SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant |X|

Filed by the Party other than the Registrant [ ]

Check the appropriate box:

|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12

HFB FINANCIAL CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

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(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

|X| No fee required.

$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1. Title of each class of securities to which transaction applies:

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2. Aggregate number of securities to which transaction applies:

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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

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4. Proposed maximum aggregate value of transaction:

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5. Total fee Paid:

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[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

1. Amount previously paid: _______________________________________________
2. Form, Schedule or Registration Statement No.:__________________________
3. Filing Party:__________________________________________________________
4. Date Filed:____________________________________________________________

September 17, 2001

Dear Stockholder:

We invite you to attend the 2001 Annual Meeting of Stockholders of HFB
Financial Corporation (the "Corporation"), the holding company of Home Federal
Bank, Federal Savings Bank, to be held at Pine Mountain State Resort Park,
Pineville, Kentucky, on October 17, 2001 at 2:00 p.m.

The Meeting has been called for the election of directors. Enclosed are a
proxy statement, a proxy card and an Annual Report to Stockholders for the 2001
fiscal year. Directors and officers of the Corporation, as well as
representatives of the Corporation's independent auditors, will be present to
respond to any questions the stockholders may have.

YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. On
behalf of the Board of Directors, we urge you to please sign, date and return
the enclosed proxy card in the enclosed postage-prepaid envelope as soon as
possible, even if you currently plan to attend the annual meeting. This will not
prevent you from voting in person, but will assure that your vote is counted if
you are unable to attend the Meeting.

Sincerely,

/s/ DAVID B. COOK

David B. Cook
President

HFB FINANCIAL CORPORATION
1602 CUMBERLAND AVENUE
MIDDLESBORO, KENTUCKY 40965
(606) 248-1095

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 17, 2001

NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Stockholders (the
"Meeting") of HFB Financial Corporation (the "Corporation"), the holding company
of Home Federal Bank, Federal Savings Bank, will be held at Pine Mountain State
Resort Park, Pineville, Kentucky on October 17, 2001 at 2:00 p.m.

A Proxy Card and a Proxy Statement for the Meeting are enclosed.

The Meeting is for the purpose of considering and acting upon:

1. The election of two directors of the Corporation; and

2. Such other matters as may properly come before the Meeting or any
adjournment thereof.

NOTE: The Board of Directors is not aware of any other business to come before
the Meeting.

Any action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above, or on any date or dates to which, by
original or later adjournment, the Meeting may be adjourned. Pursuant to the
Bylaws of the Corporation, the Board of Directors has fixed the close of
business on September 1, 2001, as the record date for determination of the
stockholders entitled to vote at the Meeting and any adjournments thereof.

You are requested to fill in and sign the enclosed form of proxy that is
solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote at the Meeting in
person.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ FRANK W. LEE

Frank W. Lee
Secretary
Middlesboro, Kentucky
September 17, 2001

IMPORTANT: PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED PROXY. THE PROMPT RETURN
OF PROXIES WILL SAVE YOUR CORPORATION THE EXPENSE OF FURTHER REQUESTS FOR
PROXIES IN ORDER TO INSURE A QUORUM. AN ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.

PROXY STATEMENT
OF
HFB FINANCIAL CORPORATION
1602 CUMBERLAND AVENUE
MIDDLESBORO, KENTUCKY 40965
(606) 248-1095

ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 17, 2001

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of HFB Financial Corporation (the
"Corporation"), the holding company of Home Federal Bank, Federal Savings Bank
("Home Federal" or the "Bank"), to be used at the Annual Meeting of Stockholders
of the Corporation (the "Meeting") which will be held at Pine Mountain State
Resort Park, Pineville, Kentucky, on October 17, 2001 at 2:00 p.m. The
accompanying Notice of Annual Meeting and this Proxy Statement are being first
mailed to stockholders on or about September 17, 2001.

VOTING AND REVOCATION OF PROXIES

Proxies solicited by the Board of Directors of the Corporation will be
voted in accordance with the directions given therein. Where no instructions are
indicated, proxies will be voted for the nominees for directors set forth below.

The proxy confers discretionary authority on the persons named therein to
vote with respect to the election of any person as a director where the nominee
is unable to serve or for good cause will not serve, and with respect to matters
incident to the conduct of the Annual Meeting. If any other proposal is
presented at the Annual Meeting, proxies will be voted by those named therein in
accordance with the determination of a majority of the Board of Directors, if
the proposal was not submitted with the notice required under the Corporation's
Bylaws.

Proxies marked as abstentions will not be counted as votes cast. In
addition, shares held in street name which have been designated by brokers on
proxy cards as not voted ("broker no-votes") will not be counted as votes cast.
Proxies marked as abstentions or as broker no-votes, however, will be treated as
shares present for purposes of determining whether a quorum is present.

Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Corporation, the filing of a later proxy prior to
a vote being taken on a particular proposal at the Meeting or by attendance at
the Meeting and voting in person. A written notice revoking a previously
executed proxy should be sent to HFB Financial Corporation, 1602 Cumberland
Avenue, Middlesboro, Kentucky 40965 -- Attention: Frank W. Lee, Secretary.

VOTING SECURITIES AND SECURITY OWNERSHIP

Holders of record of the Corporation's common stock, par value $1.00 per
share (the "Common Stock"), as of the close of business on September 1, 2001
(the "Record Date") are entitled to one vote for each share then held. As of the
Record Date, the Corporation had 1,296,854 shares of Common Stock issued and
outstanding. The presence, in person or by proxy, of at least a majority of the
total number of shares of the Common Stock outstanding on the Record Date will
be required to constitute a quorum at the Meeting.

The following table sets forth information as of the Record Date with
respect to any person who was known to the Corporation to be the beneficial
owner of more than 5% of the Common Stock.

Amount and Nature Percent of Shares
of Beneficial of Capital Stock
Beneficial Owner Ownership (1)(2)(3) Outstanding
----------------------- --------------------- -----------------

David B. Cook 82,162 6.34%
3226 W. Cumberland Avenue
Middlesboro, KY 40965

-----------------
(1), (2), (3) See corresponding footnotes in table below.

The following table sets forth, as of the Record Date, information known to
the Company with respect to the beneficial ownership of Common Stock by each
director or nominee of the Corporation, by each executive officer of the
Corporation who is not a Director, and by all directors and executive officers
of the Corporation as a group.

Amount and Nature Percent of Shares
of Beneficial of Capital Stock
Beneficial Owner Ownership (1)(2)(3) Outstanding
----------------------- --------------------- -----------------

Frank W. Lee, Director 31,085 2.40%
Charles A. Harris, Director 38,033 2.93%
Frances Coffey Rasnic, Director 8,643 0.66%
David B. Cook, Director and President and
Chief Executive Officer 82,162 6.34%
Earl Burchfield, Director 38,710 2.98%
E.W. Nagle, Director 22,424 1.73%
Robert V. Costanzo, Chairman of the Board 18,865 1.43%
Stanley Alexander, Jr., Chief Financial Officer 13,183 1.02%
Kenneth V. Jones, Chief Operations Officer 4,767 0.31%

All directors and executive
officers as a group (9 persons) 257,534 19.86%

-----------------
(1) As to the Corporation's directors and executive officers, includes 7,225
shares, 4,767 shares, 7,225 shares and 19,217 shares which may be acquired
by Messrs. Costanzo and Jones, Ms. Rasnic and all directors and executive
officers as a group, respectively, upon the exercise of stock options
granted under the HFB Financial Corporation 1992 Stock Option Plan (the
"1992 Stock Option Plan"). In accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, a person is deemed to be the
beneficial owner, for purposes of this table, of any shares of Common Stock
if he or she has or shares voting or investment power with respect to such
Common Stock or has a right to acquire beneficial ownership at any time
within 60 days from the Record Date. As used herein, "voting power" is the
power to vote or direct the voting of shares and "investment power" is the
power to dispose or direct the disposition of shares. Except as otherwise
noted, ownership is direct, and the named individuals and group exercise
sole voting and investment power over the shares of the Common Stock.
(2) Includes 2,224 shares, 6,808 shares, 4,660 shares, 11,692 shares, 1,392
shares and 46,813 shares held for the benefit of Directors Lee, Harris,
Cook, Burchfield, Costanzo and all directors and executive officers as a
group, respectively, through trusts established under the Bank's
discontinued and current deferred compensation plans for directors.
(3) Includes shares held by certain directors and executive officers as
custodians under Uniform Transfers to Minors Acts, by their spouses and
children and for the benefit of certain directors and executive officers
under individual retirement accounts ("IRAs").

PROPOSAL I - ELECTION OF DIRECTORS

The Corporation's Board of Directors has seven members, with approximately
one-third elected annually in accordance with the Corporation's bylaws. At the
Meeting, two persons nominated by the Board of Directors, one of whom is
currently a director and whose term expires in 2001, will stand for election.
Mr. E.W. Nagle, who is currently a director and whose term expires at this
year's Annual Meeting, has decided not to stand for re-election due to health
reasons.

The Board of Directors has nominated Kenneth V. Jones and Robert V.
Costanzo to each serve as director for a three-year period or until his
respective successors has been elected and qualified. It is intended that the
persons named in the proxies being solicited by the Board will vote for the
election of the named nominees. If any nominee is unable to serve, the shares
represented by all valid proxies will be voted for the election of such
substitute as the Board of Directors may recommend. At this time, the Board
knows of no reason why any nominee might be unavailable to serve.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ELECTION OF EACH
OF THE NOMINEES.

The following table sets forth, for each nominee and for each director
continuing in office, such person's name, age as of June 30, 2001, the year he
or she first became a director of the Bank or the Corporation (if applicable)
and the year his or her current term as a director will expire. All existing
directors became directors of the Corporation in 1992, upon the Corporation's
organization, except Ms. Rasnic, who was appointed a director of the Corporation
in 1996.

YEAR FIRST CURRENT
ELECTED OR TERM
AGE AS OF APPOINTED TO
NAME JUNE 30, 2001 DIRECTOR EXPIRE
---- ------------- ---------- ------

BOARD NOMINEES FOR TERMS TO EXPIRE IN 2004

Kenneth V. Jones 44 N/A N/A
Robert V. Costanzo 45 1989 2001

DIRECTORS CONTINUING IN OFFICE

Frank W. Lee 88 1952 2002
Charles A. Harris 67 1987 2002
Frances Coffey Rasnic 52 1996 2002
David B. Cook 51 1974 2003
Earl Burchfield 71 1976 2003

DIRECTORS AND NOMINEE

The principal occupation of each director and each nominee for director of
the Corporation during the last five years is set forth below.

E. W. NAGLE is retired from the Middlesboro Tanning Company, where he
served as an officer. He is a member of the Lions Club and a Charter Member of
the All Sports Hall of Fame.

ROBERT V. COSTANZO is Chairman of the Board of the Corporation. A 1989
graduate of Salmon P. Chase College of Law, Mr. Costanzo serves as District
Judge of Bell County, Kentucky. He is a member of the Kentucky Bar Association
and presently serves on the KBA House of Delegates. He is a member of the
Kiwanis International and St. Julian Catholic Church in Middlesboro.

FRANK W. LEE currently serves as Secretary/Treasurer of the Bank and the
Corporation. He has a law degree and is a member of the Kentucky Bar
Association. Mr. Lee is a retired pharmacist and is the past owner of Lee's Drug
Store in Middlesboro, Kentucky. Mr. Lee is a former director of a local bank.

CHARLES A. HARRIS is retired owner of Harris Insurance Agency in Harlan,
Kentucky. Mr. Harris is serving, or has served as President of the Harlan Lions
Club, Chairman of the Harlan County Chapter of American Red Cross and Volunteer
for ARC State Disaster Team, Harlan Chamber of Commerce, Councilman of City of
Harlan, Kentucky, Harlan Volunteer Firefighters, Harlan School Futures
Committee, Advisor to Harlan State Vocational Technical School, President of the
Alumni Association of Harlan Boys Choir, Board Member of Red Bird Mission,
Beverly, Kentucky and Board Member of Harlan County Extension Service. Mr.
Harris is also a member of the Oleika Shrine and the Harlan County Shrine Club.

FRANCES COFFEY RASNIC has been a lifelong resident of Claiborne County. She
graduated from the University of Tennessee and holds 45 hours above her Masters
in Education. She has served her community in various civic and school groups.
She has been self-employed in real estate development and in her previously
owned family business, Coffey Funeral Home, in New Tazewell and Harrogate,
Tennessee where she is currently employed. She is a businesswoman who remains
active in the Claiborne County Chamber of Commerce and serves as Memorial
Secretary of the American Cancer Society and Chairperson of the Tourism
Committee and Board Member of the Clinch-Powell Enterprise Community. She is a
member of the New Tazewell United Methodist Church.

DAVID B. COOK currently serves as president and chief executive officer of
the Corporation and the Bank. A graduate of Western Kentucky University and a
member of First Baptist Church in Middlesboro, Mr. Cook has served as president
of both the Lexington Chapter of the Society of Real Estate Appraisers and the
ROHO Club of Middlesboro. He has previously served as a board member on the Bell
County Chamber of Commerce, the Board of Housing Appeals for the City of
Middlesboro and as a member of the "Advisory Group" of the Middlesboro City
Council's Finance Committee. He is a past board member of the Bluegrass Council
of Boy Scouts of America, Lexington, Kentucky. Mr. Cook has also served as
president of the Kentucky Thrift Foundation, board member of the Central
Kentucky League of Savings Associations and board member of the Kentucky Bankers
Association. Mr. Cook is currently president of the Bell County Industrial
Foundation and Revolving Loan Committee.

EARL BURCHFIELD is retired as a newspaper publisher. Mr. Burchfield is a
past member of the Middlesboro Rotary Club, a past trustee of Appalachian
Hospitals, a past member of Bell County and Claiborne County Chambers of
Commerce and active in the area Gideons organization. He serves as a Nursing
Home Volunteer, as well as church treasurer and Deacon.

KENNETH V. JONES, age 44, is not currently a director but has been
nominated for election at the Annual Meeting. He joined Home Federal Bank in
October of 1999 and was appointed Chief Operations Officer on May 15, 2000.
Prior to joining Home Federal Bank, Mr. Jones served as Executive Vice
President, Chief Financial Officer and Director of Citizens Bank, New Tazewell,
TN, with 24 years of experience in both operations and lending. He received his
Bachelor of Science Degree in Business Administration from the University of
Tennessee and graduated with honors from the American Bankers Association
Graduate School of Banking. Ken serves as director of the Bell County Chamber of
Commerce and director of the Bell County Industrial Foundation. Mr. Jones also
served as president and director of the Claiborne County Chamber of Commerce. He
and his wife Donna have two children, Matthew and Jacob, and currently reside in
Lone Mountain Tennessee.

EXECUTIVE OFFICER WHO IS NOT A DIRECTOR

The following sets forth information with respect to the executive officers
of the Corporation, including their ages as of the Record Date, who do not serve
on the Board of Directors.

STANLEY ALEXANDER, JR., age 52, is currently the Bank's and the
Corporation's Chief Financial Officer. Mr. Alexander graduated from the Graduate
School of Banking at the University of Wisconsin in 1984 and had 17 years of
banking experience prior to joining the Bank in 1991. He has served as treasurer
of the Middlesboro-Bell County Airport Board, Secretary of the ROHO Club, and as
a member of the "Advisory Group" to the Middlesboro City Council's Finance
Committee.

COMMITTEES OF THE BOARDS OF DIRECTORS OF THE CORPORATION AND THE BANK

The Boards of Directors of the Corporation and the Bank conduct their
business through meetings of the Boards and their committees. During the fiscal
year ended June 30, 2001, the Corporation's Board of Directors held 12 meetings.
No current director attended fewer than 75% of the total aggregate meetings of
the Corporation's Board of Directors and committees on which such Board member
served during fiscal 2001 with the exception of Mr. Nagle, who was absent due to
illness. The Board passed a resolution to excuse his absence.

The Corporation's audit committee is comprised of Directors Burchfield
(Chairman), Rasnic, and Lee. The audit committee meets as needed to examine and
approve the audit report prepared by the independent auditors of the
Corporation. During fiscal year 2001, the Corporation's audit committee met four
times. Each of the directors who serve on the audit committee are "independent"
of the Corporation, as the term "independent" is defined under Rule 4200 of the
listing standards of the National Association of Security Dealers, Inc. For
fiscal year 2002, the Chairman of the audit committee will be Mr. Burchfield.
This committee meets quarterly to (1) monitor the accounting and financial
reporting practices of the Corporation, and (2) determine whether the
Corporation has adequate administrative, operating and internal accounting
controls. The Corporation's Board of Directors has adopted a written charter for
the audit committee, which is attached as Appendix A. A copy of the audit
committee's Report is attached as Appendix B.

The Corporation's nominating committee is comprised of the full Board of
Directors for the purpose of evaluating candidates and making nominations for
election as directors. This Committee met once during fiscal 2001 in that
capacity. While the Board of Directors will consider nominees recommended by
stockholders, it has not actively solicited recommendations from the
Corporation's stockholders for nominees nor, subject to the procedural
requirements set forth in the Corporation's Charter and Bylaws, established any
procedures for this purpose.

The Corporation's compensation committee is comprised of Directors Lee
(Chairman), Burchfield and Harris. The Committee meets periodically to evaluate
the compensation and fringe benefits of the directors, officers and employees
and to recommend changes and to monitor and evaluate employee morale. The
compensation committee met once during fiscal 2001.

EXECUTIVE COMPENSATION

Summary Compensation Table. The Corporation's principal subsidiary is the
Bank. The Corporation has no full time employees, relying instead on employees
of the Bank for the limited corporate services provided. All compensation paid
to officers and other employees is paid by the Bank. Other than as set forth
below, no executive officer's total salary and bonus for the fiscal year
exceeded $100,000 for services rendered in all capacities to the Corporation and
its subsidiaries.

Long-Term
Compensation
Annual Compensation(1) ------------
Name and Principal ---------------------- Payout of All Other
Position Year Salary Bonus Restricted Stock Compensation(2)
----------------------------------------------------------------------------------------------------------

David B. Cook 2001 $142,500 $ 9,674 $ --- $25,629
President and Chief 2000 $133,750 $15,469 $ --- $25,732
Executive Officer of the 1999 $126,575 $14,987 $ --- $34,721
Corporation and the
Bank

(1) Excludes perquisites, which did not exceed 10% of each named executive
officer's annual salary and bonus.
(2) Includes fees in the amount of $14,050 in fiscal 2001, $13,150 in fiscal
2000 and $12,400 in fiscal 1999 for Mr. Cook's services as a director for
the Corporation and the Bank. ESOP contributions in fiscal 2001, 2000 and
1999 for the benefit of Mr. Cook were $2,770, $8,176 and $22,321,
respectively.

Employment Agreement. In 2001, the Bank entered into an amended and
restated employment agreement with Mr. Cook as President and Chief Executive
Officer. As President and Chief Executive Officer, Mr. Cook is responsible for
overseeing all operations of the Bank, and for implementing the policies adopted
by the Board of Directors. The employment agreement has a term of three years
and, pursuant to the terms of the agreement, it shall

be extended on each anniversary date from the date of commencement of the
agreement for an additional one-year period beyond the then effective expiration
date, upon a determination by the Board of Directors that performance of the
employee has met the required standards and that such agreement should be
extended. The agreement provides for an annual base salary of $147,500. The
agreement provides for a salary review by the Board of Directors not less often
than annually, as well as inclusion in any discretionary bonus plans, retirement
and medical plans, customary fringe benefits and vacation and sick leave. The
agreement is terminable by the Bank for "just cause" as defined in the
agreement. In the event of termination for just cause, no severance benefits are
available. If the Bank terminates an employee without just cause, the employee
will be entitled to a continuation of his salary and benefits from the date of
termination through the remaining term of the agreement plus an additional
12-month period, but in no event in excess of three years' salary. The employee
is able to voluntarily terminate his agreement by providing 90 days' written
notice to the Board of Directors, in which case the employee is entitled to
receive only his compensation, vested rights, and benefits up to the date of
termination. In the event of the employee's death or disability, the employee or
his estate will be entitled to a continuation of his salary and benefits through
the remaining term of the agreement.

The employment agreement contains provisions stating that in the event of
(i) the employee's voluntary termination of employment for any reason within 30
days following a change in control of the Bank or the Corporation, or (ii) the
employee's involuntary termination of employment in connection with, or within
six months before or two years after, any change in control of the Bank or the
Corporation, the employee will be paid within 30 days of such termination a sum
equal to 2.99 times the average annual compensation he received during the
five-year period immediately prior to the date of change in control. "Control"
generally refers to the acquisition, by any person or entity, of the ownership
or power to vote more than 25% of the Bank's or Corporation's voting stock, or
the control of the election of a majority of Directors or the exercise of a
controlling influence over the management or policies of the Bank or
Corporation. The employment agreement also provides for a similar lump sum
payment to be made in the event of the employee's voluntary termination of
employment upon the occurrence, or within 90 days thereafter, of certain
specified events following any change in control, whether approval by the Board
of Directors or otherwise which have not been consented to in writing by the
employee including (i) requiring the employee to move his personal residence or
perform his principal executive functions more than 35 miles from the Bank's
current primary office, (ii) materially diminishing the employee's base
compensation, (iii) failing to maintain existing employee benefit plans,
including material vacation, fringe benefits, stock option and retirement plans,
(iv) assigning duties and responsibilities to the employee which are other than
those normally associated with his position with the Bank, (v) materially
diminishing the employee's authority and responsibility, (vi) failing to
re-elect the employee to the Bank's Board of Directors, and (vii) materially
diminishing the employee's secretarial or other administrative support. The
aggregate payments that would have been made to Mr. Cook assuming termination of
employment under the foregoing circumstances at June 30, 2001 would have been
approximately $369,000.

DIRECTORS' COMPENSATION

Members of the Board of Directors and committees of the Board of Directors
of the Corporation receive a monthly retainer of $900, plus $250 per regular or
special Board meeting attended.

TRANSACTIONS WITH MANAGEMENT

All of the Bank's loans to directors and executive officers are made on
substantially the same terms, including interest rates, as those prevailing for
comparable transactions and do not involve more than the normal risk of
repayment or present other unfavorable features. Furthermore, loans above the
greater of $25,000 or 5% of the Bank's capital and surplus (up to $500,000) to
such persons must be approved in advance by a disinterested majority of the
Board of Directors. The Bank does not offer favorable terms on mortgage loans to
directors or officers.

STOCKHOLDER PROPOSALS

In order to be eligible to be included in the proxy materials of the
Corporation for next year's Annual Meeting of Stockholders, any stockholder
proposal to take action at such meeting must be received at the Corporation's
executive office at 1602 Cumberland Avenue, Middlesboro, Kentucky 40965 no later
than May 15, 2002 (120 days prior to the anticipated date of next year's Annual
Meeting of Stockholders). Any such proposal shall be subject to the requirements
of the proxy rules under the Securities Exchange Act of 1934, as amended.
Otherwise, any stockholder proposal to be acted upon at such meeting but not
included in the proxy materials must be received at the Corporation's executive
office, at 1602 Cumberland Avenue, Middlesboro, Kentucky 40965 on or

before September 15, 2002 (30 days prior to next year's anticipated annual
meeting date). If the Company is not notified of a stockholder proposal by
September 15, 2002, then the Corporation may have the discretion to vote the
proxies against such stockholder proposal, even though such proposal is not
discussed in the proxy statement. In the event that the date of next year's
annual meeting changes, a stockholder proposal must be received not later than
30 days prior to the new date of such annual meeting; provided, however, that in
the event that less than 40 days notice of the new date of annual meeting is
given or made to stockholders, a stockholder proposal must be received not later
than the close of business on the tenth day following the day on which notice of
the new date of the annual meeting was mailed. All stockholder proposals must
also comply with the Corporation's bylaws and Tennessee law.

INDEPENDENT ACCOUNTANTS

Olive LLP, independent accountants, was appointed by the Board of Directors
of the Corporation and served as the Corporation's auditors for the fiscal year
ending June 30, 2001. Representatives of Olive LLP are expected to attend the
Annual Meeting to respond to appropriate questions and to make a statement if
they so desire. Olive LLP will serve as the Corporation's auditors for the
fiscal year ending June 30, 2002.

During the year ended June 30, 2001, the Corporation incurred the following
principal auditor fees:

Audit fees: (a) $38,500
Financial information systems design
and implementation fees: $11,564
All other fees: $ 8,530

------------------
(a) Includes fees related to annual report on Form 10-K and quarterly
reports on Form 10-Q.

The Audit Committee of the Board of Directors of the Company has considered
and has concluded that services, other than the audit, performed by the
accountants, do not interfere with maintaining the independence of the auditors.

OTHER MATTERS

The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the direction of the majority of the Board of Directors.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Pursuant to regulations promulgated under the Securities Exchange Act of
1934, as amended, the Corporation's officers, directors and persons who own more
than 10% of the outstanding Common Stock are required to file reports detailing
their ownership and changes of ownership in such Common Stock, and to furnish
the Corporation with copies of all such reports. Based solely on the
Corporation's review of ownership reports received prior to the Record Date, or
written representations from reporting persons that no annual report of change
in beneficial ownership is required, the Corporation believes that all
directors, executive officers and stockholders owning in excess of ten percent
of the Common Stock have complied with the reporting requirements for the 2001
fiscal year with the exception of Director Earl Burchfield, who had a late
filing of his sale of one hundred shares of Common Stock.

MISCELLANEOUS

The cost of solicitation of proxies will be borne by the Corporation. In
addition to solicitations by mail, directors, officers, and regular employees of
the Corporation may solicit proxies personally or by telegraph or telephone
without additional compensation.

The Corporation's Annual Report to Stockholders is being mailed to all
persons who were stockholders of record as of the close of business on September
1, 2001. Any stockholder who has not received a copy of such Annual Report may
obtain a copy by writing the Corporation. Such Annual Report is not to be
treated as a part of the proxy solicitation material nor as having been
incorporated herein by reference.

A COPY OF THE CORPORATION'S FORM 10-KSB AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE
RECORD DATE UPON WRITTEN REQUEST TO STANLEY ALEXANDER, JR., CHIEF FINANCIAL
OFFICER, HFB FINANCIAL CORPORATION, 1602 CUMBERLAND AVENUE, MIDDLESBORO,
KENTUCKY 40965.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ FRANK W. LEE

Frank W. Lee
Secretary
Middlesboro, Kentucky
September 17, 2001

APPENDIX A
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HOME FEDERAL BANK, FSB

AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

CHARTER

I. PURPOSE

The Audit Committee is a committee of the Board of Directors. The primary
function of the Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities by reviewing:

1. the financial information which will be provided to shareholders,
governmental or regulatory bodies, the public, and others;

2. the Corporation's auditing, accounting, and financial reporting
process;

3. the systems of internal controls related to finance, accounting, legal
compliance, regulatory compliance and ethics that management and the
Board of Directors have established, and

4. the audit process.

Consistent with this function, the Audit Committee should encourage continuous
improvement of, and foster adherence to, the corporation's policies, procedures,
and practices at all levels.

The Audit Committee's primary duties and responsibilities are to:

1. Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control system

2. Review and appraise the audit efforts of the Corporation's independent
accountants and the internal auditors

3. Provide an open avenue of communication among the independent
accountants, financial and senior management, internal auditors, and
the Board of Directors.

The Audit Committee will primarily fulfill these responsibilities by carrying
out the activities enumerated in Section IV of this Charter.

II. COMPOSITION

The Audit Committee should be comprised of three or more directors as
determined by the Board. Each member will be independent of the management of
the Corporation and free of any relationship that, in the opinion of the Board
of Directors, would interfere with his or her exercise of independent judgment
as a Committee member.

All members of the Committee shall have a working familiarity with basic
finance and accounting practices. Committee members may enhance their
familiarity with finance and accounting by participating in educational programs
conducted by the Corporation or an outside consultant.

The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the members
of the Committee may designate a Chair by majority vote of the full Committee
membership.

The duties and responsibilities of a member of the Audit Committee are in
addition to those duties set out for a member of the Board of Directors.

III. MEETINGS

The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management, the internal auditors,
and the independent accountants in separate executive sessions to discuss any
matters that the Committee or each of these groups believe should be discussed
separately. The Committee may ask members of management or others to attend
meetings and provide pertinent information as necessary.

In addition, the Committee or at least the Chair of the Committee should
meet with the independent accountants and management, either in person or by
phone, quarterly to review the Corporation's financial statements. This review
should be done prior to the Corporation's 10Q or 10K filing and its public
release of earnings. This discussion should include a discussion of significant
adjustments, management judgments and accounting estimates, significant new
accounting policies, and disagreements with management.

IV. RESPONSIBILITIES AND DUTIES

In meeting its responsibilities, the audit committee is expected to:

1. Provide an open avenue of communication between the internal auditors, the
independent accountant, and the Board of Directors.

2. Confirm and assure the objectivity of the internal auditor.

3. Confirm and assure the independence of the independent accountant,
including a review of management consulting services provided by the
independent accountant and related fees.

4. Review and update the Committee's charter annually.

5. Recommend to the Board of Directors the independent accountants to be
nominated, approve the compensation of the independent accountant, and
review and approve, if applicable, the discharge of the independent
accountants.

6. Review and concur in the appointment, replacement, reassignment, or
dismissal of the internal auditor.

7. Review the qualifications of the Internal Auditor to specific areas within
the audit plan.

8. Review with the independent auditor and internal auditor the coordination
of audit efforts to assure completeness of coverage, reduction of redundant
efforts, and the effective use of audit resources.

9. Inquire of management, the internal auditor, and the independent accountant
about significant risks or exposures and assess the steps management has
taken to minimize such risk to the Corporation.

10. Consider, in consultation with the independent accountant and the internal
auditor, the audit scope and plan of the internal auditors and the
independent accountant. Determine if the internal auditor and independent
accountants are utilizing a risk-based approach.

11. Consider and review with the independent accountant and the director of
internal auditing:

(a) the adequacy of the Corporation's internal controls including
computerized information system controls and security.

(b) any related significant findings and recommendations of the independent
accountant and internal auditing together with management responses
thereto; and

12. Review with management and the independent accountant at the completion of
the annual audit:

(a) the Corporation's annual financial statements and related footnotes;

(b) the independent accountant's audit of the financial statements and his
or her report thereon;

(d) any serious difficulties or disputes with management encountered during
the course of the audit; and

(e) other matters related to the conduct of the audit which are to be
communicated to the committee under generally accepted auditing standards.

13. Review with management and the internal auditor:

(a) Regular internal audit reports to management prepared by the internal
auditor, including significant findings and management's responses to those
findings. A summary of findings from completed internal audits should be
reviewed prior to the meeting.

(b) Any difficulties encountered in the course of their audits, including
any restrictions on the scope of their work or access to required
information.

(d) The internal audit department budget and staffing.

(e) The internal audit department charter.

(f) Internal auditing's compliance with the IIA's Standards for the
Professional Practice of Internal Auditing (standards).

14. Review filings with the SEC and other published documents containing the
Corporation's financial statements and consider whether the information
contained in these documents is consistent with the information contained
in the financial statements.

15. Review with management, and if necessary, with the Corporation's counsel,
any legal matter that could have a significant impact on the Corporation's
financial statements.

16. Review management's monitoring of the Corporation's compliance with its
ethical code of conduct.

17. Review legal and regulatory matters that may have a material impact on the
financial statements, related Corporation compliance policies, and programs
and reports received from regulators.

18. Meet with the internal auditor, the independent accountant, and management
in separate executive sessions to discuss any matters that the committee or
these groups believe should be discussed privately with the Audit
Committee.

19. Meet with the Corporation's regulatory bodies to discuss the results of
their examinations.

20. Report Committee actions to the Board of Directors with such
recommendations as the Committee may deem appropriate.

21. Prepare a letter for inclusion in the annual report that describes the
Committee's composition and responsibilities, and how they were discharged.

22. Conduct or authorize, if necessary, investigations into any matters within
the Committee's scope of responsibilities. The Committee shall be empowered
to retain independent counsel, accountants, or others to assist in the
conduct of any investigation.

23. Perform such other functions as assigned by law, the Corporation's charter
or bylaws, or the Board of Directors.

24. Advise financial management and the independent auditor that they are
expected to provide a timely analysis of significant current financial
reporting issues and practices.

25. Provide that financial management and the independent auditor discuss with
the audit committee their qualitative judgments about the appropriateness,
not just the acceptability, of accounting principles and financial
disclosure practices used or proposed to be adopted by the Corporation and,
particularly, about the degree of aggressiveness or conservatism of its
accounting principles and underlying estimates.

26. Determine as regards to new transactions or events, the auditor's reasoning
for the appropriateness of the accounting principles and disclosure
practices adopted by the Corporation.

APPENDIX B
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AUDIT COMMITTEE REPORT

The Board of Directors of the Corporation has appointed an audit committee,
consisting of three directors, which assists the Board of Directors in
fulfilling its responsibility for oversight of the quality and integrity of the
accounting, auditing and financial reporting practices of the Corporation.

In discharging its oversight responsibility as to the audit process, the
audit committee obtained from the independent auditors a formal written
statement describing all relationships between the auditors and the Corporation
that might bear on the auditors' independence consistent with Independence
Standards Board Standard No. 1, Independence Discussions with Audit Committees,
as amended, and has discussed with the auditors any relationships that may
impact their objectivity and independence and satisfied itself as to the
auditors' independence. The audit committee also discussed with management, the
internal auditors and the independent auditors the quality and adequacy of the
Corporation's internal controls and the internal audit function's organization,
responsibilities, budget and staffing. The audit committee reviewed with both
the independent and the internal auditors their audit plans, audit scope, and
identification of audit risks.

The audit committee reviewed and discussed with the independent auditors
all matters required by generally accepted auditing standards, including those
matters described in Statement on Auditing Standards No. 61, as amended,
Communication with Audit Committees, and, with and without management present,
discussed and reviewed the results of the independent auditors' examination of
the financial statements.

The audit committee reviewed and discussed the audited financial statements
of the Corporation as of and for the fiscal year ended June 30, 2001, with
management and the independent auditors. Management has the responsibility for
the preparation of the Corporation's financial statements and the independent
auditors have the responsibility for the examination of those statements and
expressing an opinion on the conformity of those audited financial statements
with generally accepted accounting principles. The audit committee held one
meeting during fiscal year 2001.

Based on the above-mentioned review and discussions with management and the
independent auditors, the audit committee recommended to the Board of Directors
that the Corporation's audited financial statements be included in the
Corporation's Annual Report on Form 10-K for the fiscal year ended June 30,
2001, for filing with the Securities and Exchange Commission.

September 17, 2001 Earl Burchfield, Chair
Frances Coffey Rasnic, Member
Frank W. Lee, Member

REVOCABLE PROXY
HFB FINANCIAL CORPORATION

ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 17, 2001

The undersigned hereby appoints Frank W. Lee, Charles Harris and Frances
Rasnic, with full powers of substitution, to act as attorneys and proxies for
the undersigned, to vote all shares of the common stock of HFB Financial
Corporation which the undersigned is entitled to vote at the Annual Meeting of
Stockholders, to be held at Pine Mountain State Resort Park, Pineville,
Kentucky, on October 17, 2001 at 2:00 p.m. and at any and all adjournments
thereof, as follows:

VOTE
FOR WITHHELD
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1. The election as directors of all
nominees listed below (except as [ ] [ ]
marked to the contrary below).

Kenneth V. Jones
Robert V. Costanzo

INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE LINE BELOW.

--------------------------------------------------

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED ABOVE.

THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCH MEETING, AS TO WHICH THIS PROXY CONFERS DISCRETIONARY
AUTHORITY, THIS PROXY MAY BE VOTED AS DIRECTED BY A MAJORITY OF THE BOARD OF
DIRECTORS, SUBJECT TO FEDERAL SECURITIES LAWS.

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

Should the undersigned be present and vote at the Meeting or at any
adjournment thereof, then the power of said attorneys and prior proxies shall be
deemed terminated and have no further force and effect. The undersigned may also
revoke his proxy by filing a subsequent proxy or notifying the Secretary of his
decision to terminate his proxy.

The undersigned acknowledges receipt from the Corporation prior to the
execution of this proxy of notice of the Meeting, a Proxy Statement and an
Annual Report to Stockholders.

Dated: , 2001
----------------------

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PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER

--------------------------------------- ------------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER

Please sign exactly as your name appears on the enclosed card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.

PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.