<PAGE>
<PAGE>
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 a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Subsection 240.14a-11(c) or
Subsection 240.14a-12
HFB FINANCIAL CORPORATION
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
HFB FINANCIAL CORPORATION
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Rules 0-11(c)(1)(iii), 14a-6(i)(1), or
14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction
applies:
_________________________________________________________________
2. Aggregate number of securities to which transaction
applies:
_________________________________________________________________
3. Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
_________________________________________________________________
4. Proposed maximum aggregate value of transaction:
_________________________________________________________________
[ ] 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:
____________________________________________<PAGE>
<PAGE>
[LETTERHEAD]
` September 20, 1996
Dear Stockholder:
We invite you to attend the Annual Meeting of Stockholders of
HFB Financial Corporation (the "Corporation"), the holding company
of Home Federal Bank, Federal Savings Bank (the "Bank"), to be held
at Pine Mountain State Resort Park, Pineville, Kentucky, on
Tuesday, October 15, 1996 at 2:00 p.m.
The Annual Meeting has been called for the election of
directors. Enclosed is a proxy statement, a proxy card and an
Annual Report to Stockholders for the 1996 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<PAGE>
<PAGE>
HFB FINANCIAL CORPORATION
1602 CUMBERLAND AVENUE
MIDDLESBORO, KENTUCKY 40965
(606) 248-1095
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 15, 1996
NOTICE IS HEREBY GIVEN that the 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 Tuesday, October 15, 1996 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 three directors of the Corporation;
2. Such other matters as may properly come before the Meet-
ing 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, 1996, 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 which 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 20, 1996
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.<PAGE>
<PAGE>
PROXY STATEMENT
OF
HFB FINANCIAL CORPORATION
1602 CUMBERLAND AVENUE
MIDDLESBORO, KENTUCKY 40965
(606) 248-1095
ANNUAL MEETING OF STOCKHOLDERS
October 15, 1996
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 Tuesday, October 15, 1996 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 16, 1996.
REVOCATION OF PROXIES
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. 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 and in favor of each of the other
proposals set forth in this Proxy Statement for consideration at
the Meeting.
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 business 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. 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 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.
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, 1996 (the "Record Date") are entitled to one vote
for each share then held. As of the Record Date, the Corporation
had 627,836 shares of Common Stock issued and outstanding, and
there were approximately 389 stockholders of record (not including
certain persons holding shares in "street name"). 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.
<PAGE>
<PAGE>
The following table sets forth information as of September 1,
1996 (i) with respect to any person who was known to the
Corporation to be the beneficial owner of more than five percent of
the Common Stock and (ii) as to the Common Stock beneficially owned
by each director or nominee of the Corporation, each executive
officer of the Corporation who is not a Director, and all directors
and executive officers of the Corporation as a group.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NAME AND ADDRESS NATURE OF SHARES OF
OF CERTAIN BENEFICIAL COMMON STOCK
BENEFICIAL OWNERS OWNERSHIP(1)(2) OUTSTANDING
- ------------------ --------------- ------------
<S> <C> <C>
HFB Financial Corporation
Employee Stock Ownership Plan and Trust
1602 Cumberland Avenue
Middlesboro, Kentucky 40965 22,396 3.57%
Frank W. Lee, Director 14,647 2.33
Charles A. Harris, Director 18,744 2.97
Frances Coffey Rasnic, Director 100 .02
David B. Cook, Director and Executive Officer 37,263 5.84
Earl Burchfield, Director 19,552 3.10
J.D. Cook, Chairman 24,606 3.86
E.W. Nagle, Director 13,613 2.16
Robert V. Costanzo, Director 8,638 1.37
Stanley Alexander, Jr., Executive Officer 7,260 1.15
All directors and executive
officers as a group (9 persons) 144,423 (3) 21.73%
</TABLE>
____________________
(1) As to the Corporation's directors and executive officers,
includes 3,613, 10,000, 3,613, 10,000, 3,613, 3,613, 2,384,
and 36,836 shares which may be acquired by Messrs. Harris,
David Cook, Burchfield, J.D. Cook, Nagle, Costanzo, Alexander
and all directors and executive officers as a group upon the
exercise of stock options granted under the HFB Financial
Corporation 1992 Stock Option Plan. The Corporation's
directors and executive officers, and persons who own more
than ten percent of the Common Stock, are required to report
their ownership and changes in ownership of the Common Stock
with the Corporation. Based solely on the Corporation's
review of ownership reports received prior to September 1,
1996, 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 1996 fiscal year, except for director
Rasnic, who failed to file one report, reporting one
transaction on a timely basis.
(2) Includes 10,234, 3,131, 2,093, 4,957, 3,968 and 24,383 shares
held for the benefit of Directors Lee, Harris, David Cook,
Burchfield, J.D. Cook, 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. 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.
(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"). Does not include 22,396 unallocated shares
held by the HFB Financial Corporation Employee Stock Ownership
Plan ("ESOP") and Trust, the voting of which shares is
directed by the ESOP Trustees in accordance with the
directions of the ESOP Committee. Includes 24,383 shares
owned by directors and executive officers through trusts
established under the Bank's discontinued and current deferred
compensation plans for directors.
2<PAGE>
<PAGE>
_________________________________________________________________
PROPOSAL I - ELECTION OF DIRECTORS
_________________________________________________________________
GENERAL
The Corporation's Board of Directors currently is composed of
eight members, with approximately one-third of the Members of the
Board to be elected annually in accordance with the Corporation's
bylaws. At the Meeting, three persons nominated by the Board of
Directors, who currently are directors and whose terms expire in
1996, will stand for election.
The Board of Directors has nominated Frank W. Lee, Charles A.
Harris and Frances Coffey Rasnic to serve as directors for a three-
year period or until their respective successors have been elected
and shall qualify. It is intended that the persons named in the
proxies 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 un-
available to serve.
The following table sets forth for each nominee and for each
director continuing in office, such person's name, age as of June
30, 1996, the year he or she first became a director of the Bank
and the year his or her current term as a director will expire.
All such persons 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, filling the
unexpired term of former director James C. Gandy, who resigned as
a director during fiscal 1996, due to his relocation out of the
Middlesboro, Kentucky area.
<TABLE>
<CAPTION>
YEAR FIRST CURRENT
ELECTED OR TERM
AGE AS OF APPOINTED TO
NAME JUNE 30, 1996 DIRECTOR EXPIRE
- ---- ------------- ------------ ---------
<S> <C> <C> <C>
BOARD NOMINEES FOR TERMS TO EXPIRE IN 1999
Frank W. Lee 83 1952 1996
Charles A. Harris 62 1987 1996
Frances Coffey Rasnic 47 1996 1996
DIRECTORS CONTINUING IN OFFICE
David B. Cook (1) 46 1974 1997
Earl Burchfield 66 1976 1997
J. D. Cook (1) 70 1961 1998
E. W. Nagle 84 1961 1998
Robert V. Costanzo 40 1989 1998
</TABLE>
_____________
(1) J. D. Cook is the father of David B. Cook.
The principal occupation of each Director and Executive
Officer of the Corporation during the last five years is set forth
below.
3<PAGE>
<PAGE>
FRANK W. LEE currently serves as Secretary/Treasurer of the
Bank and the Company. 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, and past president of
J.L. Manring Insurance Company. He was active in scouting for
thirteen years.
CHARLES A. HARRIS is 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, 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.
FRANCES COFFEY RASNIC is the Vice President of Coffey Funeral
Home, a family owned business with operations in New Tazewell and
Harrogate, Tennessee. She currently serves as Vice President of
the Claiborne County Chamber of Commerce, Secretary of Claiborne
County American Cancer Society, and as a Board Member of C.E.A.S.E.
DAVID B. COOK joined the Bank in 1971 and is currently the
Bank's and the Corporation's President and Chief Executive Officer.
He is currently serving as Board Member to the Bell County
Industrial Commission, member of the Advisory Board at Lincoln
Memorial University, Board Member of the Blue Grass Council of the
Boy Scouts of America, and a Board Member of Intrieve,
Incorporated. Mr. Cook has served as a member of the "Cluster
Group" in support of a Middlesboro School Improvement Program,
Board Member of the Bell County Chamber of Commerce, member of the
Board of Housing Appeals for the City of Middlesboro, as well as a
member of the "Advisory Group" to the Middlesboro City Council's
Finance Committee. He was the 1992 President of the ROHO Club and
served as President of the Lexington Chapter of the Society of Real
Estate Appraisers.
EARL BURCHFIELD is retired as a newspaper publisher. Mr.
Burchfield is a past member of the Middlesboro Rotary Club, 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, Deacon and on the
church council.
STANLEY ALEXANDER, JR. 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
Home Federal in 1991. He currently serves as treasurer of the
Middlesboro-Bell County Airport Board, Secretary of the ROHO Club,
and has served as a member of the "Advisory Group" to the
Middlesboro City Council's Finance Committee.
J. D. COOK served in various capacities with the Bank,
including Secretary/Treasurer, Executive Vice President, Managing
Officer and President from 1960 to 1990. Mr. Cook currently serves
as Chairman of the Board of the Bank and the Corporation, and
continues to be employed by the Bank. Mr. Cook is a past-member of
Active Body of Deacons, Baptist Church, served as treasurer of the
Bell County Chamber of Commerce and on the Advisory Committee for
the Community Development Committee of the Middlesboro City
Council, is a member of the Board of Directors of the Cumberland
Development Corporation and the Advisory Committee of Cumberland
Valley Area Development District.
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 a practicing attorney in Middlesboro,
Kentucky. He has served as a member of the Middlesboro-Bell County
Airport Board of Directors and currently is a member of the
Experimental Aircraft Association. He is a member of the
Middlesboro Kiwanis Club and a member of the Salvation Army Fund
Raising Committee.
4<PAGE>
<PAGE>
COMMITTEES OF THE BOARDS OF DIRECTORS OF THE CORPORATION
The Boards of Directors of the Corporation and the Bank
conduct their business through meetings of the Boards and their
committees. During the year ended June 30, 1996, the Corporation's
Board of Directors held 14 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 1996.
The Corporation's audit committee is comprised of Directors
Burchfield (Chairman) and Rasnic, and Chief Financial Officer
Stanley Alexander, Jr. The audit committee meets as needed, to
examine and approve the audit report prepared by the independent
auditors of the Corporation. During fiscal 1996, the Corporation's
audit committee met two times.
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 1996 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 one time during fiscal 1996.
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
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. The following table sets forth information regarding
cash and noncash compensation for the 1996 fiscal year awarded to
or earned by the Corporation's Chief Executive Officer, as no other
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.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation(1) Compensation
Name and Principal ---------------------- Payout of All Other
Position Year Salary Bonus Restricted Stock(2) Compensation (3)
- ----------------- ---- ------ ----- ------------------- ----------------
<S> <C> <C> <C> <C> <C>
David B. Cook
President and Chief 1996 $ 107,500 $ 12,656 $ 62,790 $ 37,851
Executive Officer of the 1995 102,000 10,313 60,060 34,131
Corporation and Bank 1994 97,500 10,000 63,473 27,400
</TABLE>
_______________
(1) Excludes perquisites, which did not exceed 10% of each named
executive officer's annual salary and bonus.
(2) Reflects value of restricted stock awards which vested
during fiscal 1995 and 1994, respectively, based on the market
value of the Common Stock of $2,300 as of September 1, 1996,
and when vested for fiscal 1994.
(3) Includes fees in the amount of $10,100 in fiscal 1996, $9,300
in fiscal 1995 and $9,900 in fiscal 1994 for Mr. Cook's
services as a director for the Corporation and the Bank, and
ESOP contributions in fiscal 1996, 1995 and 1994 for the
benefit of Mr. Cook of $27,751, $24,831 and $17,500,
respectively.
5<PAGE>
<PAGE>
PENSION PLAN
The Corporation's principal subsidiary is the Bank. The Bank
participates in a multiple employer defined benefit plan (the
"Pension Plan"). Employees who have one year of service and
reached age 21 are eligible to participate in the Pension Plan.
They are 100% vested after five years of service. Employees are
entitled to a normal retirement benefit at age 65 equal to 2% times
years of benefit service times the average annual salary (as
defined) for the five consecutive years of highest salary during
benefit service, with annual 1% adjustments for retirees who attain
age 66 and older. The Pension Plan also provides for early
retirement benefits (commencing as early as age 55), disability
retirement benefits and death benefits. Contributions are
actuarially determined. The Bank makes all contributions to the
Pension Plan. During 1996, the Bank contributed $110,174 to the
Pension Plan. During 1993 and 1994, the Pension Plan was fully
funded, and the Bank was not required to make any contribution. At
June 30, 1996, Mr. David B. Cook had 23 years of credited service
under the Pension Plan.
The following table illustrates annual pension benefits at age
65 under the Pension Plan at various levels of compensation and
years of service, assuming 100% vesting of benefits. All
retirement benefits illustrated in the table below are without
regard to any Social Security benefits to which a participant might
be entitled.
<TABLE>
<CAPTION>
Years of Service
Average -------------------------------------------------------------------
Compensation 5 10 15 20 25 30 35
- ------------ ------ ------ ------ ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 20,000 $ 2,000 $ 4,000 $ 6,000 $ 8,000 $10,000 $12,000 $14,000
40,000 4,000 8,000 12,000 16,000 20,000 24,000 28,000
60,000 6,000 12,000 18,000 24,000 30,000 36,000 42,000
80,000 8,000 16,000 24,000 32,000 40,000 48,000 56,000
100,000 10,000 20,000 30,000 40,000 50,000 60,000 70,000
120,000 12,000 24,000 36,000 48,000 60,000 72,000 84,000
140,000 14,000 28,000 42,000 56,000 70,000 84,000 98,000
</TABLE>
OPTION PLAN
The following table sets forth information regarding the
exercise of stock options during the 1996 fiscal year and the
number and value of options held by the named executive officer at
the end of the 1996 fiscal year under the Corporation's 1992 Stock
Option Plan (the "Option Plan"). No options were granted during
the 1996 fiscal year.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Year-End at Fiscal Year-End
Shares Acquired Value (All Immediately (All Immediately
Name on Exercise Realized Exercisable) Exercisable) (1)
- ---- --------------- -------- ------------------ --------------------
<S> <C> <C> <C> <C>
David B. Cook -- $ -- 10,000 $ 130,000
</TABLE>
____________________
(1) Based on the difference between the exercise price of the
stock options of $10.00 per share and the market value of the
Common Stock of $23.00 per share, based on the most recent
trades known to the Corporation as of September 1, 1996.
6<PAGE>
<PAGE>
EMPLOYMENT AGREEMENTS
The Bank entered into an employment agreement with David B.
Cook, President and Chief Executive Officer. David B. Cook, as
President and Chief Executive Officer is responsible for overseeing
all operations of the Bank, and for implementing the policies
adopted by the Board of Directors. The employment agreement for
David B. Cook commenced on the date of completion of the Conversion
of the Bank from mutual to stock form (December 28, 1992) (the
"Conversion") for a term of three years, and provides for an annual
base salary which is currently $110,000. On each anniversary date
from the date of commencement of the agreement, the term of
employment will be extended 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 the employee with a salary review by the Board
of Directors not less often than annually, as well as with
inclusion in any discretionary bonus plans, retirement and medical
plans, customary fringe benefits and vacation and sick leave. The
agreement terminates upon the employee's death, and 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 60 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.
The employment agreement contains provisions stating that in
the event of the employee's involuntary termination of employment
in connection with, or within one year 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) requiring the employee to report to a person
or persons other than the Board of Directors of the Bank, (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, and (vi) failing to re-elect the employee to
the Bank's Board of Directors. The aggregate payments that would
be made to David B. Cook assuming termination of employment under
the foregoing circumstances at June 30, 1996 would have been
approximately $275,000.
DIRECTORS' COMPENSATION
Members of the Board of Directors and committees of the Board
of Directors of the Corporation receive a monthly retainer of $550,
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.
7<PAGE>
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Grover, Grewling & Co. PSC, which was the Corporation's
independent certified public accounting firm for the 1996 fiscal
year, has been retained by the Board of Directors to be the
Corporation's auditors for the 1997 fiscal year. A representative
of Grover, Grewling & Co. PSC, is expected to be present at the
Annual Meeting to respond to stockholders' questions and will have
the opportunity to make a statement if he so desires.
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 judgment of the person or persons voting the proxies.
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 stockholders of record as of the close of business on
September 1, 1996. 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 FORM 10-K 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.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the proxy materials
of the Corporation for next year's 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 23, 1997.
Any such proposals shall be subject to the requirements of the
proxy rules adopted under the Securities Exchange Act of 1934, as
amended.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Frank W. Lee
Frank W. Lee
Secretary
Middlesboro, Kentucky
September 20, 1996
8<PAGE>
<PAGE>
REVOCABLE PROXY
HFB FINANCIAL CORPORATION
_________________________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
October 15, 1996
_________________________________________________________________
The undersigned hereby appoints J.D. Cook, E.W. Nagle and
Robert Costanzo, 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
Tuesday, October 15, 1996 at 2:00 p.m. and at any and all
adjournments thereof, as follows:
VOTE
FOR WITHHELD
--- --------
1. The election as directors of all
nominees listed below (except as
marked to the contrary below). [ ] [ ]
Frank W. Lee
Charles A. Harris
Frances Coffey Rasnic
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE,
INSERT THAT NOMINEE'S NAME ON THE LINE PROVIDED
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, THIS PROXY WILL BE
VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO
BE PRESENTED AT THE MEETING.
_________________________________________________________________
<PAGE>
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Meeting or at any adjournment thereof, then the power of said
attorneys and prior proxies shall be deemed terminated and of 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 dated September 20, 1996, and an Annual Report to
Stockholders.
Dated: _______________________, 1996
__________________________ __________________________
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.
_________________________________________________________________
