HOME FEDERAL BANK, FEDERAL SAVINGS BANK

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                            EMPLOYMENT AGREEMENT WITH
                                  DAVID B. COOK

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     THIS  AGREEMENT  entered into this 23rd day of March,  1999, by and between
Home Federal Bank,  Federal  Savings Bank (the  "Bank"),  and David B. Cook (the
"Executive"),  effective on the Effective  Date, is an amendment and restatement
of the  agreement  entered  into by and  between  the Bank and  David B. Cook on
January 1st, 1998.

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

     NOW, THEREFORE, it is AGREED as follows:

     1. Defined Terms.

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

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

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

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

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

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

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

                    (g) "Effective Date" shall mean March 23, 1999.

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

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

                    (j) "Just Cause" shall mean, in the good faith determination
of  the  Board,  the  Executive's  personal  dishonesty,  incompetence,  willful
misconduct,  breach of fiduciary duty  involving  personal  profit,  intentional
failure  to  perform  stated  duties,  willful  violation  of any  law,  rule or
regulation  (other  than  traffic  violations  or  similar  offenses)  or  final
cease-and-desist  order,

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or material  breach of any  provision of this  Agreement.  No act, or failure to
act, on the Executive's part shall be considered  "willful" unless he has acted,
or failed to act, with an absence of good faith and without a reasonable  belief
that his action or failure to act was in the best interest of the Bank.

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

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

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

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

     3. Base Compensation.  The Bank agrees to pay the Executive during the term
of this Agreement a salary at the rate of $130,000.00 per annum, payable in cash
not less  frequently than monthly.  The Board shall review,  not less often than
annually,  the rate of the  Executive's  salary,  and in its sole discretion may
decide to increase his salary.

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

     5. Other Benefits.

                    (a)  Participation  in Retirement,  Medical and Other Plans.
During  the  term  of  this  Agreement,  the  Executive  shall  be  eligible  to
participate  in the  following  benefit  plans  maintained  by the  Bank:  group
hospitalization,  disability, health, dental, sick leave, life insurance, travel
and/or accident  insurance,  auto  allowance/auto  lease,  retirement,  pension,
and/or other present or future qualified plans provided by the Bank,  generally,
which  benefits,  taken as a whole,  must be

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at least as favorable as those in effect on the Effective Date.  Further, if the
Executive  retires  from  employment  with the Bank at or after age 55 and for a
reason other than Just Cause, the Bank shall provide the Executive and his legal
dependents with medical  insurance  coverage that is not less favorable than the
coverage  that the Bank  provides  for its  officers.  The  Bank  shall  pay all
premiums for this coverage,  shall provide it for the Executive's lifetime,  and
agrees that this obligation shall survive expiration of this Agreement.

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

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

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

     7. Loyalty; Noncompetition.

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

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this  Agreement,  the  Executive  shall not engage in any  business  or activity
contrary to the  business  affairs or  interests  of the Bank,  or be  gainfully
employed in any other position or job other than as provided above.

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

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

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

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

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

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

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

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

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

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                    (b)  Disability.  The Bank  may  terminate  the  Executive's
employment after having  established the Executive's  Disability.  The Executive
shall be entitled  to the  compensation  and  benefits  provided  for under this
Agreement for (i) any period during the term of this  Agreement and prior to the
establishment of the Executive's Disability during which the Executive is unable
to work  due to the  physical  or  mental  infirmity,  or  (ii)  any  period  of
Disability which is prior to the Executive's  termination of employment pursuant
to this  Section;  provided  that any benefits  paid pursuant to the Bank's long
term disability  plan will continue as provided in such plan.  During any period
that the Executive shall receive disability  benefits and to the extent that the
Executive  shall be physically and mentally able to do so, he shall furnish such
information,  assistance and documents so as to assist in the continued  ongoing
business of the Bank and, if able,  shall make himself  available to the Bank to
undertake  reasonable  assignments  consistent  with his prior  position and his
physical and mental health. The Bank shall pay all reasonable  expenses incident
to  the  performance  of  any  assignment  given  to the  Executive  during  the
disability period.

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

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

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

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

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

     12. Change in Control.

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

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

                    (c)  Funding  of  Grantor  Trust  upon  Change  in  Control.
Notwithstanding  any other  provision of this  Agreement that may be contrary or
inconsistent  herewith,  not  later  than ten  business  days  after a Change in
Control,  the Bank shall (i) deposit in a Trust an amount  equal to the Code ss.
280G Maximum,  unless the Executive has previously provided a written release of
any claims under this Agreement,  and (ii) provide the trustee of the Trust with
a written  direction to hold said amount and any investment  return thereon in a
segregated  account  for  the  benefit  of  the

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Executive,  and to follow the  procedures  set forth in the next paragraph as to
the  payment of such  amounts  from the Trust.  At any time or from time to time
during the 27-consecutive  month period after a Change in Control, the Executive
may provide the trustee of the Trust with a written  notice  directing  that the
trustee pay to the Executive an amount designated in the notice as being payable
pursuant to this  Agreement.  Within three  business days after  receiving  said
notice,  the trustee of the Trust shall pay the Executive the amount  designated
therein in immediately  available  funds,  and shall  thereafter send the Bank a
written  notice  thereof.  Upon the earlier of the Trust's  final payment of all
amounts due under the following paragraph or the date 27 months after the Change
in Control,  the  trustee of the Trust shall pay to the Bank the entire  balance
remaining in the segregated account maintained for the benefit of the Executive.
The Executive shall thereafter have no further interest in the Trust.

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

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

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

     16. Successors and Assigns.

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

                    (b) Executive.  Since the Bank is contracting for the unique
and personal  skills of the  Executive,  the Executive  shall be precluded  from
assigning or delegating his rights or duties  hereunder  without first obtaining
the  written  consent  of the Bank;  provided,  however,  that  nothing


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in  this  paragraph  shall  preclude  (i)  the  Executive  from   designating  a
beneficiary to receive any benefit payable hereunder upon his death, or (ii) the
executors,  administrators,  or other legal  representatives of the Executive or
his estate from assigning any rights hereunder to the person or persons entitled
thereunto.

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

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

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

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

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

                           [Signature pages to follow]

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

                                             HOME FEDERAL BANK, FEDERAL
                                             SAVINGS BANK

Witnessed by:

/s/ Frank W. Lee                               By:  /s/ Robert V. Costanzo
    ---------------------------                     ----------------------------
     Frank W. Lee                                       Robert V. Costanzo

                                               EXECUTIVE

Witnessed by:

/s/ Frank W. Lee                                /s/  David B. Cook
    ---------------------------                     ----------------------------
     Frank W. Lee                                    David B. Cook

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