<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

|X|    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
       ACT OF 1934

                    FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                                       OR

|_|    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
       EXCHANGE ACT OF 1934

       FOR THE TRANSITION PERIOD FROM _____________ TO ________________
       COMMISSION FILE NUMBER 0-30680

                      FIRST FEDERAL OF OLATHE BANCORP, INC.
--------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)

             KANSAS                                     48-1226075
------------------------------------        ------------------------------------
(State or other jurisdiction                (I.R.S. Employer Identification No.)
of incorporation or organization)

   100 EAST PARK STREET, OLATHE, KANSAS                      66061
--------------------------------------------------------------------------------
 (Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code:        (913) 782-0026
                                                     ---------------------------

           Securities Registered Pursuant to Section 12(b) of the Act:

                                      NONE

           Securities Registered Pursuant to Section 12(g) of the Act:

                     COMMON STOCK, PAR VALUE $.01 PER SHARE
                                (Title of class)

      Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. YES |X|. NO |_|.

      Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained herein, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. |X|

      The Registrant's revenues for the fiscal year ended December 31, 2001 were
$4.1 million.

      As of March 15, 2002, there were 556,328 shares issued and 513,726 shares
outstanding of the Registrant's Common Stock. The aggregate market value of the
voting stock held by non-affiliates of the registrant, computed by reference to
the last sale price of such stock on the Over-the-Counter Electronic Bulletin
Board as of March 15, 2002, was $22.00. (The exclusion from such amount of the
market value of the shares owned by any person shall not be deemed an admission
by the registrant that such person is an affiliate of the registrant.)

<PAGE>

                       DOCUMENTS INCORPORATED BY REFERENCE

      Parts II and III of Form 10-KSB - Portions of Annual Report to
Stockholders for the fiscal year ended December 31, 2001.

      Part III of Form 10-KSB - Portions of Proxy Statement for 2002 Annual
Meeting of Stockholders.

<PAGE>


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

      First Federal of Olathe Bancorp, Inc. was formed in December 1999 at the
direction of First Federal Savings and Loan Association of Olathe ("First
Federal Savings") for the purpose of owning all of the outstanding stock of
First Federal Savings issued upon the conversion of First Federal Savings from
the mutual to stock form. On April 11, 2000, First Federal of Olathe Bancorp
acquired all of the shares of First Federal Savings in connection with the
completion of the conversion. All references to First Federal of Olathe Bancorp,
unless otherwise indicated, at or before April 11, 2000 refer to First Federal
Savings. First Federal of Olathe Bancorp's common stock is quoted on the
Over-the-Counter Electronic Bulletin Board under the symbol "FFOL."

      First Federal Savings is a federally chartered savings association located
in Olathe, Kansas. First Federal Savings was founded in 1923 as a
state-chartered mutual savings association under the name Central Building and
Loan Association. In 1934, First Federal Savings converted to a federal mutual
savings association charter and adopted its current name. First Federal Savings
is regulated by the Office of Thrift Supervision and the Federal Deposit
Insurance Corporation. First Federal Savings' deposits have been federally
insured since 1934 and are currently insured by the Federal Deposit Insurance
Corporation under the Savings Association Insurance Fund. First Federal Savings
has been a member of the Federal Home Loan Bank System since 1933. At December
31, 2001, First Federal of Olathe Bancorp had total assets of $55.4 million,
deposits of $37.7 million and stockholders' equity of $12.2 million.

      First Federal Savings operates as a traditional savings association,
specializing in one-to four- family residential mortgage lending and savings
deposits. First Federal Savings' business consists primarily of attracting
retail deposits from the general public and using those funds to originate real
estate loans. First Federal Savings holds its loans for long-term investment
purposes. First Federal Savings also invests in various investment securities.

      The executive office of First Federal of Olathe Bancorp and First Federal
Savings is located at 100 East Park Street, Olathe, Kansas 66061 and their
telephone number is (913) 782-0026.

LENDING ACTIVITIES

      GENERAL. At December 31, 2001, First Federal Savings' net loan portfolio
totaled $38.4 million, representing approximately 69.3% of First Federal
Savings' $55.4 million of total assets at that date. The principal lending
activity of First Federal Savings is the origination of fixed-rate, one- to
four-family residential loans with terms of up to 25 years. At December 31, 2000
and 2001 First Federal Savings' loan portfolio consisted primarily of first
mortgage, one- to four-family residential loans, with small amounts of
commercial real estate loans and loans secured by deposit accounts. First
Federal Savings also occasionally originates construction/permanent loans to
individuals for the construction and permanent financing of one- to four-family
dwellings, although First Federal Savings has originated very few
construction/permanent loans in recent years. First Federal Savings retains in
its portfolio all loans that it originates.

      Following completion of the stock conversion in April 2000, First Federal
Savings implemented a program for offering longer-term, fixed-rate residential
mortgage loans with terms of up to 25 years and fixed-rate commercial real
estate loans for retention in its portfolio. Prior to the implementation of this
program, First Federal Savings originated fixed-rate one- to four-family
residential loans with terms to maturity of no greater than 15 years. First
Federal Savings also intends to explore adjustable rate lending through the
purchase of adjustable rate loans on a limited basis. To a lesser extent, First
Federal Savings also intends to originate loans secured by deposit accounts.
First Federal may hire additional staff to expand its lending activities.

      The types of loans that First Federal Savings may originate are subject to
federal and state laws and regulations. Interest rates charged by First Federal
Savings on loans are affected principally by the demand for such loans and the

<PAGE>

supply of money available for lending purposes and the rates offered by its
competitors. These factors are, in turn, affected by general and economic
conditions, the monetary policy of the federal government, including the Federal
Reserve Board, legislative and tax policies, and governmental budgetary matters.

      Under OTS regulations, a thrift institution's loans-to-one borrower limit
is generally limited to the greater of 15% of unimpaired capital and surplus or
$500,000. See "Regulation--Federal Regulation of Savings Associations." At
December 31, 2001, First Federal Savings' limit on loans-to-one borrower was
$1.8 million. At that date, First Federal Savings' largest amount of loans to
one borrower, including the borrower's related interests, was $1.7 million and
consisted of 20 residential mortgage loans secured by non-owner occupied,
investor-owned homes and a personal home loan. These loans were performing
according to their original terms at December 31, 2001.

      LOAN PORTFOLIO COMPOSITION. The following table shows the composition of
First Federal Savings' loan portfolio by type of loan at the dates indicated.
First Federal Savings' loan portfolio is composed solely of loans with fixed
rates of interest.

<TABLE>
<CAPTION>
                                                                     AT DECEMBER 31,
                                                   -------------------------------------------------------
                                                             2001                        2000
                                                   --------------------------  -------------------------
                                                      AMOUNT       PERCENT        AMOUNT      PERCENT
                                                   -------------  -----------  ------------- -----------
                                                                  (DOLLARS IN THOUSANDS)
<S>                                                  <C>             <C>          <C>            <C>
REAL ESTATE LOANS:
One- to four-family(1) .........................     $38,671          99%         $36,244         98%
Commercial .....................................         121          --               50          1
                                                     -------         ---          -------        ---
Total real estate loans ........................      38,792          99           36,294         99
                                                     -------         ---          -------        ---
Loans on Deposits ..............................         223           1              275          1
                                                     -------         ---          -------        ---
Total Loans ....................................      39,015         100%          36,569        100%
                                                     -------         ===          -------        ===

LESS:
Deferred fees and discounts ....................         425                          335
Allowance for losses ...........................         175                          175
                                                     -------                      -------
Total loans receivable, net ....................     $38,415                      $36,059
                                                     =======                      =======
</TABLE>

----------
(1)   Includes construction/permanent loans in the amount of $950,000.

      ONE- TO FOUR-FAMILY MORTGAGE LOANS. First Federal Savings' primary lending
activity is the origination of first mortgage loans secured by one- to
four-family residential property located in First Federal Savings' market area.
A portion of the one- to four-family mortgage loans originated by First Federal
Savings are secured by investor-owned, non-owner occupied residences. Loans are
generated through First Federal Savings' existing customers and referrals, real
estate brokers and other marketing efforts. First Federal Savings generally has
limited its real estate loan originations to the financing of properties located
within its market area and has not made out-of-state loans. At December 31,
2001, First Federal Savings had $38.7 million, or 98% of its loan portfolio,
invested in mortgage loans secured by one- to four-family residences.

      Historically, First Federal Savings' residential mortgage loans had terms
of up to 15 years. However, during fiscal 2000, First Federal Savings commenced
originating residential mortgage loans with terms to maturity of up to 25 years.
First Federal Savings has originated only fixed-rate residential loans. First
Federal Savings has no current plans to originate adjustable rate mortgages.
However, First Federal Savings intends to explore adjustable rate lending
through the purchase of adjustable rate loans on a limited basis. All of the
loans made by First Federal Savings are retained in its portfolio for long-term
investment. First Federal Savings has not sold loans in the secondary mortgage
market, and First Federal Savings' loans generally are not underwritten for
resale in the secondary mortgage market. First Federal Savings' fixed-rate
mortgage loans amortize monthly with principal and interest due each month.
Residential real estate loans often remain outstanding for significantly shorter
periods than their contractual terms because borrowers may refinance or prepay
loans at their option.


                                       2
<PAGE>
      Under First Federal Savings' real estate lending policy, a title insurance
policy must be obtained for each real estate loan. First Federal Savings also
requires fire and extended coverage casualty insurance, in order to protect the
properties securing its real estate loans. Borrowers must also obtain flood
insurance policies when the property is in a flood hazard area. First Federal
Savings requires borrowers to advance funds to an escrow account for the payment
of real estate taxes but does not require escrowed funds for hazard insurance
premiums provided other proof of an effective hazard insurance policy is
provided to First Federal Savings. First Federal Savings generally makes loans
up to a maximum amount of $125,000, subject to exceptions by the Board of
Directors. In recent years, as a result of increasing property values, the Board
has granted frequent waivers from this maximum loan amount.

      First Federal Savings' residential mortgage loans customarily include
due-on-sale clauses, which are provisions giving First Federal Savings the right
to declare a loan immediately due and payable in the event, among other things,
that the borrower sells or otherwise disposes of the underlying real property
serving as security for the loan. Due-on-sale clauses are a means of increasing
the interest rate on First Federal Savings' mortgage portfolio during periods of
rising interest rates.

      Regulations limit the amount that a savings association may lend relative
to the appraised value of the real estate securing the loan, as determined by an
appraisal at the time of loan origination. Such regulations generally permit a
maximum loan-to-value ratio of 95% for residential property and 90% for all
other real estate loans. First Federal Savings' lending policies, however,
generally limit the maximum loan to value ratio to 80% of the lesser of the
appraised value or the purchase price of the property securing the loan.

      First Federal Savings originates mortgage loans secured by
non-owner-occupied residential properties. At December 31, 2001, such loans
totaled $13.7 million, or 35.3% of First Federal Savings' loan portfolio. Most
of these loans are made to investors and are secured by one- to four-family
rental properties. These loans are made on the same general terms as loans
secured by owner-occupied properties, including loan-to-value ratios of up to
80% and terms of up to 25 years. However, First Federal Savings generally
charges higher interest rates on investor loans.

      When underwriting residential real estate loans, First Federal Savings
reviews and verifies each loan applicant's employment, income and credit history
and, if applicable, First Federal Savings' experience with the borrower. First
Federal Savings' policy is to obtain credit reports and financial statements on
all borrowers and guarantors, and to verify references. Properties securing real
estate loans are appraised by First Federal Savings-approved independent
appraisers. Appraisals are subsequently reviewed by the First Federal Savings'
Board. Management believes that stability of income, past credit history and
adequacy of the proposed security are integral parts in the underwriting
process. Written appraisals are generally required on real estate property
offered to secure an applicant's loan.

      Currently, First Federal Savings does not offer adjustable-rate
residential mortgage loans. First Federal Savings intends to explore the
purchase of adjustable rate loans, provided such loans are secured by local
properties and are serviced by the originator of the loan or a third party.
First Federal Savings does not currently plan to originate adjustable rate
loans, although it may determine to do so in the future.

      RESIDENTIAL CONSTRUCTION LOANS. On a very limited basis, First Federal
Savings originates residential construction loans to individuals for the
construction and permanent financing of their personal residence. Such loans are
generally made to individuals with whom First Federal Savings has a pre-existing
customer relationship. First Federal Savings' originations of
construction/permanent loans have been minimal during recent years. Construction
loans to individuals are made on the same general terms as First Federal
Savings' one- to four-family mortgage loans, but provide for the payment of
interest only during the construction phase, which is usually six months. At the
end of the construction phase, the loan converts to a permanent mortgage loan.

      Prior to making a commitment to fund a construction loan, First Federal
Savings requires an appraisal of the property by an independent appraiser. First
Federal Savings also reviews and inspects each project prior to disbursement of
funds during the term of the construction loan. Loan proceeds are disbursed
after inspection of the project based on percentage of completion.

      MULTI-FAMILY AND COMMERCIAL REAL ESTATE LENDING. In the past, First
Federal Savings on infrequent occasions has originated loans secured by
commercial real estate. During 2001 and 2000, First Federal Savings

                                       3
<PAGE>

originated two loans and one loan, respectively, secured by commercial real
estate. First Federal Savings plans to maintain a program for offering
fixed-rate, commercial real estate loans.

      Historically, any multi-family and commercial real estate loans originated
by First Federal Savings have been made on the same general terms as one- to
four-family loans, including fixed rates of interest, but with terms to maturity
and amortization schedules of up to 10 years, and in amounts up to 50% of the
lesser of the appraised value of the property or the sales price.

      CONSUMER LOANS. Historically, First Federal Savings' consumer lending
activities have been limited to deposit account loans. At December 31, 2001,
three consumer loans were outstanding, all secured by deposit accounts. First
Federal Savings does not expect to become an active consumer lender, although it
does expect to place some additional emphasis on making deposit account loans in
the future.

      First Federal Savings offers loans secured by savings deposits at First
Federal Savings. Generally, these loans are made at an interest rate that is 2%
above the account rate for up to 100% of the account balance and for a term
through the next semi-annual earnings date of June 30 or December 31.

      First Federal Savings does not originate second mortgage or home equity
loans, but does make loans to existing borrowers for the purpose of home
improvement. These home improvement loans typically involve a modification to
First Federal Savings' first mortgage. These loans are generally limited to 80%
or less of the appraised value of the property securing the loan based either
upon the old appraisal of the property or, if appropriate, a new appraisal of
the property. These loans are originated as fixed-rate loans and generally have
maximum terms of 15 years. First Federal Savings also makes "additional advance"
loans, which are advances up to the amount of the original first mortgage and
which must be repaid prior to the original loan maturity. Because First Federal
Savings' additional advance loans and loans for the purpose of home improvements
are secured by a first mortgage, rather than a second mortgage, First Federal
Savings classifies these loans as one- to four-family residential loans.

      LOAN ORIGINATION AND OTHER FEES. In addition to interest earned on loans,
First Federal Savings receives loan origination fees or "points" for originating
loans. Loan points are a percentage of the principal amount of the mortgage loan
and are charged to the borrower in connection with the origination of the loan.
First Federal Savings generally charges loan origination fees equal to 2% of the
loan amount.

      In accordance with Statement of Financial Accounting Standards No. 91,
which deals with the accounting for non-refundable fees and costs associated
with originating or acquiring loans, First Federal Savings' loan origination
fees and certain related direct loan origination costs are offset, and the
resulting net amount is deferred and amortized as interest income over the
contractual life of the related loans as an adjustment to the yield of such
loans. At December 31, 2001, First Federal Savings had $425,000 of net deferred
loan fees which will be amortized using the interest method.

      LOAN MATURITY SCHEDULE. The following schedule illustrates the contractual
maturity and weighted average rates of First Federal Savings' total loan
portfolio at December 31, 2001. The schedule does not reflect the effects of
scheduled payments, possible prepayments or enforcement of due-on-sale clauses.

                                       4
<PAGE>

<TABLE>
<CAPTION>
                                                       REAL ESTATE
                                         ----------------------------------------
                                            ONE- TO FOUR-
                                               FAMILY              COMMERCIAL       LOANS ON DEPOSITS             TOTAL
                                         ------------------    ------------------   ------------------     ------------------
                                                   WEIGHTED              WEIGHTED             WEIGHTED               WEIGHTED
                                                   AVERAGE               AVERAGE              AVERAGE                AVERAGE
                                          AMOUNT     RATE       AMOUNT     RATE      AMOUNT     RATE        AMOUNT     RATE
                                         -------   --------    -------   --------   -------   --------     -------   --------
                                                                    (DOLLARS IN THOUSANDS)
<S>                                      <C>         <C>       <C>        <C>       <C>          <C>       <C>         <C>
DUE DURING YEARS ENDING DECEMBER 31,
2002 ...............................     $   140     9.36%     $ --         --%     $ 74         8.40%     $   214     9.03%
2003 ...............................         115     8.78        --         --        --           --          115     8.78
2004 ...............................         250     8.08        --         --       149         8.40          399     8.20
2005 and 2006 ......................         479     8.65        --         --        --           --          479     8.65
2007 to 2011 .......................       6,303     7.97       121       8.69        --           --        6,424     7.98
2012 to 2026 .......................      31,384     8.18        --         --        --           --       31,384     8.18
                                         -------     ----      ----       ----      ----         ----      -------     ----
     Total .........................     $38,671     8.16%     $121       8.69%     $223         8.40%     $39,015     8.16%
                                         =======     ====      ====       ====      ====         ====      =======     ====
</TABLE>

      Thetotal amount of loans due after December 31, 2002 that have
predetermined interest rates is $38.8 million, while no loans due after such
date had floating or adjustable interest rates.

      Scheduled contractual maturities of loans do not necessarily reflect the
actual expected term of First Federal Savings' portfolio. The average life of
mortgage loans is substantially less than their average contractual terms
because of prepayments. The average life of mortgage loans tends to increase
when current mortgage loans rates are higher than rates on existing mortgage
loans and, conversely, decrease when rates on existing mortgage loans are lower
than current mortgage loan rates, due to refinancing of fixed-rate loans at
lower rates. Under the latter circumstance, the weighted average yield on loans
decreases as higher yielding loans are repaid or refinanced at lower rates.

      ORIGINATION OF LOANS. The lending activities of First Federal Savings are
subject to the written underwriting standards and loan origination procedures
established by First Federal Savings' board of directors and management. Loan
originations are obtained through a variety of sources, including referrals from
existing customers and real estate brokers. Written loan applications are taken
by First Federal Savings' staff, and Mitch Ashlock, First Federal Savings'
President and Chief Executive Officer, supervises the procurement of credit
reports, appraisals and other documentation involved with a loan. Property
valuations are performed by independent outside appraisers approved by First
Federal Savings' Board of Directors. First Federal Savings' loan approval
process is intended to assess the borrower's ability to repay the loan, the
viability of the loan and the adequacy of the value of the property that will
secure the loan. All loans are approved by First Federal Savings' Board of
Directors.

      First Federal Savings holds all loans for long-term investment purposes.
First Federal Savings has not purchased any loans but may determine to do so in
the future. In particular, as noted above, First Federal Savings intends to
explore the purchase of adjustable rate residential loans, provided such loans
are secured by local properties and are serviced by the originator of the loan
or a third party.


                                       5
<PAGE>

      The following table shows total loans originated and repaid during the
periods indicated. No loans were purchased or sold during the periods shown.

                                                             YEARS ENDED
                                                             DECEMBER 31,
                                                       ------------------------
                                                         2001            2000
                                                       --------        --------
                                                             (IN THOUSANDS)
ORIGINATIONS BY TYPE:
FIXED RATE:
Real estate - one- to four-family ..............       $ 17,286        $ 10,927
                                                       --------        --------
Real estate - commercial .......................             78              53
                                                       --------        --------
Deposit loans ..................................            232             370
                                                       --------        --------
Total fixed-rate ...............................         17,596          11,350
                                                       --------        --------
Adjustable Rate ................................             --              --
                                                       --------        --------
Total loans originated .........................         17,596          11,350
                                                       --------        --------

Total loans purchased ..........................                             --

SALES AND REPAYMENTS:
Total loans sold ...............................             --              --
Principal repayments ...........................         15,123           6,750
                                                       --------        --------
Total reductions ...............................         15,123           6,750
(Increase) in other items, net (1) .............            (90)            (13)
                                                       --------        --------
         Net increase ..........................       $  2,383        $  4,587
                                                       ========        ========

----------
(1)   Other items, net include the effects relating to loans in process,
      deferred loan origination fees or costs, escrow funds held and the
      allowance for loan losses.

      LOAN COMMITMENTS. First Federal Savings issues commitments for mortgage
loans conditioned upon the occurrence of certain events. Commitments are made in
writing on specified terms and conditions and are honored for up to 180 days
from approval. At December 31, 2001, First Federal Savings had loan commitments
totaling $862,000. See Note 13 of the Notes to Financial Statements included in
the back of the annual report.

      ASSET QUALITY. All loan payments are due on the first day of each month.
When a borrower fails to make a required loan payment, First Federal Savings
attempts to cure the deficiency by contacting the borrower and seeking the
payment. A late notice is mailed on the 16th day of the month and a second late
notice is mailed on the 23rd day of the month. In most cases, deficiencies are
cured promptly. If a delinquency continues beyond the 27th day of the month,
additional contact is made either through additional notices or other means and
First Federal Savings will attempt to work out a payment schedule. While First
Federal Savings generally prefers to work with borrowers to resolve the
problems, First Federal Savings will institute foreclosure or other proceedings,
as necessary, to minimize any potential loss.

      First Federal Savings' Board of Directors is informed monthly of the
amounts of loans delinquent more than 30 days, all loans in foreclosure and all
foreclosed and repossessed property owned by First Federal Savings.

      Loans are placed on non-accrual status when the collection of principal
and/or interest becomes doubtful. When a loan is placed on non-accrual status,
previously accrued but unpaid interest is deducted from interest income.

      Real estate acquired by First Federal Savings as a result of foreclosure
or by deed-in-lieu of foreclosure are classified as real estate owned until
sold. First Federal Savings had two properties owned at December 31, 2001, for a
total of $218,000, and no real estate owned at December 31, 2000.


                                       6
<PAGE>

      DELINQUENT LOANS. The following table sets forth information concerning
delinquent loans at December 31, 2001, in dollar amount and as a percentage of
First Federal Savings' total loan portfolio. The dollar amounts shown equal the
total outstanding principal balances of the related loans, rather than the
actual payment amounts which are past due. At December 31, 2001, First Federal
Savings had no consumer loans, construction loans or land loans which were
delinquent 30 or more days.

<TABLE>
<CAPTION>
                                                           LOANS DELINQUENT FOR:
                               -------------------------------------------------------------------------------
                                      60-89 DAYS              90 DAYS AND OVER        TOTAL DELINQUENT LOANS
                               -------------------------  ------------------------  --------------------------
                                                 PERCENT                   PERCENT                     PERCENT
                                                 OF LOAN                   OF LOAN                     OF LOAN
                               NUMBER   AMOUNT  CATEGORY  NUMBER  AMOUNT  CATEGORY  NUMBER   AMOUNT   CATEGORY
                               ------   ------  --------  ------  ------  --------  ------  -------   --------
                                                          (DOLLARS IN THOUSANDS)
<S>                               <C>    <C>       <C>       <C>    <C>       <C>       <C>    <C>       <C>
Real Estate:
  One- to four-family .......      4     $198      .51%       2     $ 57      .15%       6     $255      .66%
  Multi-family ..............     --       --       --       --       --       --       --       --       --
  Commercial ................     --       --       --       --       --       --       --       --       --
  Construction or development     --       --       --       --       --       --       --       --       --
Consumer ....................     --       --       --       --       --       --       --       --       --
                                 ---     ----      ---      ---     ----      ---      ---     ----      ---
     Total ..................      4     $198      .51%       2     $ 57      .15%       6     $255      .66%
                                 ===     ====      ===      ===     ====      ===      ===     ====      ===
</TABLE>

      NON-PERFORMING ASSETS. The following table sets forth information
regarding non-performing loans and real estate owned by First Federal Savings at
the dates indicated. As of the dates indicated, First Federal Savings had no
material restructured loans within the meaning of SFAS No. 15.

<TABLE>
<CAPTION>
                                                                   AT
                                                               DECEMBER 31,
                                                             ----------------
                                                             2001        2000
                                                             ----        ----
                                                          (DOLLARS IN THOUSANDS)
<S>                                                          <C>         <C>
Non-accruing loans: .....................................    $ --        $ --

Accruing loans delinquent more than 90 days:
  One- to four-family ...................................      57         299
                                                             ----        ----
     Total ..............................................      57         299
                                                             ----        ----

Foreclosed assets: ......................................     218          --
                                                             ----        ----

Total non-performing assets .............................    $274        $299
Total as a percentage of total assets ...................     .49%        .59%
                                                             ====        ====
</TABLE>

      For the year ended December 31, 2001, First Federal Savings had no
non-accruing loans, and therefore had no gross interest income which would have
been recorded had non-accruing loans been current in accordance with their
original terms. There was no interest income on such loans for the year ended
December 31, 2001.

      The $57,000 of accruing loans delinquent more than 90 days at December 31,
2001, consisted of two loans to a single borrower secured by one- to four-family
residences. The collateral was destroyed by fire and insurance proceeds covering
this balance are in the process of being received.

      Foreclosed assets in the amount of $218,000 represent properties acquired
by the Association from two borrowers at a sheriff's sale. Negotiations of sale
are currently in process for one of the properties and the other is to be
offered to potential investors. Full recovery of principal and related costs is
anticipated during the first quarter of 2002.


                                       7
<PAGE>
      OTHER LOANS OF CONCERN. In addition to the non-performing loans set forth
in the tables above, at December 31, 2001, there were no loans classified by
First Federal Savings, with respect to which known information about the
possible credit problems of the borrowers or the cash flows of the security
properties have caused management to have some doubts as to the ability of the
borrowers to comply with present loan repayment terms and which may result in
the future inclusion of such items in the non-performing asset categories.

      CLASSIFIED ASSETS. Federal regulations require that each insured savings
institution classify its assets on a regular basis. In addition, in connection
with examinations of insured institutions, federal examiners have authority to
identify problem assets and, if appropriate, classify them. There are three
classifications for problem assets: "substandard," "doubtful" and "loss."
Substandard assets have one or more defined weaknesses and are characterized by
the distinct possibility that the insured institution will sustain some loss if
the deficiencies are not corrected. Doubtful assets have the weaknesses of
substandard assets with the additional characteristic that the weaknesses make
collection or liquidation in full on the basis of currently existing facts,
conditions and values questionable, and there is a higher possibility of loss.
An asset classified loss is considered uncollectible and of such little value
that continuance as an asset of the institution is not warranted. Another
category designated "special mention" also must be established and maintained
for assets which do not currently expose an insured institution to a sufficient
degree of risk to warrant classification as substandard, doubtful or loss.
Assets classified as substandard or doubtful require the institution to
establish general allowances for loan losses. If an asset or portion thereof is
classified loss, the insured institution must either establish specific
allowances for loan losses in the amount of 100% of the portion of the asset
classified loss, or charge-off such amount. General loss allowances established
to cover losses related to assets classified substandard or doubtful may be
included in determining an institution's regulatory capital, while specific
valuation allowances for loan losses do not qualify as regulatory capital.
Federal examiners may disagree with an insured institution's classifications and
amounts reserved.

      When an insured institution classifies problem assets as either
substandard or doubtful, it may establish general allowances for losses in an
amount deemed prudent by management. General allowances represent loss
allowances which have been established to recognize the inherent risk associated
with lending activities, but which, unlike specific allowances, have not been
allocated to particular problem assets. When an insured institution classifies
problem assets as "loss," it is required either to establish a specific
allowance for losses equal to 100% of that portion of the asset so classified or
to charge-off such amount. An institution's determination as to the
classification of its assets and the amount of its valuation allowances is
subject to review by the regulatory authorities, who may order the establishment
of additional general or specific loss allowances.

      In connection with the filing of its periodic reports with the OTS and in
accordance with its classification of assets policy, First Federal Savings
reviews loans in its portfolio monthly to determine whether such assets require
classification in accordance with applicable regulations. On the basis of
management's review of its assets, at December 31, 2001, First Federal Savings
had classified none of its assets as substandard, none as doubtful and none as
loss. These loans have been considered by management in its analysis of First
Federal Savings' allowance for loan losses.

      ALLOWANCE FOR LOAN LOSSES. In originating loans, First Federal Savings
recognizes that losses will be experienced and that the risk of loss will vary
with, among other things, the type of loan being made, the creditworthiness of
the borrower over the term of the loan, general economic conditions and, in the
case of a secured loan, the quality of the security for the loan. The allowance
method is used in providing for loan losses. Accordingly, all loan losses are
charged to the allowance and all recoveries are credited to it. The allowance
for loan losses is established through a provision for loan losses charged to
operations. The provision for loan losses is based on management's evaluation of
the collectibility of the loan portfolio, including the nature of the portfolio,
credit concentrations, trends in historical loss experience, specified impaired
loans, and economic conditions.

      At December 31, 2001, First Federal Savings had an allowance for loan
losses of $175,000. Although management believes that it uses the best
information available to establish the allowance for loan losses, future
adjustments to the allowance for loan losses may be necessary and results of
operations could be significantly and adversely affected if circumstances differ
substantially from the assumptions used in making the determinations.
Furthermore, while First Federal Savings believes it has established its
existing allowance for loan losses in accordance

                                       8
<PAGE>

with generally accepted accounting principles, there can be no assurance that
regulators, in reviewing First Federal Savings' loan portfolio, will not request
First Federal Savings to increase significantly its allowance for loan losses.
In addition, because future events affecting borrowers and collateral cannot be
predicted with certainty, there can be no assurance that the existing allowance
for loan losses is adequate or that substantial increases will not be necessary
should the quality of any loans deteriorate as a result of the factors discussed
above. Any material increase in the allowance for loan losses may adversely
affect First Federal Savings' financial condition and results of operations.

      First Federal Savings' management believes that it determines the size of
the allowance based on the best information available at the time, the allowance
will need to be adjusted as circumstances change and assumptions are updated.
Future adjustments to the allowance could significantly affect net income.

      The following table sets forth the allocation for loan losses by category
for the periods indicated.

<TABLE>
<CAPTION>
                                                                   AT DECEMBER 31,
                                      -----------------------------------------------------------------------
                                                    2001                                   2000
                                      ----------------------------------   ----------------------------------
                                                               PERCENT                               PERCENT
                                                               OF LOANS                              OF LOANS
                                                     LOAN      IN EACH                    LOAN       IN EACH
                                      AMOUNT OF     AMOUNTS    CATEGORY    AMOUNT OF     AMOUNTS     CATEGORY
                                      LOAN LOSS       BY       TO TOTAL    LOAN LOSS       BY        TO TOTAL
                                      ALLOWANCE    CATEGORY      LOANS     ALLOWANCE    CATEGORY       LOANS
                                      ---------    --------    ---------   ---------    --------     --------
                                                             (DOLLARS IN THOUSANDS)
<S>                                   <C>          <C>          <C>          <C>          <C>          <C>
Real estate--One- to four-family      $   175      $38,671      100.00%      $   175      $36,244      100.00%
Real estate--commercial ........           --           --          --            --           --          --
Deposit loans ..................           --           --          --            --           --          --
Unallocated ....................           --           --          --            --           --          --
                                      -------      -------      ------       -------      -------      ------
     Total .....................      $   175      $38,671      100.00%      $   175      $36,244      100.00%
                                      =======      =======      ======       =======      =======      ======
</TABLE>

      The following table sets forth information with respect to First Federal
Savings' allowance for loan losses for the periods indicated.

<TABLE>
<CAPTION>
                                                         YEARS ENDED
                                                         DECEMBER 31,
                                                     2001           2000
                                                   ---------      --------
                                                     (DOLLARS IN THOUSANDS)
<S>                                                <C>            <C>
Balance at beginning of period ..............      $     175      $    175
Charge-offs .................................             --            --
Recoveries ..................................             --            --
Net Charge-offs .............................             --            --
Additions charged to operations .............             --            --
                                                   ---------       -------
Balance at end of period ....................      $     175       $   175
                                                   =========       =======

Ratio of net charge-offs during the period to
  average loans outstanding during the period            N/A           N/A


Ratio of net charge-offs during the period to
 average non-performing assets ..............            N/A           N/A

Ratio of allowance for loan losses to loans
 receivable, net, at end of period ..........            .46%          .49%
                                                   =========       =======
Ratio of Allowance for Loan Losses to
 non-performing assets at end of period .....          63.87%        58.53%
                                                   =========       =======
</TABLE>


                                       9
<PAGE>

INVESTMENT ACTIVITIES

      First Federal Savings is permitted under federal law to invest in various
types of liquid assets, including U.S. Government obligations, securities of
various federal agencies and of state and municipal governments, deposits at the
Federal Home Loan Bank of Topeka, certificates of deposit of federally insured
institutions, certain bankers' acceptances and federal funds. within certain
regulatory limits, First Federal Savings may also invest a portion of its assets
in commercial paper and corporate debt securities. savings institutions like
First Federal Savings are also required to maintain an investment in FHLB stock.
First Federal Savings is required under federal regulations to maintain a
minimum amount of liquid assets. At December 31, 2001, First Federal Savings'
liquidity ratio (liquid assets as a percentage of net withdrawable savings
deposits and current borrowings) was 37.4%. See "Regulation" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--liquidity and Capital Resources."

      Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," requires that investments be
categorized as "held to maturity," "trading securities" or "available for sale,"
based on management's intent as to the ultimate disposition of each security.
STatement of Financial Accounting Standards No. 115 allows debt securities to be
classified as "held to maturity" and reported in financial statements at
amortized cost only if the reporting entity has the positive intent and ability
to hold those securities to maturity. Securities that might be sold in response
to changes in market interest rates, changes in the security's prepayment risk,
increases in loan demand, or other similar factors cannot be classified as "held
to maturity." Debt and equity securities held for current resale are classified
as "trading securities." These securities are reported at fair value, and
unrealized gains and losses on the securities would be included in earnings.
First Federal Savings does not currently use or maintain a trading account. debt
and equity securities not classified as either "held to maturity" or "trading
securities" are classified as "available for sale." These securities are
reported at fair value, and unrealized gains and losses on the securities are
excluded from earnings and reported, net of deferred taxes, as a separate
component of equity.

      All of First Federal Savings' investment securities carry market risk
insofar as increases in market rates of interest may cause a decrease in their
market value. They also carry prepayment risk insofar as they may be called
prior to maturity in times of low market interest rates, so that First Federal
Savings may have to invest the funds at a lower interest rate. First Federal
Savings' investment policy does not permit engaging directly in hedging
activities or purchasing high risk mortgage derivative products. Investments are
made based on certain considerations, which include the interest rate, yield,
settlement date and maturity of the investment, First Federal Savings' liquidity
position, and anticipated cash needs and sources. the effect that the proposed
investment would have on First Federal Savings' credit and interest rate risk
and risk-based capital is also considered. First Federal Savings purchases
investment securities to provide necessary liquidity for day-to-day operations.
First Federal Savings also purchases investment securities when investable funds
exceed loan demand.

      Generally, the investment policy of First Federal Savings, as established
by the Board of Directors, is to invest funds among various categories of
investments and maturities based upon First Federal Savings' liquidity needs,
asset/liability management policies, investment quality, marketability and
performance objectives.

      MORTGAGE-BACKED SECURITIES. First Federal Savings has the legal authority
to invest in mortgage-backed securities to supplement residential loan
production, and First Federal Savings' investment policy as adopted by the board
permits investments in certain mortgage-backed securities. In recent years,
however, First Federal Savings has chosen not to purchase any mortgage-backed
securities.

      OTHER INVESTMENTS. At December 31, 2001, First Federal Savings' investment
securities consisted of u.s. government/federal agency securities, FHLB stock,
Freddie Mac stock and other interest-earning assets. All of the U.S.
government/federal agency securities are held to maturity. During 2001, First
Federal Savings purchased 20,000 shares of Freddie Mac preferred stock. The
Freddie Mac stock is accounted for as available for sale. The U.S.
government/federal agency securities consisted primarily of Fannie Mae and
Freddie Mac bonds and Federal Home Loan Bank bonds, with fixed rates of
interest.


                                       10
<PAGE>

      The following table sets forth the composition of First Federal Savings'
investment securities, net of premiums and discounts, at the dates indicated.

<TABLE>
<CAPTION>
                                                                    AT DECEMBER 31,
                                                   ---------------------------------------------
                                                           2001                     2000
                                                   --------------------    ---------------------
                                                     BOOK       % OF         BOOK         % OF
                                                    VALUE       TOTAL        VALUE       TOTAL
                                                   ---------   --------    ----------    -------
                                                                (DOLLARS IN THOUSANDS)
<S>                                                <C>            <C>          <C>         <C>
Investment securities held to maturity:
  U.S. government/federal Agency securities......  $   5,500      34.32%       12,594      91.57%
Investment securities available for sale:
  Freddie Mac stock .............................      1,848      11.53           829       6.03

FHLB stock ......................................        380       2.37           330       2.40
                                                   ---------   --------    ----------    -------
     Total investment securities
      and FHLB stock ............................      7,728      48.22        13,753     100.00
                                                   ---------   --------    ----------    -------
Average remaining life of
  investment securities (1) .....................     13 yrs                    9 yrs

Other interest-earning assets:
  Interest-bearing deposits with banks ..........      8,300      51.78            --         --
                                                   ---------   --------    ----------    -------
     Total ......................................  $  16,028     100.00%       13,753     100.00%
                                                   =========   ========    ==========    =======
</TABLE>

----------
(1)   Average remaining life is subject to call provisions on all U.S.
      government/federal agency securities and excludes available-for-sale
      securities.

      INVESTMENT PORTFOLIO MATURITIES. The following table sets forth the
scheduled maturities, carrying values, market values and average yields for
First Federal Savings' investment securities excluding FHLB Stock and Freddie
Mac stock at December 31, 2001.

<TABLE>
<CAPTION>
                                                                                    AT DECEMBER 31, 2001
                                                         -------------------------------------------------------------------
                                                          LESS
                                                          THAN 1     1 TO 5      5 TO 10    OVER 10      TOTAL INVESTMENT
                                                           YEAR       YEARS       YEARS      YEARS          SECURITIES
                                                         ---------  ---------   ---------  ----------  ----------------------
                                                           BOOK       BOOK        BOOK       BOOK        BOOK        MARKET
                                                           VALUE      VALUE       VALUE      VALUE       VALUE        VALUE
                                                         ---------  ---------   ---------  ----------  ----------  ----------
                                                                               (DOLLARS IN THOUSANDS)
<S>                                                      <C>        <C>         <C>        <C>         <C>         <C>
U.S. GOVERNMENT/FEDERAL AGENCY SECURITIES...........     $    --    $     500   $   1,000  $    4,000  $   5,500   $   5,475

WEIGHTED AVERAGE YIELD..............................          --%        8.10%       6.20%       6.63%      6.68%
</TABLE>

SOURCES OF FUNDS

      GENERAL. Deposits are the primary source of First Federal Savings' funds
for lending and other investment purposes. In addition to deposits, First
Federal Savings derives funds primarily from principal and interest payments on
loans. Loan repayments are a relatively stable source of funds, while deposit
inflows and outflows are significantly influenced by general interest rates and
money market conditions. Borrowings may also be used on a short- term basis to
compensate for reductions in the availability of funds from other sources and
may be used on a longer-term basis for general business purposes.

      DEPOSITS. First Federal Savings' deposits are attracted principally from
within its primary market area. Deposit account terms vary, with the principal
differences being the minimum balance required, the time periods the funds must
remain on deposit and the interest rate.


                                       11
<PAGE>

      First Federal Savings' deposits are obtained primarily from residents of
its primary market area. During the first quarter of 2001, first federal savings
began accepting additional brokered certificates of deposit from out-of-state
sources for the purpose of raising funds during periods of strong loan demand.
At December 31, 2001, First Federal Savings had approximately $7.3 million of
brokered certificates of deposit.

      First Federal Savings' deposit products include non-interest bearing
demand accounts, passbook accounts, money market accounts and term certificate
accounts. Interest rates paid, maturity terms, service fees and withdrawal
penalties are established by First Federal Savings on a periodic basis.
Management determines the rates and terms based on rates paid by competitors,
First Federal Savings' needs for funds or liquidity, growth goals and federal
and state regulations.

      SAVINGS PORTFOLIO. The following table sets forth the dollar amount of
savings deposits in the various types of deposit programs offered by First
Federal Savings as of the dates indicated.

<TABLE>
<CAPTION>
                                                                          AT DECEMBER 31,
                                                        --------------------------------------------------
                                                                  2001                     2000
                                                        -----------------------  -----------------------
                                                          AMOUNT      PERCENT      AMOUNT     PERCENT
                                                        -----------  ----------  ----------- -----------
                                                                     (DOLLARS IN THOUSANDS)
<S>                                                      <C>          <C>          <C>          <C>
TRANSACTIONS AND SAVINGS DEPOSITS:
Non-interest bearing Accounts........................    $   167        0.44%      $    --          --%
Passbook Accounts....................................      4,108       10.90         3,019       10.59
Money Market Accounts................................      1,861        4.94         1,797        6.30
                                                         --------     ------       --------     ------

Total Non-Certificates...............................      6,136       16.28         4,816       16.89
                                                         --------     ------       --------     ------

CERTIFICATES:

 3.00 - 5.99%........................................     21,274       56.47        13,782       48.35
 6.00 - 7.99%........................................     10,261       27.25         9,906       34.76
                                                         --------     ------       --------     ------

Total Certificates...................................     31,535       83.72        23,688       83.11
                                                         --------     ------       --------     ------
Total Deposits.......................................    $37,671      100.00%      $28,504      100.00%
                                                         ========     ======       ========     ======
</TABLE>

      DEPOSIT ACTIVITY. The following table sets forth the deposit activities of
First Federal Savings for the periods indicated:

<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31,
                                                          ------------------------
                                                             2001         2000
                                                          ----------    ----------
                                                           (DOLLARS IN THOUSANDS)

<S>                                                       <C>           <C>
Opening balance......................................     $  28,504     $  36,203
Deposits.............................................        23,330         2,002
Withdrawals..........................................        14,163        (9,701)
                                                          ----------    ---------

Ending balance.......................................     $  37,671     $  28,504
                                                          ==========    =========

Net increase (decrease)..............................     $   9,167     $  (7,699)
                                                          ==========    =========

Percent increase (decrease)..........................         32.16%       (21.27)%
                                                          ==========    =========
</TABLE>


                                       12
<PAGE>

      TIME DEPOSIT MATURITY SCHEDULE. The following table shows rate and
maturity information for First Federal Savings' certificates of deposit at
December 31, 2001.

<TABLE>
<CAPTION>
                                                       3.00-         6.00-                   PERCENT
                                                       5.99%         7.99%       TOTAL      OF TOTAL
                                                      -------      --------     -------     --------
                                                                 (DOLLARS IN THOUSANDS)
<S>                                                   <C>          <C>          <C>              <C>
Certificate accounts maturing in quarter ending:

March 31, 2002 .................................      $ 1,712      $   861      $ 2,573          8 %
June 30, 2002 ..................................        2,125          924        3,049            9
September 30, 2002 .............................        1,150          365        1,515            5
December 31, 2002 ..............................        1,495          703        2,198            6
March 31, 2003 .................................        1,697        3,001        4,698           14
June 30, 2003 ..................................          729          876        1,605            5
September 30, 2003 .............................        6,383        1,555        7,938           25
December 31, 2003 ..............................        1,060           --        1,060            4
March 31, 2004 .................................        1,309           --        1,309            5
June 30, 2004 ..................................          726           --          726            3
September 30, 2004 .............................          382           --          382            2
December 31, 2004 ..............................          126           --          126            1
Thereafter .....................................        2,380        1,976        4,356           13
                                                      -------      -------      -------      -------

   Total .......................................      $21,274      $10,261      $31,535       100.00%
                                                      =======      =======      =======      =======

   Percent of Total ............................        67.46%       32.54%      100.00%
                                                      =======      =======      =======
</TABLE>

         The following table indicates the amount of First Federal Savings'
jumbo certificates of deposit and other certificates of deposit by time
remaining until maturity at December 31, 2001.

<TABLE>
<CAPTION>
                                                             MATURITY
                                              ----------------------------------------
                                                            OVER      OVER
                                              3 MONTHS     3 TO 6    6 TO 12    OVER 12
                                               OR LESS     MONTHS     MONTHS     MONTHS     TOTAL
                                               -------    -------    -------    -------    -------
                                                                (IN THOUSANDS)
<S>                                            <C>        <C>        <C>        <C>        <C>
Certificates of deposit less than $100,000     $ 1,973    $ 2,158    $ 2,909    $17,126    $24,166

Certificates of deposit of $100,000 or more        600        891        804      5,074      7,369
                                               -------    -------    -------    -------    -------

Total certificates of deposit .............    $ 2,573    $ 3,049    $ 3,713    $22,200    $31,535
                                               =======    =======    =======    =======    =======
</TABLE>


                                       13
<PAGE>

      BORROWINGS. First Federal Savings may obtain advances from the FHLB of
Topeka upon the security of the common stock it owns in that bank and certain of
its residential mortgage loans and mortgage-backed securities, provided certain
standards related to creditworthiness have been met. These advances are made
pursuant to several credit programs, each of which has its own interest rate and
range of maturities. FHLB advances are generally available to meet seasonal and
other withdrawals of deposit accounts and to permit increased lending. See
"Regulation--Federal Regulation of Savings Associations--Federal Home Loan Bank
System."

      At December 31, 2001, First Federal Savings had available credit lines of
approximately $2.6 million from the FHLB of Topeka, contingent upon additional
purchase of FHLB stock. First Federal Savings had $5.0 million of FHLB advances
outstanding at December 31, 2001.

      The following table sets forth the maximum month-end balance and average
balance of FHLB advances, for the periods indicated.

                                                        YEARS ENDED DECEMBER 31,
                                                        ------------------------
                                                            2001        2000
                                                           ------      ------
                                                              (IN THOUSANDS)
MAXIMUM BALANCE:

  FHLB advances .........................................  $6,600      $6,600

AVERAGE BALANCE:

  FHLB advances .........................................   5,548       2,610

      The following table sets forth certain information as to First Federal
Savings' FHLB advances at the dates indicated.

                                                              AT DECEMBER 31,
                                                          ---------------------
                                                            2001         2000
                                                          --------     --------

FHLB advances ........................................      $5,000       $6,600

Weighted average interest rate of FHLB advances ......        5.88%        6.48%

EMPLOYEES

      At December 31, 2001, First Federal Savings had a total of three full-time
and no part-time employees. First Federal Savings' employees are not represented
by any collective bargaining group. Management considers its employee relations
to be good.

SERVICE CORPORATION ACTIVITIES

      As a federally chartered savings association, First Federal Savings is
permitted by OTS regulations to invest up to 2% of its assets in the stock of,
or loans to, service corporation subsidiaries. First Federal Savings may invest
an additional 1% of its assets in service corporations where such additional
funds are used for inner-city or community development purposes and up to 50% of
its total capital in conforming loans to service corporations in which it owns
more than 10% of the capital stock. In addition to investments in service
corporations, federal associations are permitted to invest an unlimited amount
in operating subsidiaries engaged solely in activities in which a federal
association may engage. At December 31, 2001, First Federal Savings had no
subsidiaries.

FIRST FEDERAL SAVINGS' MARKET AREA

      First Federal Savings considers its primary market area to consist of
Johnson County, Kansas, with a concentration of business activity in the city of
Olathe, which is the county seat, and the immediate surrounding area. Johnson
County is part of the Kansas City metropolitan statistical area. Olathe and the
surrounding areas have experienced increases in population as the Kansas City
outer suburbs have expanded. Since 1990, Johnson County has experienced
significant increases in population. The Johnson County population has increased
from approximately


                                       14
<PAGE>

355,000 in 1990 to approximately 460,000 in 2001. Employment in Johnson County
is generally diversified, including employment in services, wholesale and retail
trade and government.

COMPETITION

      First Federal Savings faces significant competition both in attracting
deposits and in making loans. Its most direct competition for deposits has come
historically from commercial banks, credit unions and other savings institutions
located in its primary market area, including many large financial institutions
which have greater financial and marketing resources available to them. In
addition, First Federal Savings faces significant competition for investors'
funds from short-term money market securities, mutual funds and other corporate
and government securities. First Federal Savings does not rely upon any
individual group or entity for a material portion of its deposits. First Federal
Savings' ability to attract and retain deposits depends on its ability to
generally provide a rate of return, liquidity and risk comparable to that
offered by competing investment opportunities.

      First Federal Savings' competition for real estate loans comes principally
from mortgage banking companies, commercial banks, other savings institutions
and credit unions. First Federal Savings competes for loan originations
primarily through the interest rates and loan fees it charges, and the
efficiency and quality of services it provides borrowers. Factors which affect
competition include general and local economic conditions, current interest rate
levels and volatility in the mortgage markets. Competition may increase as a
result of the continuing reduction of restrictions on the interstate operations
of financial institutions and the anticipated slowing of refinancing activity.

NEW ACCOUNTING PRONOUNCEMENTS

      The Financial Accounting Standards Board (FASB) recently adopted Statement
of Financial Accounting Standards (SFAS) 142, "Goodwill and Other Intangible
Assets". This statement establishes new financial accounting and reporting
standards for acquired goodwill and other intangible assets. The Statement
addresses how intangible assets that are acquired individually or with a group
of other assets should be accounted for in financial statements upon their
acquisition. It also addresses how goodwill and other intangible assets should
be accounted for after they have been initially recognized in the financial
statements. SFAS 142 is effective for fiscal years beginning after December 15,
2001. The adoption of this statement is not expected to have a material effect
on the financial statements of the Company.

      The FASB recently adopted SFAS 143, "Accounting for Asset Retirement
Obligations". This Statement requires an entity to record a liability for an
obligation associated with the retirement of an asset at the time the liability
is incurred by capitalizing the cost as part of the carrying value of the
related asset and depreciating it over the remaining useful life of that asset.
SFAS 143 is effective for fiscal years beginning after June 15, 2002. The
adoption of this statement is not expected to have a material effect on the
financial statements of the Company.

      The FASB recently adopted SFAS 144, "Accounting for the Impairment of
Long-Lived Assets and for Long- Lived Assets to be Disposed Of". This Statement
addresses how and when to measure impairment on long-lived assets and how to
account for long-lived assets that an entity plans to dispose of either through
sale, abandonment, exchange or distribution to owners. The Statement also
requires expected future operating losses from discounted operations to be
recorded in the period in which the losses are incurred rather than the
measurement date. SFAS 144 is effective for fiscal years beginning after
December 15, 2001. The adoption of this statement is not intended to have a
material effect on the financial statements of the Company.

                                   REGULATION

GENERAL

      First Federal Savings is regulated, examined and supervised by the OTS, as
its chartering agency, and the FDIC, as the insurer of its deposits. The
activities of federal savings institutions are governed by the Home Owners' Loan
Act, as amended and, in certain respects, the Federal Deposit Insurance Act and
the regulations issued by the OTS


                                       15
<PAGE>

and the FDIC to implement these statutes. These laws and regulations delineate
the nature and extent of the activities in which federal savings associations
may engage. Lending activities and other investments must comply with various
statutory and regulatory capital requirements. In addition, First Federal
Savings' relationship with its depositors and borrowers is also regulated to a
great extent, especially in matters such as the ownership of deposit accounts
and the form and content of First Federal Savings' mortgage documents. First
Federal Savings must file reports with the OTS and the FDIC concerning its
activities and financial condition in addition to obtaining regulatory approvals
prior to entering into certain transactions such as mergers with, or
acquisitions of, other financial institutions. There are periodic examinations
by the OTS and the FDIC to review First Federal Savings' compliance with various
regulatory requirements. The regulatory structure also gives the regulatory
authorities extensive discretion in connection with their supervisory and
enforcement activities and examination policies, including policies with respect
to the classification of assets and the establishment of adequate loan loss
reserves for regulatory purposes. Any change in policies, whether by the OTS,
the FDIC or Congress, could have a material adverse impact on First Federal
Savings and its operations.

      As the savings and loan holding company of First Federal Savings, First
Federal of Olathe Bancorp also is subject to federal regulation and oversight.
The purpose of the regulation of First Federal of Olathe Bancorp and other
holding companies is to protect subsidiary savings and loan associations.

FEDERAL REGULATION OF SAVINGS ASSOCIATIONS

      OFFICE OF THRIFT SUPERVISION. The OTS is an office in the Department of
the Treasury. It generally possesses the supervisory and regulatory duties and
responsibilities formerly vested in the Federal Home Loan Bank Board. Among
other functions, the OTS issues and enforces regulations affecting federally
insured savings associations and regularly examines these institutions.

      FEDERAL HOME LOAN BANK SYSTEM. The Federal Home Loan Bank System,
consisting of 12 banks, is under the jurisdiction of the Federal Housing Finance
Board. First Federal Savings is a member of the Federal Home Loan Bank of
Topeka. First Federal Savings holds shares of capital stock in the Federal Home
Loan Bank of Topeka in an amount equal to the greater of 1.0% of the aggregate
outstanding principal amount of residential mortgage loans, home purchase
contracts and similar obligations at the beginning of each year, or 1/20 of its
borrowings from the Federal Home Loan Bank of Topeka. First Federal Savings
holds an investment in Federal Home Loan Bank of Topeka stock of $380,000 at
December 31, 2001. Among other benefits, the Federal Home Loan Bank of Topeka
provides a central credit facility primarily for member institutions.

      INSURANCE OF DEPOSIT ACCOUNTS. The FDIC has adopted a risk-based deposit
insurance assessment system. The FDIC assigns an institution to one of three
capital categories based on the institution's financial information, as of the
reporting period ending seven months before the assessment period, and one of
three supervisory subcategories within each capital group. The three capital
categories are well capitalized, adequately capitalized and undercapitalized.
The supervisory subgroup to which an institution is assigned is based on a
supervisory evaluation provided to the FDIC by the institution's primary federal
regulator and information which the FDIC determines to be relevant to the
institution's financial condition and the risk posed to the deposit insurance
funds. An institution's assessment rate depends on the capital category and
supervisory category to which it is assigned. The FDIC is authorized to raise
the assessment rates. The FDIC has exercised this authority several times in the
past and may raise insurance premiums in the future. If this type of action is
taken by the FDIC, it could have an adverse effect on the earnings of the
Association.

      The FDIC may terminate the deposit insurance of any insured depository
institution if it determines after a hearing that the institution has engaged or
is engaging in unsafe or unsound practices, is in an unsafe or unsound condition
to continue operations, or has violated any applicable law, regulation, order or
any condition imposed by an agreement with the FDIC. It also may suspend deposit
insurance temporarily during the hearing process for the permanent termination
of insurance, if the institution has no tangible capital. If insurance of
accounts is terminated, the accounts at the institution at the time of
termination, less subsequent withdrawals, shall continue to be insured for a
period of six months to two years, as determined by the FDIC.


                                       16
<PAGE>
      LIQUIDITY REQUIREMENTS. Under OTS regulations, each savings institution is
required to maintain liquid assets in an amount that would ensure the
institution's safe and sound operation. The Association's liquidity ratio at
December 31, 2001 was 37.4%. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."

      PROMPT CORRECTIVE ACTION. Under the OTS Prompt Corrective Action
regulations, the OTS is required to take supervisory actions against
undercapitalized institutions, the severity of which depends upon the
institution's level of capital. Generally, a savings institution that has total
risk-based capital of less than 8.0% or a leverage ratio or a Tier 1 core
capital ratio that is less than 4.0% is considered to be undercapitalized. A
savings institution that has total risk- based capital less than 6.0%, a Tier 1
core risk-based capital ratio of less than 3.0% or a leverage ratio that is less
than 3.0% is considered to be "significantly undercapitalized" and a savings
institution that has a tangible capital to assets ratio equal to or less than
2.0% is deemed to be "critically undercapitalized." Generally, the banking
regulator is required to appoint a receiver or conservator for an institution
that is "critically undercapitalized." The regulation also provides that a
capital restoration plan must be filed with the OTS within 45 days of the date
an institution receives notice that it is "undercapitalized," "significantly
undercapitalized" or "critically undercapitalized." In addition, numerous
mandatory supervisory actions become immediately applicable to the institution,
including, but not limited to, restrictions on growth, investment activities,
capital distributions, and affiliate transactions. The OTS could also take any
one of a number of discretionary supervisory actions against undercapitalized
institutions, including the issuance of a capital directive and the replacement
of senior executive officers and directors.

      At December 31, 2001, First Federal Savings was categorized as "well
capitalized" under the prompt corrective action regulations.

      STANDARDS FOR SAFETY AND SOUNDNESS. Federal law requires each federal
banking agency to prescribe for all insured depository institutions standards
relating to, among other things, internal controls, information systems and
audit systems, loan documentation, credit underwriting, interest rate risk
exposure, asset growth, compensation, and other operational and managerial
standards as the agency deems appropriate. The federal banking agencies adopted
Interagency Guidelines Prescribing Standards for Safety and Soundness to
implement the safety and soundness standards required under the Federal law. The
guidelines set forth the safety and soundness standards that the federal banking
agencies use to identify and address problems at insured depository institutions
before capital becomes impaired. The guidelines address internal controls and
information systems; internal audit systems; credit underwriting; loan
documentation; interest rate risk exposure; asset growth; and compensation, fees
and benefits. If the appropriate federal banking agency determines that an
institution fails to meet any standard prescribed by the guidelines, the agency
may require the institution to submit to the agency an acceptable plan to
achieve compliance with the standard. If an institution fails to meet these
standards, the appropriate federal banking agency may require the institution to
submit a compliance plan.

      QUALIFIED THRIFT LENDER TEST. As a federal savings institution, the
Association is required to satisfy a qualified thrift lender test whereby it
must maintain at least 65% of its "portfolio assets" in "qualified thrift
investments" consisting primarily of residential mortgages and related
investments, including mortgage-backed and related securities. "Portfolio
assets" generally means total assets less specified liquid assets up to 20% of
total assets, goodwill and other intangible assets, and the value of property
used to conduct business. A savings association that fails the qualified thrift
lender test must either convert to a bank charter or operate under specified
restrictions. As of December 31, 2001, the Association met the qualified thrift
lender test.

      CAPITAL REQUIREMENTS. OTS capital regulations require savings institutions
to meet three minimum capital standards: a 1.5% tangible capital ratio, a 4%
leverage ratio (3% for institutions receiving the highest rating on the CAMELS
rating system) and an 8% risk-based capital ratio. In addition, the prompt
corrective action standards discussed below also establish, in effect, a minimum
2% tangible capital standard, a 4% leverage ratio (3% for institutions receiving
the highest rating on the CAMELS financial institution rating system), and,
together with the risk-based capital standard itself, a 4% Tier 1 risk-based
capital standard. OTS regulations also require that, in meeting the tangible,
leverage and risk-based capital standards, institutions must generally deduct
investments in and loans to subsidiaries engaged in activities as principal that
are not permissible for a national bank.

                                       17
<PAGE>
      The risk-based capital standard for savings institutions requires the
maintenance of Tier 1 (core) and total capital (which is defined as core capital
and supplementary capital) to risk-weighted assets of at least 4% and 8%,
respectively. In determining the amount of risk-weighted assets, all assets,
including certain off-balance sheet assets, are multiplied by a risk-weight
factor of 0% to 100%, assigned by the OTS capital regulation based on the risks
believed inherent in the type of asset. Core capital is defined as common
stockholders' equity (including retained earnings), certain noncumulative
perpetual preferred stock and related surplus and minority interests in equity
accounts of consolidated subsidiaries less intangibles other than certain
mortgage servicing rights and credit card relationships. The components of
supplementary capital currently include cumulative preferred stock, long-term
perpetual preferred stock, mandatory convertible securities, subordinated debt
and intermediate preferred stock, the allowance for loan and lease losses
limited to a maximum of 1.25% of risk-weighted assets and up to 45% of
unrealized gains on available-for-sale equity securities with readily
determinable fair market values. Overall, the amount of supplementary capital
included as part of total capital cannot exceed 100% of core capital.

      The capital regulations also incorporate an interest rate risk component.
Savings institutions with "above normal" interest rate risk exposure are subject
to a deduction from total capital for purposes of calculating their risk-based
capital requirements. For the present time, the OTS has deferred implementation
of the interest rate risk capital charge.

      At December 31, 2001, First Federal Savings had tangible capital of $11.6
million, or 20.3% of adjusted total assets, which is approximately $10.8 million
above the minimum requirement of 1.5% of adjusted total assets in effect on that
date. At December 31, 2001, First Federal Savings had core capital equal to
$11.6 million, or 20.3% of adjusted total assets, which is $9.3 million above
the minimum leverage ratio requirement of 4% as in effect on that date. At
December 31, 2001, First Federal Savings had total risk based capital of $12.2
million (including approximately $11.6 million in core capital and $.6 million
in qualifying supplementary capital) and risk-weighted assets of $25.0 million
(with no converted off-balance sheet assets); or total capital of 48.7% of
risk-weighted assets. This amount was $10.2 million above the 8% requirement in
effect on that date.

      CAPITAL DISTRIBUTIONS. OTS regulations govern capital distributions by
savings institutions, which include cash dividends, stock repurchases and other
transactions charged to the capital account of a savings institution to make
capital distributions. A savings institution must file an application for OTS
approval of the capital distribution if either (1) the total capital
distributions for the applicable calendar year exceed the sum of the
institution's net income for that year to date plus the institution's retained
net income for the preceding two years, (2) the institution would not be at
least adequately capitalized following the distribution, (3) the distribution
would violate any applicable statute, regulation, agreement or OTS-imposed
condition, or (4) the institution is not eligible for expedited treatment of its
filings. If an application is not required to be filed, savings institutions
which are a subsidiary of a holding company, as well as certain other
institutions, must still file a notice with the OTS at least 30 days before the
board of directors declares a dividend or approves a capital distribution.

      LOANS TO ONE BORROWER. Savings institutions are generally required to
follow the national bank limit on loans to one borrower. Generally, this limit
is 15% of its unimpaired capital and surplus, plus an additional 10% of
unimpaired capital and surplus, if the loan is secured by readily marketable
collateral, which is defined to include certain financial instruments and
bullion. The OTS by regulation has amended the loans to one borrower rule to
permit savings associations meeting certain requirements, including capital
requirements, to extend loans to one borrower in additional amounts under
circumstances limited essentially to loans to develop or complete residential
housing units. See "Business of First Federal Savings--Lending Activities" for
further information.

      ACTIVITIES OF ASSOCIATIONS AND THEIR SUBSIDIARIES. A savings association
may establish operating subsidiaries to engage in any activity that the savings
association may conduct directly and may establish service corporation
subsidiaries to engage in certain pre-approved activities or, with approval of
the OTS, other activities reasonably related to the activities of financial
institutions. When a savings association establishes or acquires a subsidiary or
elects to conduct any new activity through a subsidiary that the association
controls, the savings association must notify the FDIC and the OTS 30 days in
advance and provide the information each agency may, by regulation, require.
Savings associations also must conduct the activities of subsidiaries in
accordance with existing regulations and orders.

                                       18
<PAGE>

      The OTS may determine that the continuation by a savings association of
its ownership control of, or its relationship to, the subsidiary constitutes a
serious risk to the safety, soundness or stability of the association or is
inconsistent with sound banking practices. Based upon that determination, the
FDIC or the OTS has the authority to order the savings association to divest
itself of control of the subsidiary. The FDIC also may determine by regulation
or order that any specific activity poses a serious threat to the Savings
Association Insurance Fund. If so, it may require that no Savings Association
Insurance Fund member engage in that activity directly.

      TRANSACTIONS WITH AFFILIATES. Savings associations must comply with
Sections 23A and 23B of the Federal Reserve Act relative to transactions with
affiliates in the same manner and to the same extent as if the savings
association were a Federal Reserve member bank. A savings and loan holding
company, its subsidiaries and any other company under common control are
considered affiliates of the subsidiary savings association under the Home
Owners Loan Act. Generally, Sections 23A and 23B limit the extent to which the
insured association or its subsidiaries may engage in certain covered
transactions with an affiliate to an amount equal to 10% of the institution's
capital and surplus and place an aggregate limit on all transactions with
affiliates to an amount equal to 20% of capital and surplus, and require that
all transactions be on terms substantially the same, or at least as favorable to
the institution or subsidiary, as those provided to a non-affiliate. The
term"covered transaction" includes the making of loans, the purchase of assets,
the issuance of a guarantee and similar types of transactions.

      Any loan or extension of credit by First Federal Savings to an affiliate
must be secured by collateral in accordance with Section 23A.

      Three additional rules apply to savings associations. First, a savings
association may not make any loan or other extension of credit to an affiliate
unless that affiliate is engaged only in activities permissible for bank holding
companies. Second, a savings association may not purchase or invest insecurities
issued by an affiliate, other than securities of a subsidiary. Third, the OTS
may, for reasons of safety and soundness, impose more stringent restrictions on
savings associations but may not exempt transactions from or otherwise abridge
Section 23A or 23B. Exemptions from Section 23A or 23B may be granted only by
the Federal Reserve, as is currently the case with respect to all FDIC-insured
banks.

      First Federal Savings' authority to extend credit to executive officers,
directors and 10% shareholders, as well as entities controlled by those persons,
is currently governed by Sections 22(g) and 22(h) of the Federal Reserve Act,
and Regulation O thereunder. Among other things, these regulations require that
loans be made on terms and conditions substantially the same as those offered to
unaffiliated individuals and not involve more than the normal risk of repayment.
Regulation O also places individual and aggregate limits on the amount of loans
First Federal Savings may make to those persons based, in part, on First Federal
Savings' capital position, and requires certain board approval procedures to be
followed. The OTS regulations, with certain minor variances, apply Regulation O
to savings institutions.

      COMMUNITY REINVESTMENT ACT. Savings associations are required to follow
the provisions of the Community Reinvestment Act of 1977, which requires the
appropriate federal bank regulatory agency, in connection with its regular
examination of a savings association, to assess the savings association's record
in meeting the credit needs of the community serviced by the savings
associations, including low and moderate income neighborhoods. The regulatory
agency's assessment of the savings association's record is made available to the
public. Further, an assessment is required of any savings associations which has
applied, among other things, to establish a new branch office that will accept
deposits, relocate an existing office or merge or consolidate with, or acquire
the assets or assume the liabilities of, a federally regulated financial
institution. First Federal Savings received a "satisfactory" rating as a result
of its most recent examination.

SAVINGS AND LOAN HOLDING COMPANY REGULATIONS

      HOLDING COMPANY ACQUISITIONS. Federal law and regulation generally
prohibit a savings and loan holding company, without prior OTS approval, from
acquiring more than 5% of the voting stock of any other savings association or
savings and loan holding company or controlling the assets thereof. They also
prohibit, among other things, any director or officer of a savings and loan
holding company, or any individual who owns or controls more than


                                       19
<PAGE>

25% of the voting shares of First Federal of Olathe Bancorp, Inc., from
acquiring control of any savings association not a subsidiary of a savings and
loan holding company, unless the acquisition is approved by the OTS.

      HOLDING COMPANY ACTIVITIES. First Federal of Olathe Bancorp is a unitary
savings and loan holding company under federal law because First Federal Savings
is its only insured subsidiary. Formerly, a unitary savings and loan holding
company was not restricted as to the types of business activities in which it
could engage, provided that its subsidiary savings association continued to be a
qualified thrift lender. Recent legislation, however, restricts unitary saving
and loan holding companies not existing or applied for before May 4, 1999 to
activities permissible for a financial holding company as defined under the
legislation, including insurance and securities activities, and those permitted
for a multiple savings and loan holding company as described below. In view of
the holding company's size and business plan, the Board of Directors of First
Federal of Olathe Bancorp does not believe that the recent legislation will have
a material impact on the holding company. Upon any non-supervisory acquisition
by First Federal of Olathe Bancorp of another savings association as a separate
subsidiary, First Federal of Olathe Bancorp would become a multiple savings and
loan holding company and would have extensive limitations on the types of
business activities in which it could engage. The Home Owner's Loan Act limits
the activities of a multiple savings and loan holding company and its non-
insured institution subsidiaries primarily to activities permissible for the
bank holding companies under Section 4(c)(8) of the Bank Holding Company Act,
provided the prior approval of the Office of Thrift Supervision is obtained, and
to other activities authorized by Office of Thrift Supervision regulation.
Multiple savings and loan holding companies are generally prohibited from
acquiring or retaining more than 5% of a non-subsidiary company engaged in
activities other than those permitted by the Home Owners. Loan Act.

      The activities authorized by the Federal Reserve Board as permissible for
bank holding companies also must be approved by the OTS prior to being engaged
in by a multiple savings and loan holding company.

      QUALIFIED THRIFT LENDER TEST. Federal law provides that any savings and
loan holding company that controls a savings association that fails the
qualified thrift lender test, as explained under "--Federal Regulation of
Savings Associations--Qualified Thrift Lender Test," must, within one year after
the date on which the association ceases to be a qualified thrift lender,
register as and be deemed a bank holding company under all applicable laws and
regulations.

FEDERAL SECURITIES LAW

      The stock of First Federal of Olathe Bancorp is registered with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). First Federal of Olathe Bancorp is
subject to the information, proxy solicitation, insider trading restrictions and
other requirements of the SEC under the Exchange Act.

      First Federal of Olathe Bancorp stock held by persons who are affiliates
(generally officers, directors and principal stockholders) of First Federal of
Olathe Bancorp may not be resold without registration or unless sold in
accordance with certain resale restrictions. If First Federal of Olathe Bancorp
meets specified current public information requirements, each affiliate of First
Federal of Olathe Bancorp is able to sell in the public market, without
registration, a limited number of shares in any three-month period.

FEDERAL RESERVE SYSTEM

      The Federal Reserve Board requires all depository institutions to maintain
noninterest-bearing reserves at specified levels against their transaction
accounts (primarily checking, NOW and Super NOW checking accounts). At December
31, 2001 First Federal Savings was in compliance with these reserve
requirements. The balances maintained to meet the reserve requirements imposed
by the Federal Reserve Board may be used to satisfy liquidity requirements that
may be imposed by the OTS. See "- Liquidity."

      Savings and loan associations are authorized to borrow from the Federal
Reserve Bank "discount window," but Federal Reserve Board regulations require
associations to exhaust other reasonable alternative sources of funds, including
FHLB borrowings, before borrowing from the Federal Reserve Bank.


                                       20
<PAGE>
                                    TAXATION

FEDERAL TAXATION

      First Federal of Olathe Bancorp and First Federal Savings report their
income using the accrual method of accounting and will be taxed under federal
income tax laws in the same manner as other corporations with some exceptions,
including particularly First Federal Savings' reserve for bad debts discussed
below. First Federal of Olathe Bancorp's and First Federal Savings' tax years
end on December 31 of each year. The following discussion of tax matters is
intended only as a summary and does not purport to be a comprehensive
description of the tax rules applicable to First Federal Savings or First
Federal of Olathe Bancorp.

      BAD DEBT RESERVE. Historically, savings institutions such as First Federal
Savings which met certain definitional tests primarily related to their assets
and the nature of their business were permitted to establish a reserve for bad
debts and to make annual additions thereto, which may have been deducted in
arriving at their taxable income. First Federal Savings' deductions with respect
to "qualifying real property loans," which are generally loans secured by
certain interest in real property, were computed using an amount based on First
Federal Savings' actual loss experience, or a percentage equal to 8% of First
Federal Savings' taxable income, computed with certain modifications and reduced
by the amount of any permitted additions to the non-qualifying reserve. Due to
First Federal Savings' loss experience, First Federal Savings generally
recognized a bad debt deduction equal to 8% of taxable income.

      The thrift bad debt rules were revised by Congress in 1996. The new rules
eliminated the 8% of taxable income method for deducting additions to the tax
bad debt reserves for all thrifts for tax years beginning after December 31,
1995. These rules also required that all institutions recapture all or a portion
of their bad debt reserves added since the base year, defined as the last
taxable year beginning before January 1, 1988. First Federal Savings has no
post-1987 reserves that would be recaptured. For taxable years beginning after
December 31, 1995, First Federal Savings' bad debt deduction will be determined
under the experience method using a formula based on actual bad debt experience
over a period of years. The unrecaptured base year reserves will not be
recaptured as long as the institution continues to carry on the business of
banking. In addition, the balance of the pre-1988 bad debt reserves continue to
be treated under the provisions of present law referred to below that require
recapture in the case of certain excess distributions to shareholders.

      DISTRIBUTIONS. To the extent that First Federal Savings makes "nondividend
distributions" to First Federal of Olathe Bancorp, the distributions will be
considered to result in distributions from the balance of its bad debt reserve
as of December 31, 1987, or a lesser amount if First Federal Savings' loan
portfolio decreased since December 31, 1987, and then from the supplemental
reserve for losses on loans. An amount based on the supplemental reserve for
loan losses will be included in First Federal Savings' taxable income.
Nondividend distributions include distributions in excess of First Federal
Savings' current and accumulated earnings and profits, distributions in
redemption of stock and distributions in partial or complete liquidation.
However, dividends paid out of First Federal Savings' current or accumulated
earnings and profits, as calculated for federal income tax purposes, will not be
considered to result in a distribution from First Federal Savings' bad debt
reserve. The amount of additional taxable income created from an excess
distribution is an amount that, when reduced by the tax attributable to the
income, is equal to the amount of the distribution. Thus, if, First Federal
Savings makes a "nondividend distribution," then approximately one and one-half
times the amount based on the supplemental reserve for loan losses would be
includable in gross income for federal income tax purposes, assuming a 34%
corporate federal income tax rate. See "Regulation" for limits on the payment of
dividends by First Federal Savings. First Federal Savings does not intend to pay
dividends that would result in a recapture of any portion of its tax bad debt
reserve.

      CORPORATE ALTERNATIVE MINIMUM TAX. The Internal Revenue Code imposes a tax
on alternative minimum taxable income at a rate of 20%. The excess of the tax
bad debt reserve deduction using the percentage of taxable income method over
the deduction that would have been allowable under the experience method is
treated as a preference item for purposes of computing the alternative minimum
taxable income. In addition, only 90% of alternative minimum taxable income can
be offset by net operating loss carryovers. Alternative minimum taxable income
is increased by an amount equal to 75% of the amount by which First Federal
Savings' adjusted current earnings exceeds its alternative minimum taxable
income determined without regard to this preference and prior to reduction for
net

                                       21
<PAGE>

operating losses. For taxable years beginning after December 31, 1986, and
before January 1, 1996, an environmental tax of 0.12% of the excess of
alternative minimum taxable income (with certain modification) over $2.0 million
is imposed on corporations, including First Federal Savings, whether or not an
alternative minimum tax is paid.

      DIVIDENDS-RECEIVED DEDUCTION. First Federal of Olathe Bancorp may exclude
from its income 100% of dividends received from First Federal Savings as a
member of the same affiliated group of corporations. The corporate
dividends-received deduction is generally 70% in the case of dividends received
from unaffiliated corporations with which First Federal of Olathe Bancorp and
First Federal Savings will not file a consolidated tax return, except that if
First Federal of Olathe Bancorp or First Federal Savings owns more than 20% of
the stock of a corporation distributing a dividend, then 80% of any dividends
received may be deducted.

      AUDITS. The IRS has not audited First Federal Savings' federal income tax
returns for the past five years.

KANSAS TAXATION

      First Federal Savings files Kansas income tax returns. The State of Kansas
also imposes a privilege tax on savings institutions. Savings institutions are
presently taxed at a rate of up to 4.5% of net income, which is calculated based
on federal taxable income, subject to certain adjustments. If First Federal of
Olathe Bancorp generates any taxable income, it could be taxed up to the maximum
Kansas corporate rate of 7.35%.

      First Federal Savings' state tax returns have not been audited by the
State of Kansas during the past five years.

EXECUTIVE OFFICERS OF FIRST FEDERAL SAVINGS AND FIRST FEDERAL OF OLATHE BANCORP
WHO ARE NOT DIRECTORS

      None.

ITEM 2. DESCRIPTION OF PROPERTY

      At December 31, 2001, First Federal Savings conducted its business from
its headquarters and sole office located at 100 East Park, Olathe, Kansas. First
Federal Savings' main office is leased, with the lease term expiring in 2004.
The estimated net book value of First Federal Savings' leasehold improvements,
and furniture and equipment at December 31, 2001 was approximately $8,080.

      First Federal Savings believes that its current facilities are adequate to
meet the present needs of First Federal Savings and its holding company.
However, if First Federal Savings determines to expand its staff, First Federal
Savings may need to obtain new facilities or expand its existing facility.

ITEM 3. LEGAL PROCEEDINGS

      First Federal Savings is involved, from time to time, as plaintiff or
defendant in various legal actions arising in the normal course of its
businesses. At December 31, 2001, First Federal Savings was not involved in any
legal proceedings that it believes would have a material adverse effect on the
financial condition or operations of First Federal Savings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 2001.

                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS

      Page 43 of the attached 2001 Annual Report to Shareholders is herein
incorporated by reference.


                                       22
<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

      Pages 5 to 14 of the attached 2001 Annual Report to Shareholders are
herein incorporated by reference.

ITEM 7. FINANCIAL STATEMENTS

      Pages 15 to 42 of the attached 2001 Annual Report to Shareholders are
herein incorporated by reference.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

      First Federal of Olathe Bancorp has previously filed a Current Report on
Form 8-K filed within 24 months prior to the date of the most recent financial
statements reporting a change of accountants. In the Form 8-K, First Federal of
Olathe Bancorp did not report any disagreements on any matter of accounting
principle or financial statement disclosure.

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      Information concerning Directors of the Registrant is incorporated herein
by reference from First Federal of Olathe Bancorp's definitive Proxy Statement
for the Annual Meeting of Shareholders scheduled to be held on April 25, 2002.

ITEM 10. EXECUTIVE COMPENSATION

      Information concerning executive compensation is incorporated herein by
reference from First Federal of Olathe Bancorp's definitive Proxy Statement for
the Annual Meeting of Shareholders scheduled to be held on April 25, 2002.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      Information concerning security ownership of certain beneficial owners and
management is incorporated herein by reference from First Federal of Olathe
Bancorp's definitive Proxy Statement for the Annual Meeting of Shareholders
scheduled to be held on April 25, 2002.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Information concerning certain relationships and transactions is
incorporated herein by reference from First Federal of Olathe Bancorp's
definitive Proxy Statement for the Annual Meeting of Shareholders scheduled to
be held on April 25, 2002.

ITEM 13. EXHIBITS LIST AND REPORTS ON FORM 8-K

      (a)(1) FINANCIAL STATEMENTS:

      The following information appearing in the Registrant's Annual Report to
Shareholders for the year ended December 31, 2001, is incorporated by reference
in this Form 10-KSB Annual Report as Exhibit 13.

<TABLE>
<CAPTION>
                                                                                             Page in
                                                                                              Annual
               Annual Report Section                                                          Report
               ---------------------                                                          ------
<S>                                                                                            <C>
Report of Independent Auditors............................................................      15

Consolidated Balance Sheets at December 31, 2001 and 2000.................................     16-17
</TABLE>


                                       23
<PAGE>

<TABLE>
<S>                                                                                             <C>
Consolidated Statements of Income for the Years ended December 31, 2001 and 2000..........      18

Consolidated Statements of Changes in Stockholders' Equity for the Years ended
   December 31, 2001 and 2000.............................................................      19

Consolidated Statements of Cash Flows for the Years ended December 31, 2001 and 2000......      20

Notes to Consolidated Financial Statements................................................      21
</TABLE>

      (a)(2) FINANCIAL STATEMENT SCHEDULES - All financial statement schedules
have been omitted as the information is either inapplicable or not required
under the related instructions.

      (a)(3) EXHIBITS - The following exhibits are either filed or attached as
part of this report or are incorporated herein by reference.

                                                                  Reference to
Regulation                                                      Prior Filing or
S-B Exhibit                                                      Exhibit Number
  Number                     Document                           Attached Hereto
-----------  -------------------------------------              ---------------
  2          Plan of acquisition, reorganization,                       None
             arrangement, liquidation or succession

  3.1        Articles of Incorporation                                   *

  3.2        Bylaws                                                      *

  4          Instruments defining the rights of                          *
             security holders, including indentures

  9          Voting trust agreement                                     None

 10.1        Stock Option Plan                                          **

 10.2        Recognition and Retention Plan                             **

 10.3        Form of Employment Agreement for Mitch Ashlock.             *

 10.4        Employee Stock Ownership Plan                               *

 11          Statement re: computation of per share earnings            None

 12          Statement re: computation or ratios                    Not required

 13          Annual Report to Security Holders                           13

 16          Letter re: change in certifying accountant                 None

 18          Letter re: change in accounting principles                 None

 21          Subsidiaries of Registrant                                  21

 22          Published report regarding matters                         None
              submitted to vote of security holders

 23          Consent of experts and counsel                             None

 24          Power of Attorney                                      Not Required

 28          Information from reports furnished to                      None
              State insurance regulatory authorities


                                       24
<PAGE>

                                                                  Reference to
Regulation                                                      Prior Filing or
S-B Exhibit                                                      Exhibit Number
  Number                     Document                           Attached Hereto
-----------  -------------------------------------              ---------------
 99          Additional exhibits                                        None

----------
      *Filed on December 16, 1999, as exhibits to the Registrant's Form SB-2
registration statement (Registration No. 333-92929), pursuant to the Securities
Act of 1933. All of such previously filed documents are hereby incorporated
herein by reference in accordance with Item 601 of Regulation S-B.

      **Filed on March 30, 2001, as exhibits to the Registrant's Annual Report
on Form 10-KSB for the year ended December 31, 2000 (File No. 0-30680).

      (b) REPORTS ON FORM 8-K -- A Form 8-K was filed on December 6, 2001 to
report under Item 5 of the Form 8-K the declaration of a special cash
distribution of $4.00 per share.


                                       25
<PAGE>

                                   SIGNATURES

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

                                        FIRST FEDERAL OF OLATHE BANCORP, INC.


Date: March 28, 2002                    By: /s/ MITCH ASHLOCK
                                           -------------------------------------
                                           Mitch Ashlock, Chief Executive
                                             Officer

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


By: /s/ MITCH ASHLOCK                   By: /s/ DONALD K. ASHLOCK
   --------------------------------        -------------------------------------
   Mitch Ashlock, Chief Executive          Donald K. Ashlock, Chairman of the
     Officer and Director                    Board
   (Principal Executive, Financial
     and Accounting Officer)

Date: March 28, 2002                    Date: March 28, 2002


By: /s/ JOHN M. BOWEN                   By: /s/ CARL R. PALMER
   --------------------------------        -------------------------------------
   John M. Bowen, Director                 Carl R. Palmer, Director

Date: March 28, 2002                    Date: March 28, 2002


By: /s/ MARVIN E. WOLLEN
   --------------------------------
   Marvin E. Wollen, Director

Date: March 28, 2002


                                       26
<PAGE>

                                INDEX TO EXHIBITS

Exhibit 13        2001 Annual Report to Stockholders
Exhibit 21        Subsidiaries of the Registrant


                                       27