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, 2001

 | |    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, 2001:  $16,711,400

The  registrant's  voting  stock is listed on the Nasdaq  SmallCap  Market.  The
aggregate  market  value  of the  voting  stock  held  by  nonaffiliates  of the
registrant,   based  on  the  $13.00  per  share  closing  sales  price  of  the
registrant's  common stock as quoted on the Nasdaq  SmallCap Market on September
25, 2001, was $16,859,102.  For purposes of this calculation, it is assumed that
directors and officers of the  registrant  are  affiliates.  As of September 25,
2001, the registrant had 1,296,854 shares of common stock outstanding,  of which
257,534 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, 2001. (Parts I and II)

     2. Portions of Proxy Statement for the 2001 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 three full service offices in the  southeastern  Kentucky
communities of Middlesboro and Harlan and one full service office in the eastern
Tennessee  community of New  Tazewell.  At June 30, 2001,  the Company had total
assets of $217.4 million,  deposits of $181.9 million,  net loans  receivable of
$136.9 million and stockholders' equity of $20.5 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.

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.

     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  (30  year  terms  or  less),  originated  for its
portfolio.

                                       2
<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,  2001,  the
Company had no  concentrations  of loans exceeding 10% of total loans other than
as disclosed below.
<TABLE>
<CAPTION>
                                                                At June 30,
                                           ----------------------------------------------------
                                             2001       2000       1999       1998       1997
                                             ----       ----       ----       ----       ----
                                                               (In thousands)
Real estate loans:
<S>                                        <C>        <C>        <C>        <C>        <C>
  Single and multi-family mortgage loans   $114,442   $111,157   $ 95,294   $ 94,153   $ 86,095
  Commercial real estate loans .........     14,295     11,478     10,745     10,411     10,096
Real Estate construction loans .........      4,721      6,690     12,996      8,636      5,091
                                           --------   --------   --------   --------   --------
  Total real estate loans ..............    133,458    129,325    119,035    113,200    101,282
                                           --------   --------   --------   --------   --------

Consumer loans:
  Loans on deposits ....................      2,069      2,012      1,795      1,995      1,964
  Home improvement loans ...............        845        578        828      1,176      1,306
  Automobile loans .....................      1,223      1,063      1,109      1,685        959
  Other(1) .............................      2,139      1,633      2,180      1,617      1,493
                                           --------   --------   --------   --------   --------
     Total consumer loans ..............      6,276      5,286      5,912      6,473      5,722
                                           --------   --------   --------   --------   --------

Commercial loans .......................        506        193         98        353        723
                                           --------   --------   --------   --------   --------

Total gross loans ......................    140,240    134,804    125,045    120,026    101,727

Less:
  Undisbursed portion of mortgage loans       2,311      2,529      2,931      2,757      2,019
  Allowances for loan losses ...........        718        645      1,212        973        710
  Unamortized discount and deferred loan
  fees, net ............................        348        236        160        125         14
                                           --------   --------   --------   --------   --------
Total ..................................   $136,863   $131,394   $120,742   $116,171   $104,984
                                           ========   ========   ========   ========   ========
</TABLE>
(1)     Includes home equity lines of credit.

     The  following  table sets forth  certain  information  as of June 30, 2001
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..........       $     4,165        $    16,051       $   108,521      $  128,737
Real estate construction loans......               127                817             3,777           4,721
Consumer loans (1)..................             3,982              2,294                --           6,276
Commercial loans....................               369                137                --             506
                                           -----------        -----------       -----------      ----------
  Total gross loans.................       $     8,643        $    19,299       $   112,298      $  140,240
                                           ===========        ===========       ===========      ==========
</TABLE>
(1)      Includes second mortgages and home equity lines of credit.

                                       2
<PAGE>

     The following table sets forth as of June 30, 2001 the dollar amount of all
the loans due after one year  ending  June 30,  2001 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..... $      24,291      $    100,281      $  124,572
Real estate construction loans.           896             3,697           4,594
Consumer loans (1).............         2,294                --           2,294
Commercial loans...............           137                --             137
                                -------------      ------------      ----------
   Total gross loans........... $      27,618      $    103,979      $  131,597
                                =============      ============      ==========

     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 30 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. The Company classifies
its loan assets as a "substandard,"  "doubtful" or "loss," if warranted.  Assets
classified  as  substandard  or doubtful  require a general  allowance  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  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

                                       4
<PAGE>

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, 2001 it had $2.5 million in
assets classified as substandard,  $178,000 in assets classified as doubtful and
$50,000 in assets  classified  as loss.  In addition,  the Company had $2,000 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.

     During the year ended June 30, 1999, Management estimated that losses would
be  significant  on a large  commercial  real  estate  loan the Company had been
struggling  with for the past several  years.  The loan was secured by property,
which was single purpose thus limiting its marketability. Over fiscal years 1998
and 1999,  Management increased the provision for loan losses in anticipation of
loss on this loan. During the year ended June 30, 2000, the borrower was able to
find other financing and consequentially the Company had no loss of principal on
this loan.  Due to the large amount of provision that had been allocated to this
loan,  the  provision  for loan loss was reduced by $494,000.  The provision for
loan losses was  ($437,000)  net of this  adjustment for the year ended June 30,
2000.

     The following  table sets forth an analysis of the Company's  allowance for
loan losses for the periods indicated.
<TABLE>
<CAPTION>
                                                             Year Ended June 30,
                                           -------------------------------------------------------
                                              2001      2000         1999         1998        1997
                                              ----      ----         ----         ----        ----
                                                                (In Thousands)
<S>                                        <C>         <C>         <C>         <C>         <C>
Balance at Beginning of Period .........   $   645     $ 1,212     $   973     $   710     $   671
                                           -------     -------     -------     -------     -------

Loan charge-offs:
 Real Estate:
  Residential ..........................        24          87          --          --          --
  Commercial ...........................         9          --          --          --          99
 Consumer ..............................        10          12          16          11           3
 Commercial ............................        --          34          --          --          --
                                           -------     -------     -------     -------     -------
Total charge-offs ......................        43         133          16          11         102

Recoveries:
 Real Estate:
  Residential ..........................         9          --          --          --           3
 Consumer ..............................         2           3           2          --          --
                                           -------     -------     -------     -------     -------
Total Recoveries .......................        11           3           2          --           3

Net loan recoveries (charge-offs) ......       (32)       (130)        (14)        (11)        (99)
                                           -------     -------     -------     -------     -------
Provision (Adjustment) for Loan Losses .       105        (437)        253         274         138
                                           -------     -------     -------     -------     -------

Balance at end of period ...............   $   718     $   645     $ 1,212     $   973     $   710
                                           =======     =======     =======     =======     =======

Ratio of allowance for losses to gross
  loans receivable .....................      0.52%       0.49%       0.97%       0.81%       0.67%
                                           =======     =======     =======     =======     =======

Ratio of net loan charge-offs to average
  loans outstanding during the period ..       .02%       0.10%       0.01%       0.01%       0.10%
                                           =======     =======     =======     =======     =======
</TABLE>
                                       5
<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,
                                         ----------------------------------------------------------------------------
                                                    2000 1                  2000                        1999
                                         -----------------------  -----------------------    ------------------------
                                            Amount         %         Amount          %         Amount         %
                                            ------         -         ------          -         ------         -
                                                                        (In thousands)
Residential and commercial
<S>                                      <C>            <C>        <C>             <C>       <C>            <C>
     real estate loans.............      $      714      99.44%    $      618       95.94%   $   1,210       95.19%
Consumer loans.....................               4       0.56%            27        3.92%           2        4.72%
Commercial loans...................              --         --             --        0.14%          --        0.09%
                                         ----------    -------     -----------     ------    ---------      ------
     Total allowance for
     loan losses...................      $      718     100.00%    $      645      100.00%   $   1,212      100.00%
                                                       -------     ----------      ------    ---------      ------
</TABLE>
                                             Year Ended June 30,
                             -------------------------------------------------
                                       1998                        1997
                             ------------------------      -------------------
                                Amount           %          Amount         %
                                ------           -          ------         -
                                                (In thousands)
Residential and commercial
     real estate loans....... $     970        94.31%      $   707       94.02%
Consumer loans...............         3         5.39%            3        5.31%
Commercial loans.............        --         0.30%           --        0.67%
                              ---------       -------      -------      -------
     Total allowance for
     loan losses............. $     973       100.00%      $   710      100.00%
                              ---------       -------      -------      -------

     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. 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.

                                       6
<PAGE>

     The following  table sets forth  information  with respect to the Company's
nonperforming  assets at the dates  indicated.  The Company has no  restructured
loans.
<TABLE>
<CAPTION>
                                                                             Year Ended June 30,
                                                  --------------------------------------------------------------------------
                                                      2001          2000          1999            1998             1997
                                                      ----          ----          ----            ----             ----
                                                                             (In thousands)
<S>                                                 <C>             <C>            <C>            <C>            <C>
Loans accounted for on a nonaccrual
basis (1) ......................................... $ 2,231         $ 1,613        $ 1,416        $    --        $    --
                                                    -------         -------        -------        -------        -------
Accruing loans which are contractually
  past due 90 days or more:(1)
     Real estate .................................. $   134         $   614        $   521        $   677        $   365
     Consumer .....................................      --              15              5             40              3
                                                    -------         -------        -------        -------        -------
Total of nonaccrual and 90 days
  or more past due loans .......................... $ 2,365         $ 2,242        $ 1,942        $   717        $   368
                                                    -------         -------        -------        -------        -------

Real Estate owned .................................     105             333             --             --             58
                                                    -------         -------        -------        -------        -------
   Total nonperforming assets ..................... $ 2,470         $ 2,575        $ 1,942        $   717        $   426
                                                    =======         =======        =======        =======        =======
Nonaccrual and 90 days or more past due
  loans as a percentage of total loans, net .......    1.73%           1.96%          1.96%          0.62%          0.41%
                                                    =======         =======        =======        =======        =======
Nonaccrual and 90 days or more past due
  loans as a percentage of total assets, net ......    1.09%           1.10%          1.02%          0.41%          0.27%
                                                    =======         =======        =======        =======        =======
Nonperforming assets as a percentage of
  total assets ....................................    1.14%           1.25%          1.02%          0.41%          0.27%
                                                    =======         =======        =======        =======        =======
</TABLE>
(1)   Interest on delinquent loans is accrued to income to the extent considered
      collectible.

     As of June 30,  2001,  the Company had a total of $1.5 million in 24 single
family loans classified as  "substandard."  As of June 30, 2001, the Company had
$7,000 in consumer loans,  $3,000 in single family  residential loans classified
as "special  mention." and $50,000 in single family residential loans classified
as "loss."

     In  addition,  the  Company  had 4 real  estate  development  loans  to one
borrower  totaling  $1.1  million,  of which  $925,000  had been  classified  as
"substandard"  and  $170,000 had been  classified  as  "doubtful."  The property
securing  these loans is a single  family  residential  development  in Clinton,
Tennessee.  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.

     At June 30, 2001, $27,000 would have been recognized as interest income had
these loans been in a current  status.  Income  recognized on these loans during
the period ended June 30, 2001 was $146,000.

     As of June 30,  2001,  the  Company  had a total of $105,000 in real estate
owned.

     At June 30, 2001, 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.

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

                                       7
<PAGE>

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, 2001 there
was no trading activity.  At June 30, 2001, 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 invested in common
stock of publicly held thrift institutions at June 30, 2001.

     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.

                                       8
<PAGE>
     The  following  table  sets  forth  the  carrying  value  of the  Company's
investment securities at the dates indicated.
<TABLE>
<CAPTION>
                                                                     At June 30,
                                                       --------------------------------------
                                                           2001          2000         1999
                                                           ----          ----         ----
                                                               (Dollars in Thousands)
<S>                                                    <C>            <C>          <C>
Investment securities, available for sale:
  U.S.  Treasury,  Federal Agency  obligations,
  corporate bonds and municipal
  obligations......................................... $    32,855    $    23,736  $   25,241

Investment securities, held to maturity:
  U.S. Treasury and Federal Agency obligations........          --         13,201       7,731
                                                       -----------    -----------  ----------

Total investment securities, available for
  sale and held to maturity........................... $    32,855    $    36,937  $   32,972
                                                       ===========    ===========  ==========
</TABLE>
     The following  table sets forth the maturities and Weighted  Average Yields
of securities at June 30, 2001.
<TABLE>
<CAPTION>

                                                                   At June 30, 2001
                                ---------------------------------------------------------------------------------------
                                 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,
    Federal Agency
    Obligations,
    Corporate Bonds and
    Municipal Obligations       $  1,023         $ 15,629          $   8,009         $  8,194           $ 32,855

    Total investment
    securities, available for
    sale................        $  1,023         $ 15,629          $   8,009         $  8,194           $ 32,855
                                ========         ========          =========         ========           ========

  Weighted average
   yield................           6.16%            6.06%              6.46%            6.45%              6.26%
                                ========         ========          =========         ========         ==========
</TABLE>
                                       9

<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,
                                                        ------------------------------------------------------------------
                                                                 2001                    2000                   1999
                                                        --------------------    --------------------    ------------------
                                                          Amount       %            Amount       %        Amount       %
                                                          ------       -           ------        -        ------       -
                                                                                 (Dollars in thousands)
Mortgage-backed securities, available for sale:
<S>                                                       <C>        <C>        <C>           <C>       <C>        <C>
  Freddie Mac ............................................$ 5,569     22.96%    $ 3,311        13.55%   $   744      2.82%
  Fannie Mae .............................................  8,955     36.92       3,678        15.05      4,786     18.18
  Ginnie Mae .............................................  9,731     40.12       5,947        24.34      6,528     24.80
                                                           ------    ------      ------        -----     ------     -----
Total mortgage-backed securities available for sale ...... 24,255    100.00      12,936        52.94     12,058     45.80
                                                           ------    ------      ------        -----     ------     -----

Mortgage-backed securities, held to maturity:
  Freddie Mac ............................................     --        --       1,658         6.79      1,074      4.08
  Fannie Mae .............................................     --        --       6,727        27.54      9,921     37.69
  Ginnie Mae .............................................     --        --       3,111        12.73      3,272     12.43
                                                           ------    ------      ------        -----     ------     -----
Total mortgage-backed securities, held to maturity .......     --        --      11,496        47.06     14,267     54.20
                                                           ------    ------      ------        -----     ------     -----

Total mortgage-backed securities, available
for sale and held to maturity ............................$24,255    100.00%    $24,432       100.00%   $26,325    100.00%
                                                          =======    ======     =======       ======    =======    ======
</TABLE>

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.

                                       10
<PAGE>

     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.
<TABLE>
<CAPTION>
                                                                June 30,
                          -------------------------------------------------------------------------------
                                    2001                          2000                      1999
                          ------------------------      ----------------------    -----------------------
                            Average       Average        Average     Average        Average       Average
                             Amount        Rate            Amount       Rate         Amount        Rate
                             ------      --------          ------     --------       ------       ------
                                                         (Dollars in thousands)
<S>                       <C>               <C>         <C>             <C>       <C>               <C>
NOW and money market
  deposit accounts....... $   17,708        0.95%       $   15,702      1.69%     $   13,423        1.95%
Passbook accounts........      7,357        1.31             7,604      2.22           8,008        2.48
Certificates.............    156,883        5.48           140,019      5.08         127,857        5.29
                           ---------      ------        ----------   -------      ----------     -------
  Total.................. $  181,948        4.87%       $  163,325      4.62%     $  149,288        4.83%
                           =========      ======        ==========   =======      ==========     =======
</TABLE>
     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,
2000.  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......                                    $    10,684
Over three through six months                                      16,484
Over six through twelve months                                     16,425
Over twelve months                                                  9,876
                                                              -----------
         Total                                                $    53,469
                                                              ===========

     Management  attributes the net increase in deposits for the year ended June
30, 2001 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.

     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 Company had no short-term borrowings  outstanding at June 30,
2001. The average  balance of short term  borrowings  during the 12 months ended
June 30,  2001 was $66,000  with a weighted  average  rate of 6.8%.  The maximum
balance of short term  borrowings  during the 12 months  ended June 30, 2001 was
$1.2 million.

SUBSIDIARY ACTIVITIES

     The  Company's  only  subsidiary  other  than  the  Bank  is  Home  Service
Corporation,  which engages in the  ownership  and rental of the Company's  main
office  building and  operations  center in  Middlesboro,  Kentucky and a branch
office in New Tazewell,  Tennessee. Home Service Corporation also owns and rents
other properties to unrelated parties.

                                       11
<PAGE>

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 three banks and one savings bank. In
Harlan,  Kentucky  where a branch  office  is  located,  the  Company's  primary
competition is two 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,  2001,  the  Company  and its  subsidiary  had 54  full-time
employees,  none of whom was represented by a collective  bargaining  agreement.
The Company believes that it enjoys excellent relations with its personnel.

                                       12
<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 THE BANK

     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, 2001, 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, 2001, 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  the
imposition of certain  operating  restrictions  and a  restriction  on obtaining
additional  advances from its Federal

                                       13
<PAGE>

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, 2001, 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, 2001, 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,  2001,  Home  Federal was in  compliance  with the
requirement, with an average daily liquidity ratio of 36.2%.

     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, 2001 of $1.5
million.  Long-term  FHLB advances may only be made for the purpose of providing
funds for residential housing finance.

                                       14
<PAGE>

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.

                                       15
<PAGE>

ITEM 2.  PROPERTIES
-------------------

     The Company's  principal  executive  offices are located at 1602 Cumberland
Avenue,  Middlesboro,   Kentucky  in  facilities  leased  to  the  Bank  by  its
wholly-owned  subsidiary,  Home Service Corporation.  The Company also maintains
operations  offices at 1608 Cumberland Avenue,  Middlesboro,  Kentucky and has a
branch office  located at 600 Fifth Avenue,  New  Tazewell,  Tennessee,  both of
which are leased from Home Service Corporation. In addition, the Company has two
other  branch  offices  located  at Village  Center,  Harlan,  Kentucky  and 102
Cumberland Avenue, Harlan,  Kentucky,  both of which are in premises leased from
third parties.

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 Bank 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, 2001.


                                     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,  2001  (the  "Annual  Report")  is  incorporated  herein by  reference.  For
information  regarding  restrictions  on the  payment of  dividends  see Item 1.
"Business -- Regulation  -- Regulation of Home Federal - Limitations  on Capital
Distributions."

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. In June 2001, the Company's current accountants, Olive LLP,
merged with Baird, Kurtz and Dobson into BKD, LLP.

                                    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.

                                       16
<PAGE>

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.

                                       17
<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. **

         10.6     Employment Agreement between the Bank and Kenneth Jones **

         10.7     2000 Long-Term Incentive Compensation Plan **

         10.8     Amended and Restated Employment Agreement between the Bank and
                  David B. Cook

         10.9     Amended and Restated Employment Agreement between the Bank and
                  Stanley Alexander, Jr.

         10.10    Amended and Restated Employment Agreement between the Bank and
                  Kenneth Jones

         13       Portions of the Annual Report to Stockholders for the Fiscal
                  Year Ended June 30, 2001

         21       Subsidiaries of the Registrant

----------------
*    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.
**   Incorporated by reference to the Corporation's Annual Report on Form 10-KSB
     for the fiscal year ended June 30, 2000.


     (B)   REPORTS ON FORM 8-K.
           -------------------

     None.

                                       18
<PAGE>

     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 28, 2001                     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 28, 2001
-----------------
David B. Cook
President and Chief Executive Officer
and Director
(Principal Executive Officer)


/s/ Stanley Alexander, Jr.                          September 28, 2001
--------------------------
Stanley Alexander, Jr.
Chief Financial Officer
(Principal Financial and Accounting Officer)

/s/ Kenneth Jones                                   September 28, 2001
-----------------
Kenneth Jones
Chief Operating Officer

/s/ E.W. Nagle                                      September 28, 2001
--------------
E. W. Nagle
Director


/s/ Frank W. Lee                                    September 28, 2001
----------------
Frank W. Lee
Secretary-Treasurer and Director


/s/ Frances Coffey Rasnic                           September 28, 2001
-------------------------
Frances Coffey Rasnic
Director


/s/ Charles Harris                                  September 28, 2001
------------------
Charles Harris
Director


/s/ Earl Burchfield                                 September 28, 2001
-------------------
Earl Burchfield
Director


/s/ Robert V. Costanzo                              September 28, 2001
----------------------
Robert V. Costanzo
Director

                                       19