<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 ] No fee required.
[ ] 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:
_________________________________________________________________
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 19, 1997
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 21, 1997 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 1997 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 21, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stock-
holders (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 21, 1997 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 pro-
posals 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, 1997, 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 19, 1997
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 21, 1997
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 21,
1997 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 19, 1997.
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 Secre-
tary 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 con-
sideration 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, 1997 (the "Record Date") are entitled to
one vote for each share then held. As of the Record Date, the
Corporation had 1,083,626 shares of Common Stock issued and out-
standing, and there were approximately 400 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 the Record
Date (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
NATURE OF SHARES OF
BENEFICIAL COMMON STOCK
OWNERSHIP(1)(2) OUTSTANDING
--------------- ------------
<S> <C> <C>
HFB Financial Corporation
Employee Stock Ownership Plan and Trust
1602 Cumberland Avenue
Middlesboro, Kentucky 40965 24,176 (3) 2.23%
Frank W. Lee, Director 24,850 2.29
Charles A. Harris, Director 31,374 2.90
Frances Coffey Rasnic, Director 6,187 .57
David B. Cook, Director and Executive Officer 65,896 6.08
Earl Burchfield, Director 33,148 3.04
J.D. Cook, Chairman 41,830 3.82
E.W. Nagle, Director 22,687 2.08
Robert V. Costanzo, Director 14,395 1.32
Stanley Alexander, Jr., Executive Officer 8,943 .81
All directors and executive
officers as a group (9 persons) 249,310 (4) 22.27%
<FN>
__________
(1) As to the Corporation's directors and executive officers, includes 6,021,
11,666, 6,021, 6,021, 6,021 and 35,750 shares which may be acquired by
Messrs. Burchfield, J.D. Cook, Nagle, Costanzo, Ms. Rasnic 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.
(2) Includes 17,496, 5,353, 3,670, 8,194, 6,960 and 41,673 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) Shares owned by the HFB Financial Corporation Employee Stock Ownership
Plan and Trust ("ESOP") are held in a suspense account for allocation
among participants on the basis of compensation as the loan is repaid.
Of the 79,438 shares held by the ESOP, 5,526 shares had been allocated as
of June 30, 1997. The ESOP Committee as appointed by the Board of
Directors, consists of Directors Harris, Costanzo and Burchfield.
Directors Harris, Costanzo and Burchfield, none of whom are full-time
employees of the Bank, serve as the ESOP Trustees. The ESOP Trustees
must vote all allocated shares held in the ESOP in accordance with the
directions of the ESOP Committee.
(4) 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 24,176
unallocated shares held by the ESOP. Includes 41,673 shares owned by
directors and executive officers through trusts established under the
Bank's discontinued and current deferred compensation plans for
directors.
</FN>
</TABLE>
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, two persons nominated by
the Board of Directors, who currently are directors and whose
terms expire in 1997, will stand for election.
The Board of Directors has nominated David B. Cook and Earl
Burchfield 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
unavailable 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, 1997, 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.
<TABLE>
<CAPTION>
YEAR FIRST CURRENT
ELECTED OR TERM
AGE AS OF APPOINTED TO
NAME JUNE 30, 1997 DIRECTOR EXPIRE
- ---- ------------- ------------ ------
<S> <C> <C> <C>
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2000
David B. Cook (1) 47 1974 1997
Earl Burchfield 67 1976 1997
DIRECTORS CONTINUING IN OFFICE
J. D. Cook (1) 71 1961 1998
E. W. Nagle 85 1961 1998
Robert V. Costanzo 41 1989 1998
Frank W. Lee 84 1952 1999
Charles A. Harris 63 1987 1999
Frances Coffey Rasnic 48 1996 1999
<FN>
____________
(1) J. D. Cook is the father of David B. Cook.
</FN>
</TABLE>
3<PAGE>
<PAGE>
The principal occupation of each Director and Executive
Officer of the Corporation during the last five years is set
forth below.
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.
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 Directors 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.
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 associated with the Coffey Funeral
Home of 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.
4<PAGE>
<PAGE>
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following sets forth information, including their ages
as of the Record Date, with respect to executive officers of the
Company who do not serve on the Board of Directors.
STANLEY ALEXANDER, JR., age 48, 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.
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 fiscal year ended June 30, 1997, 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 1997.
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 1997, the
Corporation's audit committee met three 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 one time during fiscal 1997 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 1997.
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 1997 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.
5<PAGE>
<PAGE>
<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 1997 $112,500 $11,094 $58,964 $41,481
Executive Officer of the 1996 107,500 12,656 62,790 37,851
Corporation and Bank 1995 102,000 10,313 60,060 34,131
<FN>
_______________
(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 $16.00 as of September 1, 1997, and when vested for
fiscal 1994.
(3) Includes fees in the amount of $9,900 in fiscal 1997, $10,100 in fiscal 1996 and $9,300 in fiscal
1995 for Mr. Cook's services as a director for the Corporation and the Bank, and ESOP contributions
in fiscal 1997, 1996 and 1995 for the benefit of Mr. Cook of $30,483, $27,751 and $24,831,
respectively.
</FN>
</TABLE>
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
1997, the Bank did not contribute to the Pension Plan. At June
30, 1997, Mr. David B. Cook had 24 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>
6<PAGE>
<PAGE>
OPTION PLAN
The following table sets forth information regarding the
exercise of stock options during the 1997 fiscal year and the
number and value of options held by the named executive officer
at the end of the 1997 fiscal year under the Corporation's 1992
Stock Option Plan (the "Option Plan"). No options were granted
during the 1997 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 16,666 $166,660 -- $ --
<FN>
__________
(1) Based on the difference between the exercise price of the stock options of $6.00
per share and the market value of the Common Stock of $16.00 per share, based on
the most recent trades known to the Corporation as of September 1, 1997.
</FN>
</TABLE>
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. 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, as
extended, provides for an annual base salary which is currently
$112,500. 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,
7<PAGE>
<PAGE>
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, 1997 would have been approximately $281,250.
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.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
George S. Olive & Co., which was the Corporation's
independent certified public accounting firm for the 1997 fiscal
year, has been retained by the Board of Directors to be the
Corporation's auditors for the 1998 fiscal year. A
representative of George S. Olive & Co. is currently expected to
be present at the Annual Meeting to respond to stockholders'
questions and will have the opportunity to make a statement if
he or she 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 pro-
perly 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.
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 percent of the
outstanding Common Stock ("Insiders") 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 Company'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 Company 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 1997 fiscal year, with the
exception of Director Charles A. Harris, who failed to file one
report, reporting one transaction on a timely basis.
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.
8<PAGE>
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The Corporation's Annual Report to Stockholders is being
mailed to all stockholders of record as of the close of business
on September 1, 1997. 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-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.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the proxy
materials of the Corporation for next year's Meeting of Stock-
holders, 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
21, 1998. Any such proposals shall be subject to the require-
ments 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 19, 1997
9<PAGE>
<PAGE>
REVOCABLE PROXY
HFB FINANCIAL CORPORATION
________________________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 21, 1997
________________________________________________________________
The undersigned hereby appoints E.W. Nagle, Robert T.
Costanzo and J.D. Cook, 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 21, 1997 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). [ ] [ ]
David B. Cook
Earl Burchfield
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, 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.
________________________________________________________________
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<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 19, 1997, 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.
________________________________________________________________
