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, 2000

                 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, 2000:  $14,757,000

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  $11.50  per  share  closing  sales  price  of  the
registrant's  common stock as quoted on the Nasdaq  SmallCap Market on September
12, 2000, was $12,204,042.  For purposes of this calculation, it is assumed that
directors and officers of the  registrant  are  affiliates.  As of September 13,
2000, the registrant had 1,299,147 shares of common stock outstanding,  of which
237,926 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, 2000. (Parts I and II)

         2.    Portions  of Proxy  Statement  for the  2000  Annual  Meeting  of
               Stockholders. (Part III)


<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 East Tennessee community of New Tazewell.  At June 30, 2000, the Company had
total assets of $205.2 million, deposits of $172.5 million, net loans receivable
of $131.4 million and stockholders' equity of $18.0 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 (25 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, 2000, the
Company had no  concentrations  of loans exceeding 10% of total loans other than
as disclosed below.
<TABLE>
<CAPTION>

                                                                                     At June 30,
                                                          --------------------------------------------------------------------
                                                           2000          1999           1998            1997          1996
                                                           ----          ----           ----            ----          ----
                                                          Amount        Amount         Amount          Amount        Amount
                                                          ------        ------         ------          ------        ------
                                                                                    (In thousands)
<S>                                                      <C>            <C>            <C>            <C>            <C>
Real estate loans:
  Single and multi-family mortgage loans .........       $111,157       $ 95,294       $ 94,153       $ 86,095       $ 79,022
  Commercial real estate loans ...................         11,478         10,745         10,411         10,096         10,237
Real Estate construction loans ...................          6,690         12,996          8,636          5,091          3,397
                                                         --------       --------       --------       --------       --------
  Total real estate loans ........................        129,325        119,035        113,200        101,282         92,656
                                                         --------       --------       --------       --------       --------

Consumer loans:
  Loans on deposits ..............................          2,012          1,795          1,995          1,964          2,001
  Home improvement loans .........................            578            828          1,176          1,306            836
  Automobile loans ...............................          1,063          1,109          1,685            959            666
  Other(1) .......................................          1,633          2,180          1,617          1,493          2,130
                                                         --------       --------       --------       --------       --------
     Total consumer loans ........................          5,286          5,912          6,473          5,722          5,633
                                                         --------       --------       --------       --------       --------

Commercial loans .................................            193             98            353            723            171
                                                         --------       --------       --------       --------       --------

Total gross loans ................................        134,804        125,045        120,026        101,727         98,460

Less:
  Undisbursed portion of mortgage loans ..........          2,529          2,931          2,757          2,019          1,797
  Allowances for loan losses .....................            645          1,212            973            710            671
  Unamortized discount and deferred loan fees, net            236            160            125             14             18
                                                         --------       --------       --------       --------       --------

Total ............................................       $131,394       $120,742       $116,171       $104,984       $ 95,974
                                                         ========       ========       ========       ========       ========
</TABLE>

(1)     Includes home equity lines of credit.

               The following table sets forth certain information as of June 30,
2000 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 Year
                                   Due in One        through        Due after
                                  Year or Less     Five Years       Five Years         Total
                                  ------------    ------------   -----------------   ----------
                                                         (In thousands)

<S>                                  <C>            <C>              <C>              <C>
Real estate mortgage loans ...       $  2,935       $ 14,444         $105,256         $122,635
Real estate construction loans            229          1,148            5,313            6,690
Consumer loans (1) ...........          2,584          2,539              163            5,286
Commercial loans .............            140             53               --              193
                                     --------       --------         --------         --------
  Total gross loans ..........       $  5,888       $ 18,184         $110,732         $134,804
                                     ========       ========         ========         ========
</TABLE>


(1)  Includes second mortgages and home equity lines of credit.


                                       3
<PAGE>


               The  following  table sets  forth as of June 30,  2000 the dollar
amount  of  all  the  loans  due  after  one  year  ending  June  30,  2000  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 ...     $ 18,458           $101,242       $119,700
Real estate construction loans        1,770              4,691          6,461
Consumer loans (1) ...........        2,702                 --          2,702
Commercial loans .............           53                 --             53
                                   --------           --------       --------
   Total gross loans .........     $ 22,983           $105,933       $128,916
                                   ========           ========       ========


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

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

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

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

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

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

               Asset  Classification  and Allowance for Loan Losses. The Company
classifies  its  loan  assets  as a  "substandard,"  "doubtful"  or  "loss,"  if
warranted.  Assets  classified  as  substandard  or  doubtful  require a general
allowances  for loan losses.  If an asset or portion  thereof is  classified  as
loss,  specified allowances for loan losses in the amount of 100% of the portion
of the  asset  classified  loss  must be  established,  or else the loan must be
charged off. An asset which does not currently warrant  classification but which
possesses weaknesses or deficiencies deserving close attention is required to be
designated as "special mention." Currently,  general loss allowances established

                                       4
<PAGE>

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, 2000 it had $1.9 million in
assets classified as substandard,  $134,000 in assets classified as doubtful and
$655,000 in assets classified as loss. In addition,  the Company had $106,000 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,
                                                             ------------- ------------  ---------------     ---------  ----------
                                                                 2000          1999           1998              1997       1996
                                                                 ----          ----           ----              ----       ----
                                                                Amount        Amount         Amount            Amount     Amount
                                                                ------        ------         ------            ------     ------
                                                                                         (In Thousands)
<S>                                                            <C>            <C>             <C>             <C>         <C>
Balance at Beginning of Period ...........................     $ 1,212        $   973         $   710         $   671     $   633
                                                               -------        -------         -------         -------     -------

Loan charge-offs:
  Real Estate:
    Residential ..........................................          87             --              --              --          --
    Commercial ...........................................          --             --              --              99          --
  Consumer ...............................................          12             16              11               3           8
  Commercial .............................................          34             --              --              --          --
                                                               -------        -------         -------         -------     -------
Total charge-offs ........................................         133             16              11             102           8

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

Net loan recoveries (charge-offs) ........................        (130)           (14)            (11)            (99)          3
                                                               -------        -------         -------         -------     -------
Provision (Adjustment) for Loan Losses ...................        (437)           253             274             138          35
                                                               -------        -------         -------         -------     -------

Balance at end of period .................................     $   645        $ 1,212         $   973         $   710     $   671
                                                               =======        =======         =======         =======     =======

Ratio of allowance for losses to gross loans receivable ..        0.49%          0.97%           0.81%           0.67%       0.68%
                                                               =======        =======         =======         =======     =======

Ratio of net loan charge-offs to average loans outstanding
during the period ........................................        0.10%          0.01%           0.01%           0.10%       0.00%
                                                                ======        =======         =======         =======     =======
</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         2000            1999       1999           1998         1998
                                    ----         ----            ----       ----           ----         ----
                                   Amount          %            Amount        %           Amount          %
                                   ------          -            ------        -           ------          -
                                                             (In thousands)
<S>                                 <C>        <C>         <C>              <C>         <C>            <C>
Residential and commercial
        real estate loans .         $  618     95.94%      $1,210           95.19%      $  970         94.31%
Consumer loans ............             27      3.92%           2            4.72%           3          5.39%
Commercial loans ..........             --      0.14%          --            0.09%          --          0.30%
                                    ------     ------      ------          ------       ------         ------

        Total allowance for
        loan losses .......         $  645    100.00%      $1,212          100.00%      $  973        100.00%
                                    ------    ------       ------          ------       ------        ------
</TABLE>




                                            Year Ended June 30,
                                 ------------------------------------------
                                    1997       1997      1996        1996
                                    ----       ----      ----        ----
                                   Amount        %      Amount         %
                                   ------        -      ------         -
                                                (In thousands)

Residential and commercial
        real estate loans .         $707      94.02%      $669        94.11%
Consumer loans ............            3       5.31%         2         5.72%
Commercial loans ..........           --       0.67%        --         0.17%
                                    ----       ----       -----      ------

        Total allowance for
        loan losses .......         $710     100.00%      $671       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
                                                           -------------------------------------------------------------------------
                                                             2000               1999          1998          1997           1996
                                                             ----               ----          ----          ----           ----
                                                            Amount             Amount        Amount         Amount         Amount
                                                            ------             ------        ------         ------         ------
                                                                                         (In thousands)
<S>                                                        <C>              <C>             <C>           <C>            <C>
Loans accounted for on a nonaccrual
basis (1)         ......................................   $  1,613         $    1,416      $      --     $       --     $       --
                                                            -------          ---------       --------      ---------      ---------
Accruing loans which are contractually
  past due 90 days or more:  (1)
        Real estate.....................................   $    614         $      521      $     677     $      365     $      657
        Consumer........................................         15                  5             40              3              3
        Commercial......................................         --                 --             --             --             --
                                                           --------         ----------      ---------     ----------     ----------
Total of nonaccrual and 90 days
  or more past due loans................................   $  2,242         $    1,942      $     717     $      368     $      660
                                                           --------         ----------      ---------     ----------     ----------

Real Estate owned.......................................        333                 --             --             58             --
                                                           --------         ----------      ---------     ----------     ----------
   Total nonperforming assets...........................   $  2,575         $    1,942      $     717     $      426     $      660
                                                           ========         ==========      =========     ==========     ==========
Nonaccrual and 90 days or more past due
  loans as a percentage of total loans, net.............      1.96%              1.96%          0.62%          0.41%          0.69%
                                                           ========         ==========      =========     ==========     ==========
Nonaccrual and 90 days or more past due
  loans as a percentage of total assets, net............      1.10%              1.02%          0.41%          0.27%          0.45%
                                                           ========         ==========      =========     ==========     ==========
Nonperforming assets as a percentage of
  total assets..........................................      1.25%              1.02%          0.41%          0.27%          0.45%
                                                           ========         ==========      =========     ==========     ==========
</TABLE>


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

               As of June 30,  2000,  the  Company had a total of $776,000 in 13
single  family loans  classified  as  "substandard."  As of June 30,  2000,  the
Company  had $5,000 in  consumer  loans  classified  and  $441,000 in two single
family residential loans classified as "special mention."

               In addition,  the Company had 6 real estate  development loans to
one borrower  totaling $1.291  million,  of which $68,000 had been classified as
special mention, $1.1 million had been classified as "substandard",  $33,000 had
been  classified  as "doubtful"  and $60,000 had been  classified as "loss." The
property  securing  these loans is a single family  residential  development  in
Clinton  Tennessee.  The borrower is actively  working to obtain new  financing.
Management  believes  that  these  loans  have been  adequately  classified  and
reserved for, but continues to monitor them as to their collectibility and as to
any possible  losses the Company could incur,  or  additional  reserves that may
need to be established

               At June 30, 2000, $202,000 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, 2000 was $61,000.

               As of June 30, 2000,  the Company had a total of $333,000 in real
estate owned.

               At June 30,  2000,  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.

                                       7
<PAGE>


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

               The  Board  of  Directors  of  the  Company  has  authorized  the
existence of a trading account in an amount not to exceed 8% of total assets for
the purpose of taking advantage of favorable  short-term market conditions.  The
Company's investment policy specifies that securities traded within this account
must be U.S. Treasury or agency  obligations.  Securities in the trading account
are marked to market on a monthly  basis.  During  the year ended June 30,  2000
there was no trading  activity.  At June 30, 2000, 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  $759,000
invested in common stock of publicly held thrift institutions at June 30, 2000.

               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,
                                                                                       ---------------------------------------
                                                                                          2000            1999          1998
                                                                                          ----            ----          ----
                                                                                                 (Dollars in Thousands)
<S>                                                                                    <C>            <C>            <C>
Investment securities, available for sale:
  U.S. Treasury, Federal Agency obligations and municipal obligations...............   $  23,736      $   25,241     $  18,238

Investment securities, held to maturity:
  U.S. Treasury and Federal Agency obligations......................................      13,201           7,731         6,497
                                                                                       ---------      ----------     ---------

Total investment securities, available for
  sale and held to maturity.........................................................   $  36,937      $   32,972     $  24,735
                                                                                       =========      ==========     =========
</TABLE>



               The following table sets forth the distributions of maturities of
securities at amortized cost at June 30, 2000.

<TABLE>
<CAPTION>
                                                                            At June 30, 2000
                                                 -----------------------------------------------------------------------------
                                                  One Year          One to        Five to        More than   Total Investment
                                                  or Less         Five Years      Ten Years      Ten Years       Portfolio
                                                 -----------     -----------     -----------     ---------      ----------
                                                                         (Dollars in thousands)
<S>                                               <C>             <C>             <C>             <C>             <C>
  Investment securities, available for sale:
    U.S. Treasury, Federal Agency
    Obligations and Municipal Obligations         $ 2,987         $ 3,061         $12,117         $ 5,571         $23,736

  Total investment
  securities, available for
  sale ..................................            2987           3,061          12,117           5,571          23,736
                                                  -------         -------         -------         -------         -------

Investment securities, held to maturity:
  U.S. Treasury and
  Federal Agency
  obligations ...........................             500           4,150           6,476           2,075          13,201
                                                  -------         -------         -------         -------         -------

  Total investment securities,
  held to maturity ......................             500           4,150           6,476           2,075          13,201
                                                  -------         -------         -------         -------         -------


  Total investment securities,
  available for sale and held to
  maturity ..............................         $ 3,487         $ 7,211         $18,593         $ 7,646         $36,937
                                                  =======         =======         =======         =======         =======


Weighted average yield ..................            6.29%           6.22%           6.51%           6.81%           6.50%
                                                  =======         =======         =======         =======         =======
</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,
                                                      ------------------------------------------------------------------------
                                                                 2000                    1999                     1998
                                                      ----------------------    --------------------       -------------------
                                                         Amount          %        Amount          %         Amount          %
                                                         ------         ---       ------         ---        ------         ---
                                                                                   (Dollars in thousands)
<S>                                                     <C>           <C>        <C>             <C>       <C>             <C>
Mortgage-backed securities, available for sale:
  Freddie Mac ......................................    $ 3,311       13.55%     $   744         2.82%     $ 1,375         6.05%
  Fannie Mae .......................................      3,678       15.05        4,786        18.18        3,912        17.22
  Ginnie Mae .......................................      5,947       24.34        6,528        24.80        3,380        14.88
                                                        -------      ------      -------       ------      -------       ------
Total mortgage-backed securities available for sale      12,936       52.94       12,058        45.80        8,667        38.15
                                                        -------      ------      -------       ------      -------       ------
Mortgage-backed securities, held to maturity:
  Freddie Mac ......................................      1,658        6.79        1,074         4.08          581         2.56
  Fannie Mae .......................................      6,727       27.54        9,921        37.69        9,957        43.83
  Ginnie Mae .......................................      3,111       12.73        3,272        12.43        3,512        15.46
                                                        -------      ------      -------       ------      -------       ------
Total mortgage-backed securities, held to maturity .     11,496       47.06       14,267        54.20       14,050        61.85
                                                        -------      ------      -------       ------      -------       ------

Total mortgage-backed securities, available
for sale and held to maturity ......................    $24,432      100.00%     $26,325       100.00%     $22,717       100.00%
                                                        =======      ======      =======       ======      =======       ======
</TABLE>




                                       10
<PAGE>



Deposit Activity and Other Sources of Funds

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

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

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

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

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
                                                                                           June 30,
------------------------------------------------------------------------------------------------------------------------------------
                                                                2000                        1999                      1998
                                                    ---------------------------      -------------------      ---------------------
                                                       Average        Average        Average     Average      Average      Average
                                                        Amount         Rate           Amount      Rate         Amount       Rate
                                                       -------        -------        -------     -------      -------      -------
                                                        (Dollars in thousands)
NOW and money market
<S>                                                 <C>                <C>       <C>              <C>       <C>               <C>
  deposit accounts...............................   $    15,702        1.69%     $    13,423      1.95%     $    11,823       2.18%
Passbook accounts................................         7,604        2.22            8,008      2.48            9,140       2.72
Certificates.....................................       140,019        5.08          127,857      5.29          116,570       5.32
                                                        -------      ------          -------    ------          -------   --------
  Total..........................................   $   163,325        4.62%     $   149,288      4.83%     $   137,533       4.88%
                                                     ==========      =======     ===========    ======       ==========   ========
</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.......................           $    9,116
        Over three through six months..............                7,314
        Over six through twelve months.............               13,906
        Over twelve months                                        14,041
                                                               ---------
                 Total.............................            $  44,377
                                                               =========


               Management  attributes  the net increase in deposits for the year
ended June 30, 2000 to general economic  conditions and competition in the local
market.  The Company does not offer  premiums for deposits,  and in the past has
not offered  interest  rates on deposits  which exceed the average rates paid by
other financial institutions in its market area. Due to aggressive  competition,
the Company has recently instituted promotions offering higher rates on deposits
to  maintain  its  market  share.  Management  anticipates  that this trend will
continue over the next twelve months.


                                       11
<PAGE>


               Borrowings.  Savings deposits  historically have been the primary
source of funds for the Company's lending and investment  activities and for its
general business activities. The Company is authorized, however, to use advances
from the FHLB of Cincinnati to  supplement  its supply of lendable  funds and to
meet deposit withdrawal requirements.  All of the advances are collateralized by
FHLB stock and single  family  first  mortgage  loans with  aggregate  principal
balances  totaling  150% of the  outstanding  amount  of  advances.  The FHLB of
Cincinnati  functions  as a central  reserve bank  providing  credit for savings
institutions and certain other member financial  institutions.  As a member, the
Company is required to own capital  stock in the FHLB and is authorized to apply
for advances on the security of such stock and certain of its home mortgages and
other assets  (principally,  securities  which are obligations of, or guaranteed
by, the United States) provided certain  standards  related to  creditworthiness
have been met. The average balance of short term borrowings during the 12 months
ended June 30, 2000 was $2.0 million with a weighted  average rate of 5.52%. The
maximum  balance of short term  borrowings  during the 12 months  ended June 30,
2000 was $9.0 million.

Subsidiary Activities

               The  Company's  only  subsidiary is Home Service  Corporation  in
which  its  investment  was  $2.7  million  at  June  30,  2000.   Home  Service
Corporation's  principal  activity  is  that  of  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.  These  properties  are
contiguous to the Company's main office and being held for future expansion.

Competition

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

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

               The Company's primary competition  comprises the commercial banks
near each of the Company's branch offices.  In Middlesboro,  where the Company's
main  office is  located,  primary  competition  consists of 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,  2000,  the  Company  and its  subsidiary  had 59
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 Home Federal

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

               At June 30, 2000,  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, 2000, 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

                                       13
<PAGE>

the imposition of certain operating  restrictions and a restriction on obtaining
additional  advances from its Federal Home Loan Bank.  If a savings  institution
does not  requalify  under the QTL test within the  three-year  period  after it
fails  the QTL  test,  it  would be  required  to  terminate  any  activity  not
permissible  for  a  national  bank  and  repay  as  promptly  as  possible  any
outstanding  advances from its Federal Home Loan Bank. In addition,  the holding
company of such an institution would similarly be required to register as a bank
holding  company with the Federal  Reserve Board. At June 30, 2000, 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, 2000, 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,  2000,  Home  Federal was in  compliance  with the
requirement, with an average daily liquidity ratio of 40.12%.

               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


                                       14
<PAGE>

(borrowings) from the FHLB, whichever is greater. Home Federal was in compliance
with this requirement, with an investment in FHLB stock at June 30, 2000 of $1.4
million.  Long-term  FHLB advances may only be made for the purpose of providing
funds for residential housing finance.

Regulation of the Company

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

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

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

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




                                       15
<PAGE>


 Item 2.  Properties

               The   following   table  sets  forth  the  location  and  certain
additional  information  regarding the Company's  offices at June 30, 2000.  The
Company  owns its main  office and New  Tazewell  Branch,  and leases its Harlan
Branch.

                                               Year    Square
                                              Opened   Footage   Net Book Value
                                              ------   -------   --------------
               Main Office:
               1602 Cumberland Avenue (1)
               Middlesboro, Kentucky           1980      9,500   $   631,070

               Operations building
               1608 Cumberland Avenue (1)
               Middlesboro, Kentucky           2000      8,500       992,097

               Branch Offices:
               Village Center (2)              1975      3,300       143,071
               Harlan, Kentucky

               102 Cumberland Avenue           2000      3,300
               Harlan, Kentucky

               600 Fifth Avenue (1)
               New Tazewell, Tennessee         1995      5,000       556,888

                 Total                                           $ 2,323,126
                                                                 ===========


(1)   Owned by Home Service Corporation,  the Company's wholly-owned subsidiary,
      and leased to the Company.
(2)   In  November  1990,  the lease on this  property  was  renegotiated  for a
      seven-year term with three five-year options.  The annual rent is $49,752.
      The Company is liable to reimburse the lessor for its proportionate  share
      of any increase in real estate  taxes and  insurance  paid by lessor.  The
      rent   expense  for  years  2000  and  1999  was   $49,752  and   $48,964,
      respectively.
(3)   At June 30, 2000,  the Bank was renting  this office from an  unaffiliated
      party on a  month-to-month  basis  for  $3,600  per  month.  Home  Service
      Corporation, the Company's wholly-owned subsidiary,  purchased this office
      on September 13, 2000 for $437,000.

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

               At June 30, 2000,  the net book value of the Company's  premises,
furniture, fixtures, equipment and land for future development was $3.9 million.
It is management's  opinion that all of the Company's  properties are adequately
covered by  insurance.  See "Premises  and  Equipment"  included in the Notes to
Consolidated Financial Statements in the Annual Report.

Item 3. Legal Proceedings.

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

Item 4.  Submission of Matters to a Vote of Security Holders

               No matters were  submitted to a vote of security  holders  during
the fourth quarter of the fiscal year ended June 30, 2000.


                                       16


<PAGE>
                                     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, 2000 (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.


                                    PART III

Item 9.  Directors and Executive Officers, Promoters and Control Persons;
        Compliance with Section 16(a) of the Exchange Act

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

Item 10.  Executive Compensation

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

Item 11.  Security Ownership of Certain Beneficial Owners and Management

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

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

Item 12.  Certain Relationships and Related Transactions

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



                                       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

      13        Portions of the Annual Report to Stockholders for the Fiscal
                Year Ended June 30, 2000

      21        Subsidiaries of the Registrant

      27        Financial Data Schedule


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


        (b)      Reports on Form 8-K.

                 None.



                                       18
<PAGE>




                                   SIGNATURES

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

                                       HFB FINANCIAL CORPORATION


September 21, 2000                     By: /s/ David B. Cook
                                          --------------------
                                          David B. Cook
                                          President and Chief Executive Officer


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


 /s/ David B. Cook                                         September 21, 2000
-------------------
David B. Cook
President and Chief Executive Officer
and Director
(Principal Executive Officer)


/s/ Stanley Alexander, Jr.                                 September 21, 2000
----------------------------
Stanley Alexander, Jr.
Chief Financial Officer
(Principal Financial and Accounting Officer)

s/ Kenneth Jones.                                          September 21, 2000
-------------------
Kenneth Jones
Chief Operating Officer

/s/ E. W. Nagle                                            September 21, 2000
----------------
E. W. Nagle
Director


/s/ Frank W. Lee                                           September 21, 2000
-----------------
Frank W. Lee
Secretary-Treasurer and Director


/s/ Frances Coffey Rasnic                                  September 21, 2000
--------------------------
Frances Coffey Rasnic
Director


/s/ Charles Harris                                         September 21, 2000
-------------------
Charles Harris
Director


/s/ Earl Burchfield                                        September 21, 2000
--------------------
Earl Burchfield
Director


/s/ Robert V. Costanzo                                     September 21, 2000
-----------------------
Robert V. Costanzo
Director



                                       19
<PAGE>


                                      INDEX TO EXHIBITS



  Exhibit No.     Description
  -----------    -----------
     3.1          Articles of Incorporation of HFB Financial Corporation *

     3.2          Bylaws of HFB Financial *

     4            Common Stock Certificate of HFB Financial Corporation *

     10.1         HFB Financial Corporation Stock Option Plan *

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

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

     10.4         Employment Agreement between the Bank and David B. Cook

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

     10.6         Employment Agreement between the Bank and Kenneth V. Jones

     10.7         2000 Long-Term Incentive Compensation Plan

     13           Portions of the Annual Report to Stockholders for the Fiscal
                  Year Ended June 30, 2000

     21           Subsidiaries of the Registrant

     27           Financial Data Schedule



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