OTS.  Federal  banking  laws and
regulations   control,   among  other  things,  the  Bank's  required  reserves,
investments,  loans, mergers and consolidations,  payment of dividends and other
aspects of Home  Federal's  operations.  The deposits of the Bank are insured by
the Savings Association  Insurance Fund ("SAIF") administered by the FDIC to the
maximum extent provided by law ($100,000 for each depositor).  In addition,  the
FDIC has certain regulatory and examination authority over OTS-regulated savings
institutions and may recommend  enforcement actions against savings institutions
to the OTS. The supervision and regulation of the Bank is intended primarily for
the protection of the deposit insurance fund and depositors.

     As a savings  institution  holding  company,  the Company is subject to OTS
regulation,  examination,  supervision and reporting  requirements.  The Company
also is required to file certain  reports with,  and  otherwise  comply with the
rules and regulations of, the SEC under the federal securities laws.

     The following  discussion  summarizes  certain of the  statutes,  rules and
regulations  affecting Home Federal and the Company.  A number of other statutes
and regulations  have an impact on their  operations.  The following  summary of
applicable  statutes  and  regulations  does not purport to be  complete  and is
qualified in its entirety by reference to such statutes and regulations.

REGULATION OF HOME FEDERAL

     REGULATORY CAPITAL.  The OTS's capital adequacy regulations require savings
institutions such as the Bank to meet three minimum capital standards:  a "core"
capital  requirement of between 3% and 5% of adjusted total assets, a "tangible"
capital requirement of 1.5% of adjusted total assets, and a "risk-based" capital
requirement of 8% of total risk-based capital to total risk-weighted  assets. In
addition,  the OTS has adopted  regulations  imposing  certain  restrictions  on
savings institutions that have a total risk-based capital ratio of less than 8%,
a ratio of Tier 1 capital to risk-weighted  assets of less than 4% or a ratio of
Tier 1 capital  to total  assets of less  than 4% (or 3% if the  institution  is
rated composite 1 under the CAMELS  examination  rating  system).  See "--Prompt
Corrective Regulatory Action."

     At June 30, 1999, Home Federal  exceeded its tangible,  core and risk-based
regulatory   capital   requirements.   For  more   information,   see  "Selected
Consolidated Financial and Other Data - Regulatory Capital Ratios" in the Annual
Report filed as Exhibit 13 to this report.

     PROMPT  CORRECTIVE  REGULATORY  ACTION.  The Federal Deposit  Insurance Act
("FDI Act") requires the federal  banking  regulators to take prompt  corrective
action in respect of depository  institutions  that do not meet certain  minimum
capital  requirements,  including  a  leverage  limit and a  risk-based  capital
requirement.  The joint regulations of the federal banking  agencies,  including
the OTS, classify insured depository  institutions by capital levels and provide
that the  applicable  agency  will take  various  prompt  corrective  actions to
resolve  the  problems  of any  institution  that fails to satisfy  the  capital
standards.   Under  the  joint   prompt   corrective   action   regulations,   a
"well-capitalized"  institution  is one that is not  subject  to any  regulatory
order or directive to meet any  specific  capital  level and that has or exceeds
the following capital levels: a total risk-based  capital ratio of 10%, a Tier 1
risk-based  capital  ratio of 6%, and a ratio of Tier 1 capital to total  assets
("leverage  ratio") of 5%. An "adequately  capitalized"  institution is one that
does not  qualify  as "well  capitalized"  but meets or  exceeds  the  following
capital  requirements:  a total  risk-based  capital of 8%, a Tier 1  risk-based
capital  ratio of 4%,  and a  leverage  ratio of either (i) 4% or (ii) 3% if the
institution has the highest  composite  examination  rating.  An institution not
meeting  these  criteria  is  treated  as   "undercapitalized,"   "significantly
undercapitalized," or "critically  undercapitalized"  depending on the extent to
which its capital levels are below these  standards.  An institution  that falls
within any of the three "undercapitalized" categories will be subject to certain
severe  regulatory  sanctions  required  by the FDI  Act  and  the  implementing
regulations. As of June 30, 1999, Home Federal was "well-capitalized" as defined
by the regulations.

     QUALIFIED  THRIFT  LENDER TEST.  The Home Owners' Loan Act ("HOLA") and OTS
regulations  require all savings  institutions  to satisfy one of two  Qualified
Thrift  Lender  ("QTL")  tests or to  suffer a number  of  sanctions,  including
restrictions on activities.  A savings institution must maintain its status as a
QTL on a  monthly  basis in at least  nine out of every 12  months.  An  initial
failure to qualify as a QTL  results  in a number of  sanctions,  including

                                       14
<PAGE>

the imposition of certain operating  restrictions and a restriction on obtaining
additional  advances from its Federal Home Loan Bank.  If a savings  institution
does not  requalify  under the QTL test within the  three-year  period  after it
fails  the QTL  test,  it  would be  required  to  terminate  any  activity  not
permissible  for  a  national  bank  and  repay  as  promptly  as  possible  any
outstanding  advances from its Federal Home Loan Bank. In addition,  the holding
company of such an institution would similarly be required to register as a bank
holding  company with the Federal  Reserve Board. At June 30, 1999, Home Federal
qualified as a QTL.

     LIMITATIONS ON CAPITAL  DISTRIBUTIONS.  OTS regulations  impose limitations
upon capital  distributions  by savings  institutions,  such as cash  dividends,
payments to repurchase or otherwise acquire its shares, payments to stockholders
of another  institution  in a cash-out  merger and other  distributions  charged
against  capital.  Under the OTS  capital  distribution  regulations,  a savings
institution   that  qualifies  for  expedited   treatment  of   applications  by
maintaining specified supervisory  examination ratings and that is not otherwise
restricted in making capital  distributions  may,  without prior approval by the
OTS, make capital  distributions  during a calendar year equal to its net income
for such year plus its retained net income for the preceding two years.  Capital
distributions  in excess of such  amount are subject to prior OTS  approval.  In
addition,  even if a proposed capital distribution is less than the above limit,
a  savings  institution  must  give  notice  to the OTS at least 30 days  before
declaration of a capital distribution to its holding company.

     Under the OTS's prompt corrective action regulations, Home Federal would be
prohibited   from  paying   dividends  if  Home  Federal  were   classified   as
"undercapitalized"   under  such  rules.  See  "--Prompt  Corrective  Regulatory
Action." Further, earnings of Home Federal appropriated to bad debt reserves and
deducted  for  federal  income tax  purposes  are not  available  for payment of
dividends or other distributions to Home Federal without payment of taxes at the
then current tax rate by Home Federal on the amount of earnings removed from the
reserves for such distributions.

     TRANSACTIONS WITH AFFILIATES AND INSIDERS. Generally,  transactions between
a savings  association or its subsidiaries and its affiliates are required to be
on terms as favorable to the association as transactions with non-affiliates. In
addition,  certain of these  transactions,  such as loans to an  affiliate,  are
restricted  to a percentage  of the  association's  capital.  Affiliates of Home
Federal  include the Company and any company that is under  common  control with
the Bank.  In  addition,  a savings  association  may not lend to any  affiliate
engaged in activities not  permissible for a bank holding company or acquire the
securities of most affiliates.  The OTS has the discretion to treat subsidiaries
of savings associations as affiliates on a case by case basis.

     Certain  transactions with directors,  officers or controlling  persons are
also  subject to  conflict of interest  regulations  enforced by the OTS.  These
conflict of interest  regulations and other statutes also impose restrictions on
loans to such persons and their  related  interests.  Among other  things,  such
loans must  generally  be made on terms that are  substantially  the same as for
loans to unaffiliated individuals.

     RESERVE  REQUIREMENTS.  The Federal  Reserve Board  requires all depository
institutions  to  maintain  noninterest  bearing  reserves at  specified  levels
against  their  transaction  accounts  (primarily  checking,  NOW and  Super NOW
checking accounts).  At June 30, 1999, Home Federal was in compliance with these
reserve  requirements.  The balances maintained to meet the reserve requirements
imposed  by  the  Federal  Reserve  Board  may  be  used  to  satisfy  liquidity
requirements that may be imposed by the OTS.

     LIQUIDITY  REQUIREMENTS.  Home  Federal is required by OTS  regulations  to
maintain an average daily balance of liquid assets (cash, certain time deposits,
bankers'  acceptances,   highly  rated  corporate  debt  and  commercial  paper,
qualifying mortgage-related securities and mortgage loans, securities of certain
mutual funds,  and specified United States  government,  state or federal agency
obligations)  equal  to the  monthly  average  of  not  less  than  a  specified
percentage of its net withdrawable  short-term  savings deposits plus short-term
borrowings.  The current  minimum  liquid asset ratio required by the OTS is 4%.
For the month  ended June 30,  1999,  Home  Federal was in  compliance  with the
requirement, with an average daily liquidity ratio of 27.4%.

     FEDERAL HOME LOAN BANK SYSTEM.  The Federal Home Loan Bank System  consists
of 12 district  Federal Home Loan Banks subject to supervision and regulation by
the Federal Housing Finance Board ("FHFB").  The Federal Home Loan Banks provide
a central credit facility primarily for member institutions.  As a member of the
FHLB of  Cincinnati,  Home  Federal is  required  to acquire  and hold shares of
capital  stock in the FHLB in an  amount at least  equal to 1% of the  aggregate
unpaid  principal of its home  mortgage  loans,  home  purchase  contracts,  and
similar  obligations  at the  beginning  of each year,  or 1/20 of its  advances
(borrowings) from the FHLB, whichever is greater. Home Federal was in compliance
with this requirement, with an investment in FHLB stock at June 30,

                                       15
<PAGE>

1999 of $1.3 million.  Long-term  FHLB advances may only be made for the purpose
of providing funds for residential housing finance.

REGULATION OF THE COMPANY

     The  Company  is a unitary  savings  and loan  holding  company  subject to
regulatory  oversight  by the OTS. As such,  the Company is required to register
and file reports with the OTS and is subject to regulation  and  examination  by
the OTS. In addition, the OTS has enforcement authority over the Company and its
non-savings  association  subsidiaries,  which  permits  the OTS to  restrict or
prohibit  activities  that are determined to be a serious risk to the subsidiary
savings association.

     As a unitary savings and loan holding company, the Company generally is not
subject to  activity  restrictions.  If the Company  were to acquire  control of
another savings association as a separate subsidiary, it would become a multiple
savings and loan holding  company,  and the activities of the Company and any of
its  subsidiaries  (other than Home  Federal or any other  SAIF-insured  savings
association)  would become subject to restrictions  on its activities  under the
HOLA  unless  such other  association  qualifies  as a QTL and is  acquired in a
supervisory acquisition.

     If Home Federal fails the QTL test, the Company must obtain the approval of
the OTS prior to continuing  after such  failure,  directly or through its other
subsidiaries,  any  business  activity  other than those  approved  for multiple
savings and loan holding companies or their  subsidiaries.  In addition,  within
one year of such failure the Company would be required to register as, and would
become subject to, the restrictions  applicable to bank holding  companies.  The
activities  authorized for a bank holding  company are more limited than are the
activities  authorized  for a  unitary  or  multiple  savings  and loan  holding
company. See "--Qualified Thrift Lender Test."

     The Company must obtain approval from the OTS before  acquiring  control of
any other SAIF-insured  association.  Such acquisitions are generally prohibited
if they  result in a  multiple  savings  and loan  holding  company  controlling
savings  associations  in  more  than  one  state.   However,   such  interstate
acquisitions  are  permitted  based  on  specific  state  authorization  or in a
supervisory acquisition of a failing savings institution.

                                       16
<PAGE>
ITEM 2.  PROPERTIES

     The  following  table  sets  forth  the  location  and  certain  additional
information  regarding the Company's  offices at June 30, 1999. The Company owns
its main office and New Tazewell Branch, and leases its Harlan Branch.

                                      Year        Square
                                     Opened       Footage       Net Book Value
                                     ------       -------       --------------

 MAIN OFFICE:
 1602 Cumberland Avenue (1)
 Middlesboro, Kentucky                1980        9,500         $   1,194,678

 BRANCH OFFICES:
 Village Center (2)                   1975        3,300                65,601
 Harlan, Kentucky

 600 Fifth Avenue (1)
 New Tazewell, Tennessee              1995        5,000               688,957

   Total                                                          $ 1,949,236
                                                                  ===========

(1)  Owned by Home Service Corporation,  the Company's wholly-owned  subsidiary,
     and leased to the Company.
(2)  In  November  1990,  the  lease on this  property  was  renegotiated  for a
     seven-year term with three five-year  options.  The annual rent is $49,752.
     The Company is liable to reimburse the lessor for its  proportionate  share
     of any increase in real estate taxes and insurance paid by lessor. The rent
     expense for years 1999 and 1998 was $48,964 and $39,803, respectively.

     DHI  Computing,  Inc.  Provo,  Utah,  performs data  processing  and record
keeping for the Company.  The Company's fixtures and equipment include a network
of teller terminals,  several computers,  Frame Relay communications  equipment,
ATMs and a check processing machine.

     At June 30, 1999, the net book value of the Company's premises,  furniture,
fixtures,  equipment  and land for  future  development  was $2.4  million.  The
Company is in the  process of  building  an annex  building  to house the Bank's
operation  center.  The  building is under  construction  and  $246,000 had been
disbursed at June 30, 1999.  The estimated cost of the building is $1.0 million,
and the  completion  date is scheduled  for November  1999.  It is  management's
opinion  that  all  of  the  Company's  properties  are  adequately  covered  by
insurance.  See "Premises and Equipment"  included in the Notes to  Consolidated
Financial Statements in the Annual Report.

ITEM 3. LEGAL PROCEEDINGS.

     From  time to  time,  the  Company  is a party  to  various  routine  legal
proceedings incident to its business,  including loan foreclosure actions. There
are currently no material legal proceedings to which the Company, the Company or
its subsidiary is a party or to which any of their property is subject.

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

     No matters were  submitted to a vote of security  holders during the fourth
quarter of the fiscal year ended June 30, 1999.

                                     PART II

ITEM 5.  MARKET  FOR THE  REGISTRANT'S  COMMON  EQUITY AND  RELATED  STOCKHOLDER
         MATTERS

     The information  contained under the section captioned "Market Information"
in the Company's  Annual Report to  Stockholders  for the Fiscal Year Ended June
30,  1999  (the  "Annual  Report")  is  incorporated  herein by  reference.  For
information  regarding  restrictions  on the  payment of  dividends  see Item 1.
"Business -- Regulation -- Regulation of the Company -- Dividend Limitations."

                                       17
<PAGE>
ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     The information contained in the section captioned "Management's Discussion
and Analysis of Financial  Condition  and Results of  Operations"  in the Annual
Report is incorporated herein by reference.

ITEM 7.  FINANCIAL STATEMENTS

     The  Consolidated  Financial  Statements and Related Notes contained in the
Annual Report are incorporated herein by reference.

ITEM 8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

     Not applicable.

                                    PART III

ITEM 9.  DIRECTORS  AND  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE

EXCHANGE ACT

     For information  regarding  delinquent  filers and the disclosure  required
pursuant  to Item 405 of  Regulation  S-KSB,  reference  is made to the  section
captioned "Section 16(a) Beneficial Ownership Reporting Compliance" in the Proxy
Statement which information is incorporated herein by reference.

ITEM 10.  EXECUTIVE COMPENSATION

     The  information  contained  under the  section  captioned  "Proposal  I --
Election of  Directors  --  Executive  Compensation"  in the Proxy  Statement is
incorporated herein by reference.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a) and (b)  The information  required by this  item  is incorporated  herein by
             reference  to  the  sections  captioned  "Proposal I -  Election of
             Directors" and "Voting Securities and Principal Holders Thereof" of
             the Proxy Statement.

(c)          Management knows of no  arrangements,  including any pledge by  any
             person of securities of the Company,  the operation of which may at
             a subsequent date result in a change in control of the registrant.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information  required by this item is incorporated  herein by reference
to the section  captioned  "Proposal I --  Election of  Directors"  of the Proxy
Statement.

                                       18
<PAGE>
ITEM 13.  EXHIBITS, LISTS AND REPORTS ON FORM 8-K.

         (a)  LIST OF DOCUMENTS FILED AS PART OF THIS REPORT

                  The following  exhibits are either attached to or incorporated
         by reference in this Annual Report on Form 10-KSB.

             Description
             -----------
     3.1     Articles of Incorporation of HFB Financial Corporation *

     3.2     Bylaws of HFB Financial Corporation *

     4       Common Stock Certificate of HFB Financial Corporation *

     10.1    HFB Financial Corporation Stock Option Plan *

     10.2    Home Federal Bank, Federal Savings Bank Management *
             Recognition Plan

     10.3    Home Federal Bank, Federal Savings Bank Supplemental *
             Executive Retirement Plan

     10.4    Employment Agreement between the Bank and David B. Cook

     10.5    Employment Agreement between the Bank and Stanley Alexander, Jr.

     13      Portions of the Annual Report to Stockholders for the Fiscal Year
             Ended June 30, 1999

     21      Subsidiaries of the Registrant

     27      Financial Data Schedule

----------------
*        Incorporated by reference to the Corporation's  Registration  Statement
         on  Form  S-1  (33-52308)   filed  with  the  Securities  and  Exchange
         Commission on September 23, 1992.

         (b)      REPORTS ON FORM 8-K.

                  On June 15, 1999, the  Corporation  filed a Report on Form 8-K
                  to report its  execution of a Branch  Purchase and  Assumption
                  Agreement  pursuant  to  which  it will  acquire  the  Harlan,
                  Kentucky branch of National City Bank of Kentucky. Pursuant to
                  the  Agreement,   the  Corporation  will  assume  deposits  of
                  approximately  $17.2  million  and pay a  related  premium  of
                  approximately  3%, or $534,000.  The transaction is subject to
                  regulatory approval and is expected to close in October 1999.

                                       19
<PAGE>
                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                        HFB FINANCIAL CORPORATION

September 21, 1999                      By: /s/ David B. Cook
                                           ---------------------------------
                                           David B. Cook
                                           President and Chief Executive Officer

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

 /s/ David B. Cook                                       September 21, 1999
-------------------------------------
David B. Cook
President and Chief Executive Officer
and Director
(Principal Executive Officer)

/s/ Stanley Alexander, Jr.                               September 21, 1999
-------------------------------------
Stanley Alexander, Jr.
Chief Financial Officer
(Principal Financial and Accounting Officer)

/s/ E. W. Nagle                                          September 21, 1999
-------------------------------------
E. W. Nagle
Director


/s/ Frank W. Lee                                         September 21, 1999
-------------------------------------
Frank W. Lee
Secretary-Treasurer and Director

/s/ Frances Coffey Rasnic                                September 21, 1999
-------------------------------------
Frances Coffey Rasnic
Director

/s/ Charles Harris                                       September 21, 1999
-------------------------------------
Charles Harris
Director

/s/ Earl Burchfield                                      September 21, 1999
-------------------------------------
Earl Burchfield
Director

/s/ Robert V. Costanzo                                   September 21, 1999
-------------------------------------
Robert V. Costanzo
Director

                                       20
<PAGE>
                                INDEX TO EXHIBITS

Exhibit No.       Description
-----------       -----------

     3.1          Articles of Incorporation of HFB Financial Corporation *

     3.2          Bylaws of HFB Financial *

     4            Common Stock Certificate of HFB Financial Corporation *

     10.1         HFB Financial Corporation Stock Option Plan *

     10.2         Home Federal Bank, Federal Savings Bank Management
                  Recognition Plan *

     10.3         Home Federal Bank, Federal Savings Bank Supplemental
                  Executive Retirement Plan *

     10.4         Employment Agreement between the Bank and David B. Cook

     10.5         Employment Agreement between the Bank and Stanley
                  Alexander, Jr.

     13           Portions of the Annual Report to Stockholders for the Fiscal
                  Year Ended June 30, 1999

     21           Subsidiaries of the Registrant

     27           Financial Data Schedule

*        Incorporated by reference to the Corporation's  Registration  Statement
         on  Form  S-1  (33-52308)   filed  with  the  Securities  and  Exchange
         Commission on September 23, 1992.

                                       21
<PAGE>