EXHIBIT 13


<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION


                       1999 ANNUAL REPORT TO STOCKHOLDERS





<PAGE>



                       FIRST KANSAS FINANCIAL CORPORATION
                                  ANNUAL REPORT


                                TABLE OF CONTENTS

                                                                            Page
                                                                           ----

Letter to Stockholders.........................................................1

Corporate Profile..............................................................2

Stock Price Information........................................................3

Selected Financial Ratios and Other Data.......................................3

Management's Discussion and Analysis...........................................4

Report of Independent Auditors...............................................F-1

Consolidated Financial Statements............................................F-2

Notes to Consolidated Financial Statements...................................F-7

Corporate Information.................................................Back Cover


<PAGE>




To Our Stockholders:

         On behalf of our Board of Directors  and  employees,  we are pleased to
present the Annual Report to Stockholders of First Kansas Financial  Corporation
(the  "Company").  As you will see from the Annual Report,  1999 was an eventful
year for the Company  and its  wholly-owned  subsidiary,  First  Kansas  Federal
Savings Bank (the "Bank").

         The  Company  continues  to invest  the net  proceeds  from its  public
offering.  We  expect  that the  investment  of  these  proceeds  will  generate
increased core earnings in future periods.

         For the  fiscal  year ended  December  31,  1999,  the  Company  earned
$855,000 or $.63 per share,  as compared to net income of $720,000,  or $.50 per
share, for the fiscal year ended December 31, 1998.

         At December 31, 1999, the Company's assets totalled $142.5 million,  as
compared to $107.2 million at December 31, 1998.  Stockholders' equity was $18.9
million or $14.17 per share at December 31, 1999,  as compared to  stockholders'
equity of $21.4 million or $13.80 per share at December 31, 1998.

         We have  accomplished  much  this  year in terms of  growth,  earnings,
market share and service.  Our  employees are top notch and are dedicated to the
tasks ahead of us. We appreciate  your support and, with you, we look forward to
our future.

                                  Sincerely,


                                  /s/ Larry V. Bailey
                                  ------------------------------------
                                  Larry V. Bailey
                                  President and Chief Executive Officer


<PAGE>



Corporate Profile

         The Company is a Kansas  corporation  organized  in February of 1998 at
the direction of First Kansas Federal Savings Association (the "Association") to
acquire all of the capital stock that the  Association  issued in its conversion
from the mutual to stock form of ownership (the "Conversion"). On June 25, 1998,
the Association completed the Conversion and became a wholly owned subsidiary of
the  Company.   Pursuant  to  the  Conversion,   First  Kansas  Federal  Savings
Association  changed its name to First Kansas Federal Savings Bank (the "Bank").
The Company is a unitary savings and loan holding company which,  under existing
laws,  generally is not restricted in the types of business  activities in which
it may engage,  provided that the Bank retains a specified  amount of its assets
in housing-related  investments. The Company conducts no significant business or
operations  of its own other than  holding all of the  outstanding  stock of the
Bank and  investing the  Company's  portion of the net proceeds  obtained in the
Conversion.

         The Bank was originally chartered in 1899 as "The Consolidated Building
and Loan Association" and commenced operations that same year. In 1938, the Bank
became a member of the Federal Home Loan Bank System, obtained a federal charter
and  changed  its  name to  "First  Federal  Savings  and  Loan  Association  of
Osawatomie." In 1983, the Bank changed its name to "First Kansas Federal Savings
Association."

         The Bank is a federally  chartered stock savings bank  headquartered in
Osawatomie,  Kansas,  with six branch offices  located in the Kansas counties of
Miami,  Bourbon,  Mitchell and Phillips.  The Bank is subject to examination and
comprehensive  regulation  by the Office of Thrift  Supervision  ("OTS") and its
deposits  are  federally  insured  by the  Savings  Association  Insurance  Fund
("SAIF") of the Federal Deposit Insurance  Corporation  ("FDIC").  The Bank is a
member of and owns  capital  stock in the  Federal  Home Loan Bank  ("FHLB")  of
Topeka, which is one of the 12 regional banks in the FHLB System.

         The Bank  operates a  traditional  savings  bank  business,  attracting
deposit accounts from the general public and using those deposits, together with
other funds, primarily to originate and invest in loans secured by single-family
residential  real estate and investment  securities,  including  mortgage-backed
securities.

Stock Price Information

         The  Company's  common  stock is traded on the Nasdaq  National  Market
under the trading  symbol of "FKAN." The following  table  reflects high and low
sale closing prices as published by the Nasdaq  National Market for the calendar
quarters  indicated.  The prices  reflect  inter-dealer  prices,  without retail
mark-up, mark-down, or commission, and may not represent actual transactions.


                                       2

<PAGE>



                                         High           Low         Dividends
                                         ----           ---         ---------
1998
Second quarter (from June 25, 1998)     $12.38         $10.00          --
Third quarter                           $12.50         $10.00          --
Fourth quarter                          $10.75         $ 9.00          --

1999
First Quarter                           $11.00         $10.25          --
Second Quarter                          $11.00         $10.00      $.05/share
Third Quarter                           $11.38         $10.69      $.05/share
Fourth Quarter                          $11.75         $11.00      $.05/share

         The  number of  shareholders  of record of common  stock as of March 3,
2000 was  approximately  552.  This does not  reflect  the  number of persons or
entities who held stock in nominee or "street"  name through  various  brokerage
firms.  At March 3, 2000,  there were 1,332,309  shares of the Company's  common
stock outstanding.

         The  Company's  ability to pay  dividends  to  stockholders  is largely
dependent upon the dividends it receives from the Bank. The Bank may not declare
or pay a cash dividend on any of its stock if the effect thereof would cause the
Bank's  regulatory  capital to be reduced below (1) the amount  required for the
liquidation  account  established in connection with the Conversion,  or (2) the
regulatory requirements imposed by the OTS.

Selected Financial Ratios and Other Data

                                                       At or For the Years Ended
                                                             December 31,
                                                       -------------------------
                                                       1999              1998
                                                       ----              ----

Return on average assets                                .63%              .71%
Return on average equity                               4.20              4.93
Average equity to average assets ratios               14.87             14.33
Equity to assets at period end                        13.24             20.00
Net interest rate spread                               2.26              2.55
Net yield on average interest-earning
assets                                                 6.63              7.00
Non-performing loans to total assets                    .01               .01
Allowance for loan loss to total loans                  .50               .50



                                       3

<PAGE>



                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


         The following is a discussion of the financial condition and results of
operations of the Company and the Bank, and should be read in  conjunction  with
the accompanying Consolidated Financial Statements.

General

         The Company was formed in 1998.  Its results  from  operations  consist
primarily  of interest  income  from the  investing  of funds from the  proceeds
generated by the sale of common stock.

         The Bank's  results of  operations  depend  primarily  on net  interest
income,  which is determined by (i) the difference between rates of interest the
Bank  earns on its  interest-earning  assets  and the  rates  the  Bank  pays on
interest-bearing  liabilities  (interest  rate  spread),  and (ii) the  relative
amounts of interest-earning assets and interest-bearing  liabilities. The Bank's
results of  operations  are also  affected  by  noninterest  income,  including,
primarily,  income from customer  deposit  account  service  charges,  gains and
losses  from  the  sale  of  investments  and  mortgage-backed   securities  and
noninterest expense, including,  primarily,  compensation and employee benefits,
federal deposit insurance  premiums,  office occupancy cost, and data processing
cost.  The Bank's  results of  operations  are also  affected  significantly  by
general and economic and competitive conditions,  particularly changes in market
interest rates, government policies and actions of regulatory  authorities,  all
of which are beyond the Bank's control.

Market Risk Analysis

         Qualitative Analysis. The Bank's assets and liabilities may be analyzed
by  examining  the  extent to which  they are  interest  rate  sensitive  and by
monitoring  the  expected  effects of  interest  rate  changes on the Bank's net
portfolio value.

         An asset or liability is interest rate sensitive within a specific time
period if it will  mature or  reprice  within  that time  period.  If the Bank's
assets  mature  or  reprice  more  quickly  or  to a  greater  extent  than  its
liabilities,  the Bank's net portfolio  value and net interest income would tend
to increase  during periods of rising interest rates but decrease during periods
of falling  interest rates.  Conversely,  if the Bank's assets mature or reprice
more slowly or to a lesser extent than its liabilities, the Bank's net portfolio
value and net interest  income would tend to decrease  during  periods of rising
interest rates but increase during periods of falling interest rates. The Bank's
policy has been to address the  interest  rate risk  inherent in the  historical
savings institution business of originating long-term loans funded by short-term
deposits by  maintaining  sufficient  liquid  assets for material and  prolonged
changes  in  interest  rates and by  originating  loans  with  shorter  terms to
maturity such as construction,  commercial and consumer loans. In addition,  the
Bank has invested in adjustable-rate  mortgage-backed  securities as an interest
rate risk management strategy.

         Quantitative  Analysis.  In order to encourage savings  associations to
reduce  their  interest  rate  risk,  the OTS  adopted a rule  incorporating  an
interest rate risk ("IRR") component into the risk-

                                       4


<PAGE>


based capital rules.  The IRR component is a dollar amount that will be deducted
from total capital for the purpose of  calculating an  institution's  risk-based
capital  requirement  and is  measured  in terms of the  sensitivity  of its net
portfolio  value  ("NPV") to changes in interest  rates.  NPV is the  difference
between  incoming and outgoing  discounted cash flows from assets,  liabilities,
and off-balance sheet contracts.  An institution's IRR is measured as the change
to its NPV as a result of a hypothetical 200 basis point ("bp") change in market
interest  rates.  A  resulting  change in NPV of more  than 2% of the  estimated
present value of total assets ("PV") will require the institution to deduct from
its capital  50% of that  excess  change.  The rules  provide  that the OTS will
calculate the IRR component quarterly for each institution.  Based on the Bank's
asset size and risk-based capital, the Bank has been informed by the OTS that it
is exempt from this rule. Nevertheless,  the following table presents the Bank's
NPV at  December  31,  1999,  as  calculated  by the  OTS,  based  on  quarterly
information voluntarily provided to the OTS.

       Changes
      in Market                  Net Portfolio Value
                        ---------------------------------
    Interest Rates      $ Amount     $ Change    % Change   NPV Ratio(1)
    --------------      --------     --------    --------   ------------
    (basis points)      (Dollars in Thousands)
           + 300         $5,238      $(9,085)       - 63%       4.13%
           + 200         $8,781      $(5,542)       - 39%       6.67%
           + 100        $11,820      $(2,503)       - 17%       8.69%
               0        $14,323         $ --          --       10.23%
           - 100        $16,272       $1,949      + 0.14       11.34%
           - 200        $16,702       $2,379        + 17%      11.48%
           - 300        $16,514       $2,191        + 15%      11.24%

---------------
(1)    Calculated as the estimated NPV divided by present value of total assets.

         Computations  of  prospective  effects of  hypothetical  interest  rate
changes are based on numerous  assumptions,  including relative levels of market
interest rates,  prepayments and deposit  run-offs and should not be relied upon
as  indicative  of actual  results.  Certain  shortcomings  are inherent in such
computations.   Although   certain  assets  and  liabilities  may  have  similar
maturities  or periods of  repricing,  they may react at different  times and in
different degrees to changes in market rates of interest.  The interest rates on
certain types of assets and  liabilities  may fluctuate in advance of changes in
market interest rates,  while rates on other types of assets and liabilities may
lag  behind  changes  in  market  interest  rates.  In the  event of a change in
interest  rates,   prepayments  and  early   withdrawal   levels  could  deviate
significantly  from those  assumed in making the  calculations  set forth above.
Additionally,  an  increased  credit  risk may result as many  borrowers  may be
unable to service their debt in the event of an interest rate increase.

         The Bank's  board of directors  reviews the Bank's asset and  liability
policies on an annual basis.  The board of directors  meets  quarterly to review
interest rate risk and trends, as well as

                                       5
<PAGE>

liquidity  and  capital  ratios and  requirements.  Management  administers  the
policies and determinations of the board of directors with respect to the Bank's
asset and liability  goals and  strategies.  The Bank expects that its asset and
liability  policies  and  strategies  will  continue  as  described  so  long as
competitive and regulatory  conditions in the financial institution industry and
market interest rates continue as they have in recent years.

Financial Condition

Total assets  increased $35.3 million or 33.0% to $142.5 million at December 31,
1999 from $107.2  million at December  31,  1998.  The  increase  was  primarily
attributable to an increase of $35.4 million in mortgage-backed  securities held
to maturity,  a $6.7 million  increase in our loan  portfolio and a $1.5 million
increase in our investment  securities held to maturity,  partially  offset by a
$4.1  million  redeployment  of cash and  cash  equivalents  and a $6.5  million
paydown in mortgage  backed  securities  available for sale.  Total  liabilities
increased  $37.9  million or 44.2% to $123.7  million at December  31, 1999 from
$85.8 million at December 31, 1998. The increase was primarily attributable to a
$39.9 million  increase in FHLB borrowings  offset by a $2.1 million decrease in
our deposits. The growth in mortgage-backed securities was part of our arbitrage
strategy with the FHLB borrowings as the underlying  source of funds. The growth
in the loan portfolio was the result of our success in purchasing  loans to meet
our asset mix needs throughout the year.


                                       6
<PAGE>

Average Balance Sheet

         The following table sets forth a summary of average  balances of assets
and liabilities as well as average yield and rate information.  Average balances
are  based  upon  month-end  balances,  however,  we do not  believe  the use of
month-end  balances  differs  significantly  from an  average  based  upon daily
balances. There has been no tax equivalent adjustments made to yields.
<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                              --------------------------------------------------------------------------------------
                                                                 1999                                           1998
                                              -------------------------------------------     --------------------------------------
                                                 Average                                        Average
                                              Outstanding      Interest                       Outstanding    Interest
                                                 Balance      Earned/Paid      Yield/Rate       Balance    Earned/Paid    Yield/Rate
                                                 -------      -----------      ----------       -------    -----------    ----------
<S>                                            <C>              <C>            <C>           <C>              <C>          <C>
Interest-earning assets:
  Loans receivable(1)                           $ 43,655         $3,345           7.66%        $ 43,978         $3,528        8.02%
  Investment securities                            6,155            391           6.35%           3,979            259        6.51%
  Mortgage-backed securities                      77,427          4,692           6.06%          42,240          2,570        6.08%
  Interest-bearing deposits                        1,733            121           6.98%           6,200            389        6.27%
  FHLB stock                                       1,594            108           6.78%             650             48        7.38%
                                                --------         ------          -----         --------         ------       -----
     Total interest-earning assets(1)            130,564          8,657           6.63%          97,047          6,794        7.00%
                                                                 ------          -----                          ------       -----
Noninterest-earning assets                         6,222                                          4,513
                                                --------                                       --------
     Total assets                               $136,786                                       $101,560
                                                ========                                        =======
Interest-bearing liabilities:
  NOW and investment deposits                    $24,194            574           2.37%        $ 23,593            561        2.38%
  Savings and certificate accounts                60,733          2,965           4.88%          60,901          3,185        5.23%
  FHLB borrowings                                 30,096          1,486           4.94%             808             52        6.44%
                                                --------         ------          -----         --------         ------       -----
     Total interest-bearing liabilities          115,023          5,025           4.37%          85,302          3,798        4.45%
                                                                 ------          -----                          ------       -----
Noninterest-bearing liabilities:                   1,427                                          1,708
                                                --------                                       --------
  Total liabilities                              116,450                                         87,010
                                                --------                                       --------
Equity                                            20,336                                         14,550
                                                --------                                       --------
     Total liabilities and equity               $136,786                                       $101,560
                                                ========                                        =======
Net interest income                                              $3,632                                         $2,996
                                                                 ======                                          =====
Net interest rate spread(2)                                                       2.26%                                       2.55%
                                                                                  =====                                     ======
Net earning assets                              $ 15,541                                       $ 11,745
                                                ========                                        =======
Net yield on interest-earning assets(3)                                           2.78%                                       3.09%
                                                                                  =====                                     ======
Average interest-earning assets to average
  interest-bearing liabilities                                                  113.51%                                     113.77%
                                                                                =======                                     ======
</TABLE>
------------------------
(1)  Includes  non-accrual  loans and  loans  held-for-sale.  Calculated  net of
     deferred  loan  fees,  loan  discounts,  loans in  process  and  loan  loss
     reserves.
(2)  Net interest rate spread represents the difference between the average rate
     on  interest-earning  assets  and  the  average  cost  of  interest-bearing
     liabilities.
(3)  Net  interest  margin  represents  net interest  income  divided by average
     interest-earning assets.

                                       7
<PAGE>



         The table below sets forth  certain  information  regarding  changes in
interest  income  and  interest  expense  for the  periods  indicated.  For each
category   of   interest-earning   assets  and   interest-bearing   liabilities,
information  is  provided  on  changes  attributable  to (i)  changes  in volume
(changes  in  average  volume  multiplied  by old rate);  (ii)  changes in rates
(changes in rate multiplied by old average volume); (iii) changes in rate-volume
(changes in rate multiplied by the change in average volume).
<TABLE>
<CAPTION>
                                                                    Year Ended December 31,
                                                           -----------------------------------------
                                                                          1999 vs. 1998
                                                           -----------------------------------------
                                                                       Increase/(Decrease)
                                                                              Due to
                                                           -----------------------------------------
                                                                                    Rate/
                                                            Volume        Rate      Volume     Total
                                                            ------        ----      ------     -----
                                                                     (Dollars in thousands)
<S>                                                        <C>        <C>        <C>        <C>
Interest-earning assets:
  Loans receivable(1)......................................  $   (26)   $  (158)   $     1    $  (183)
  Investment securities....................................      142         (6)        (3)       132
  Mortgage-backed securities...............................    2,141        (10)        (9)     2,122
  Interest-bearing deposits................................     (280)        44        (32)      (268)
  FHLB stock...............................................       70         (4)        (6)        60
                                                             -------     ------     ------     ------
     Total interest-earning assets                             2,046       (135)       (48)     1,863
                                                             -------     ------     ------     ------
Interest-bearing liabilities:
  NOW and money market deposits............................       14         (1)        (0)        13
  Savings and certificate accounts.........................       (9)      (212)         1       (220)
  FHLB borrowings..........................................    1,885        (12)      (439)     1,434
                                                             -------     ------     ------     ------
     Total interest-bearing liabilities....................    1,890       (225)      (438)     1,227
                                                             -------     ------     ------     ------
Increase in net interest income............................  $   156    $    90    $   390    $   636
                                                             -------     ------     ------     ------
</TABLE>


                                       8


<PAGE>



Results of Operations for the Years Ended December 31, 1999 and 1998

         Net  Income.  Our net  income  increased  $135,000  for the year  ended
December  31,  1999,  to $855,000  as  compared  to $720,000  for the year ended
December  31,  1998.  This  increase was  primarily  attributable  to a $636,000
increase in net interest  income and a $61,000  increase in noninterest  income,
partially offset by a $506,000 increase in noninterest expense.

         Net  Interest  Income.  Net  interest  income  is the most  significant
component of our income from  operations.  Net interest income is the difference
between  interest  we  receive  on  interest-earning  assets,  primarily  loans,
investment   and   mortgage-backed   securities   and   interest   we   pay   on
interest-bearing  liabilities,  primarily deposits and borrowings.  Net interest
income depends on the volume of and rates earned on interest-earning  assets and
the volume of and rates paid on interest-bearing liabilities.

         Our net interest income  increased  $636,000 or 21.2% to $3,632,000 for
the year ended December 31, 1999,  compared to $2,996,000 for the same period in
1998.  The  increase  was  primarily  due to the increase in average net earning
assets from $11.7 million in 1998 to $15.5 million in 1999 as well as the spread
earned on the $38 million of arbitrage transactions executed in 1999.

         The  increase in our average  interest-bearing  liabilities  from $85.3
million in 1998 to $115 million in 1999  reflects the growth in FHLB advances to
fund the arbitrage transactions.

         Our net interest  rate spread  decreased  from 2.55% for the year ended
December 31, 1998 to 2.26% for the year ended December 31, 1999 primarily due to
the smaller  margins  received  on the  arbitrage  transactions  compared to the
remainder of the asset/liability portfolio.

         Provision for Loan Losses.  Our provision for loan loss was $36,000 for
the year ended  December  31,  1999  compared  to $30,000 for the same period in
1998.  The  allowance  for  loan  losses  was  $241,000  or  .50%  of net  loans
outstanding  at  December  31,  1999  compared  to  $206,000 or .50% of net loan
outstanding at December 31, 1998.

         Historically, we have emphasized our loss experience over other factors
in establishing the provision for loan losses.  We review the allowance for loan
losses in relation to (i) our past loan loss experience, (ii) known and inherent
risks in our portfolio,  (iii) adverse situations that may affect the borrower's
ability to repay, (iv) the estimated value of any underlying collateral, and (v)
current economic  conditions.  Management believes the allowance for loan losses
is at a level that is adequate to provide for estimated losses.  However,  there
can be no assurance that further additions will not be made to the allowance and
that such losses will not exceed the  estimated  amount.  See "Business of First
Kansas Federal  Savings Bank --  Non-performing  and Problem Assets -- Allowance
for Loan Losses."

         Noninterest  income.  Our noninterest  income increased $61,000 or 7.5%
from  $811,000  in 1998 to  $872,000 in 1999.  The  increase in our  noninterest
income was  primarily  due to an increase in our deposit  account  service  fees
generated by our Totally Free Checking program.


                                       9

<PAGE>

         Noninterest  expense.  Our noninterest  expense  increased  $506,000 or
19.6%  from  $2,585,000  in 1998 to  $3,091,000  in 1999.  The  increase  in our
non-interest   expense  was  due  primarily  to  a  $221,000   increase  in  our
compensation and benefits,  a $146,000 increase in other expense (most notably a
full  year's  expense  related to the costs of a public  company)  and a $76,000
increase in occupancy and equipment.  Costs associated with our Restricted Stock
and Employee Stock Ownership  Plans were the primary  components of the increase
in compensation  and benefits.  Occupancy and equipment  expense  increased as a
result of the expenses at our new Paola branch facility and the major remodeling
of our Louisburg office.

         Income Tax  Expense.  Our income tax  expense  increased  $50,000  from
$472,000 in 1998 to 522,000 in 1999.  Our effective tax rate was 37.9% and 39.6%
for the years ended December 31, 1999 and 1998, respectively.

Liquidity and Capital Resources

         We are required to maintain  minimum levels of liquid assets as defined
by OTS regulations.  This requirement,  which varies from time to time depending
upon economic  conditions and deposit  flows,  is based upon a percentage of our
deposits and short-term  borrowings.  The required ratio currently is 4% and our
regulatory  liquidity  ratio  average was 50.81% and 26.67% at December 31, 1999
and 1998, respectively.

         Our  primary  sources  of funds are  deposits,  repayment  of loans and
mortgage-backed   securities,    maturities   of   investment   securities   and
interest-bearing  deposits  with other banks,  advances from the FHLB of Topeka,
and funds  provided  by  operations.  While  scheduled  repayments  of loans and
mortgage-backed   securities  and   maturities  of  investment   securities  are
predictable  sources of funds,  deposit flows and loan  prepayments  are greatly
influenced  by the general  level of interest  rates,  economic  conditions  and
competition.  We use our liquidity  resources  principally  to fund existing and
future loan  commitments,  maturing  certificates  of deposit and demand deposit
withdrawals,  to invest in other interest-earning assets, to maintain liquidity,
and to meet operating expenses.

         Net cash  provided by our  operating  activities  (the cash  effects of
transactions  that enter into our  determination  of net  income  e.g.  non-cash
items,  amortization and  depreciation,  provision for loan losses) for the year
ended  December  31, 1999 was  $1,250,000  as compared to $757,000  for the year
ended December 31, 1998.

         Net cash used in our investing  activities (i.e. cash payments and cash
receipts,   primarily  from  our  investment   securities  and   mortgage-backed
securities  portfolio and our loan  portfolio)  for the year ended  December 31,
1999 totaled  $39.7  million,  a change of $31.8 million from December 31, 1998.
The  change  was  primarily   attributable   to  purchases  of  investment   and
mortgage-backed securities of $50.8 million in 1999 as compared to $28.7 million
in 1998 and an increase in loans purchased of $8.5 million from $213,000 in 1998
to $8.7 million in 1999.  These changes were offset by an increase on paydown of
mortgage-backed securities from $10.8 million in 1998 to $19.8 million in 1999.

                                       10
<PAGE>


         Net cash  provided by our financing  activities  for 1999 totaled $34.4
million, an increase of $23.7 million from 1998. This change was attributable to
net increase of FHLB Advances of $39.9 million which were used as the underlying
source of funds for $38  million  in  arbitrage  transactions.  This  change was
partially  offset by our stock buy backs for the Treasury and  Restricted  Stock
Plan totaling $3.2 million.

Year 2000

         Like many financial  institutions,  we rely on computers to conduct our
business and information  systems  processing.  Industry  experts were concerned
that on January 1, 2000,  some computers  might not be able to interpret the new
year properly,  causing  computer  malfunctions.  Some banking  industry experts
remain  concerned  that some  computers may not be able to interpret  additional
dates in the year 2000  properly.  We have  operated and  evaluated our computer
operating  systems  following January 1, 2000 and have not identified any errors
or experienced any computer system malfunctions. We will continue to monitor our
information systems to assess whether our systems are at risk of misinterpreting
any future dates and will develop  appropriate  contingency plans to prevent any
potential system malfunction or correct any system failures. The Company has not
been informed of any such problem  experienced  by its vendors or its customers,
nor by any of the municipal agencies that provide services to the Company.

         Nevertheless,  it is too soon to  conclude  that  there will not be any
problems  arising  from  the  Year  2000  problem,  particularly  at some of the
Company's vendors.  The Company will continue to monitor its significant vendors
of goods and services  with respect to Year 2000  problems they may encounter as
those issues may effect the Company's ability to continue  operations,  or might
adversely  affect the Company's  financial  position,  results of operations and
cash  flows.  The  Company  does not  believe at this time that these  potential
problems  will  materially  impact the ability of the  Company to  continue  its
operations, however, no assurance can be given that this will be the case. Total
costs to become Year 2000  compliant  amounted to $62,000  through  December 31,
1999.

         The expectations of the Company  contained in this section on Year 2000
are  forward-looking  statements  within the meaning of the  Private  Securities
Litigation  Reform Act of 1995 and involve  substantial  risks and uncertainties
that may cause actual results to differ  materially  from those indicated by the
forward looking  statements.  All forward looking statements in this section are
based on information available to the Company on the date of this document,  and
the Company assumes no obligation to update such forward looking statements.

Impact of Recently Issued Accounting Standards

         The FASB issued  SFAS No.  133,  Accounting  for  Derivative  Financial
Instruments and Hedging  Activities,  in June 1998.  This statement  establishes
accounting and reporting standards for derivative instruments, including certain
derivative  instruments  embedded in other contracts and for hedging activities.
SFAS No. 133, as amended by SFAS No. 137, is effective  for all fiscal  quarters
of fiscal years beginning after June 15, 2000 and will be adopted by the Company
January 1, 2001. The adoption of SFAS No. 133 is not expected to have a material
impact on the Company's consolidated financial statements.

                                       11

<PAGE>
                               [KPMG LETTERHEAD]

1000 Walnut, Suite 1600
P.O. Box 13127
Kansas City, MO  64199


                          Independent Auditors' Report



     The Board of Directors
     First Kansas Financial Corporation:


     We have  audited  the  accompanying  consolidated  balance  sheets of First
     Kansas  Financial  Corporation  and subsidiary (the Company) as of December
     31,  1999 and 1998 and the related  consolidated  statements  of  earnings,
     stockholders' equity and comprehensive income, and cash flows for the years
     then ended. These consolidated  financial statements are the responsibility
     of the Company's management. Our responsibility is to express an opinion on
     these consolidated financial statements based on our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
     standards.  Those  standards  require that we plan and perform the audit to
     obtain  reasonable  assurance  about  whether  the  consolidated  financial
     statements are free of material misstatement.  An audit includes examining,
     on a test basis,  evidence  supporting  the amounts and  disclosures in the
     consolidated  financial  statements.  An audit also includes  assessing the
     accounting principles used and significant estimates made by management, as
     well  as   evaluating   the  overall   consolidated   financial   statement
     presentation. We believe that our audits provide a reasonable basis for our
     opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
     present fairly, in all material  respects,  the financial position of First
     Kansas  Financial  Corporation  and  subsidiary as of December 31, 1999 and
     1998 and the results of their operations and their cash flows for the years
     then ended, in conformity with generally accepted accounting principles.


                                   /s/ KPMG LLP


     Kansas City, Missiouri
     March 3, 2000




<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                           Consolidated Balance Sheets

                           December 31, 1999 and 1998
                                 (In thousands)




<TABLE>
<CAPTION>
                                               Assets                                   1999          1998
                                                                                     -----------    ----------
<S>                                                                                <C>              <C>
Cash and cash equivalents (note 3)                                                 $      4,090         8,143
Investment securities held-to-maturity
    (approximate fair value of $5,963 and $4,729, respectively) (note 4)                  6,261         4,712
Mortgage-backed securities available-for-sale (note 5)                                   20,795        27,282
Mortgage-backed securities held-to-maturity
    (approximate fair value of $55,597 and $22,664, respectively) (note 5)               57,965        22,521
Loans receivable, net (note 6)                                                           47,751        41,069
Stock in Federal Home Loan Bank (FHLB) of Topeka, at cost                                 2,114           509
Premises and equipment, net (note 7)                                                      2,213         1,775
Real estate held for development (note 8)                                                   357           361
Accrued interest receivable:
    Investment and mortgage-backed securities                                               506           295
    Loans receivable                                                                        230           190
Prepaid expenses and other assets                                                           264           359
                                                                                     -----------    ----------

             Total assets                                                          $    142,546       107,216
                                                                                     ===========    ==========

                                Liabilities and Stockholders' Equity

Liabilities:
    Deposits (note 10)                                                             $     82,317        84,436
    Advances from borrowers for property taxes and insurance                                142           134
    Borrowings from FHLB of Topeka (note 11)                                             40,500           650
    Accrued interest payable and other liabilities (note 12)                                714           556
                                                                                     -----------    ----------

             Total liabilities                                                          123,673        85,776
                                                                                     -----------    ----------

Stockholders' equity (note 13):
    Preferred stock, $.10 par value; 2,000,000 shares authorized, none issued                --            --
    Common stock, $.10 par value; 8,000,000
      shares authorized, 1,553,938 shares issued                                            155           155
    Additional paid-in capital                                                           14,842        14,834
    Treasury stock, 221,629 shares at December 31, 1999 at cost                          (2,495)           --
    Retained earnings                                                                     8,289         7,655
    Unearned compensation                                                                (1,623)       (1,181)
    Accumulated other comprehensive income (loss)                                          (295)          (23)
                                                                                     -----------    ----------

             Total stockholders' equity                                                  18,873        21,440

Commitments (note 6)
                                                                                     -----------    ----------

             Total liabilities and stockholders' equity                            $    142,546       107,216
                                                                                     ===========    ==========

</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-2
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                       Consolidated Statements of Earnings

                     Years ended December 31, 1999 and 1998
                      (In thousands, except per share data)
<TABLE>
<CAPTION>
                                                                             1999        1998
                                                                            --------    --------
<S>                                                                    <C>              <C>
Interest income:
    Loans                                                                $    3,345       3,528
    Investment securities                                                       391         259
    Mortgage-backed securities                                                4,692       2,570
    Interest-bearing deposits                                                   121         389
    Dividends on FHLB stock                                                     108          48
                                                                            --------    --------

             Total interest income                                            8,657       6,794
                                                                            --------    --------

Interest expense:
    Deposits (note 10)                                                        3,539       3,746
    Borrowings                                                                1,486          52
                                                                            --------    --------

             Total interest expense                                           5,025       3,798
                                                                            --------    --------

             Net interest income                                              3,632       2,996

Provision for loan losses (note 6)                                               36          30
                                                                            --------    --------

             Net interest income after provision for loan losses              3,596       2,966
                                                                            --------    --------
Noninterest income:
    Deposit account service fees                                                744         671
    Other                                                                       128         140
                                                                            --------    --------

             Total noninterest income                                           872         811
                                                                            --------    --------
Noninterest expense:
    Compensation and benefits (note 13)                                       1,525       1,304
    Occupancy and equipment                                                     377         301
    Federal deposit insurance premiums and assessments                           83          85
    Data processing                                                             233         188
    Deposit account processing fees                                             210         196
    Amortization of premium on deposits assumed                                  61          61
    Supplies expense                                                             75          76
    Advertising                                                                 167         160
    Other                                                                       360         214
                                                                            --------    --------

             Total noninterest expense                                        3,091       2,585
                                                                            --------    --------

             Earnings before income tax expense                               1,377       1,192

Income tax expense (note 12)                                                    522         472
                                                                            --------    --------

             Net earnings                                                $      855         720
                                                                            ========    ========

Net earnings per share - basic and diluted                               $     0.63        0.50
                                                                            ========    ========

</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

    Consolidated Statements of Stockholders' Equity and Comprehensive Income

                     Years ended December 31, 1999 and 1998
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                                                   Accumu-
                                                                                                                   lated
                                                                                                                   other
                                                                                                                   compre-
                                                                 Additional                            Unearned    hensive
                                             Preferred   Common    paid-in    Treasury    Retained     compen-     income
                                                stock     stock    capital      stock     earnings      sation     (loss)     Total
                                            ----------   -------  ---------- ---------- -----------  ----------- ---------- --------
<S>                                      <C>            <C>        <C>        <C>          <C>         <C>          <C>    <C>
Balance, December 31, 1997                $       --       --            --         --       6,935           --       (325)   6,610

Proceeds from issuance of common
    stock                                         --      155        14,833         --          --       (1,243)        --   13,745

Net earnings                                                                                   720                              720
Change in unrealized loss on available-
    for-sale securities, net of tax                                                                                    302      302
                                                                                                                            --------
             Total comprehensive income                                                                                       1,022
                                                                                                                            --------

Allocation of Employee Stock
    Ownership Plan (ESOP) shares                 --        --             1         --          --           62         --       63
                                            -------- --------- ------------- ---------- -----------  ----------- ---------- --------
Balance, December 31, 1998                       --       155        14,834         --       7,655       (1,181)       (23)  21,440

Net earnings                                                                                   855                              855
Change in unrealized loss on available-
    for-sale securities, net of tax                                                                                   (272)    (272)
                                                                                                                            --------
             Total comprehensive income                                                                                         583
                                                                                                                            --------

Purchase of 221,629 shares of
    stock for the treasury                       --        --            --     (2,495)         --           --         --   (2,495)

Purchase of 62,158 shares of stock
    for the restricted stock plan (RSP)          --        --            --         --          --         (660)        --     (660)
Allocation of ESOP shares                        --        --             8         --          --          124         --      132
Amortization of RSP shares                       --        --            --         --          --           94         --       94
Cash dividends paid ($.15 per share)             --        --            --         --        (221)          --         --     (221)
                                            -------- --------- ------------- ---------- -----------  ----------- ---------- --------
Balance, December 31, 1999                $      --       155        14,842     (2,495)      8,289       (1,623)      (295)  18,873
                                            ======== ========= ============= ========== ===========  =========== ========== ========
</TABLE>


See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                      Consolidated Statements of Cash Flows

                     Years ended December 31, 1999 and 1998
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                       1999           1998
                                                                                    -----------    -----------
<S>                                                                             <C>                <C>
Cash flows from operating activities:
    Net earnings                                                                  $        855            720
    Adjustments to reconcile net earnings to net cash provided by operating
      activities:
        Provision for loan losses                                                           36             30
        Depreciation                                                                       160            139
        Amortization of premium on deposits assumed                                         61             61
        FHLB stock dividends                                                              (108)           (48)
        Amortization of loan fees                                                          (41)           (56)
        Accretion of discounts and amortization of premiums on
           investment and mortgage-backed securities, net                                  (19)           207
        Gain on sales of loans, net                                                         (5)           (13)
        Gain on sales of mortgage-backed securities available-for-sale                      --             (3)
        Allocation of ESOP shares and amortization of RSP shares                           226             63
        Proceeds from sales of loans                                                       247            798
        Origination of loans for sale                                                     (242)          (785)
        Change in accrued interest receivable, prepaids,
           and other assets                                                               (217)           (41)
        Change in accrued interest payable and
           other liabilities                                                               297           (315)
                                                                                    -----------    -----------

             Net cash provided by operating activities                                   1,250            757
                                                                                    -----------    -----------

Cash flows from investing activities:
    Decrease in loans, net                                                               1,883          5,733
    Loans purchased                                                                     (8,702)          (213)
    Maturities/calls of investment securities held-to-maturity                              34          3,800
    Paydowns and maturities of mortgage-backed securities available-for-sale             8,532          3,991
    Paydowns and maturities of mortgage-backed securities held-to-maturity              11,291          6,817
    Proceeds from sales of mortgage-backed securities available-for-sale                    --          1,430
    Purchases of investment securities held-to-maturity                                 (1,490)        (4,587)
    Purchases of mortgage-backed securities available-for-sale                          (2,496)       (15,571)
    Purchases of mortgage-backed securities held-to-maturity                           (46,769)        (8,519)
    Proceeds from sale of real estate owned                                                142             --
    Redemption of FHLB stock                                                                --            200
    Purchase of FHLB stock                                                              (1,497)            --
    Decrease (increase) in real estate held for development                                  4             (6)
    Additions of premises and equipment, net                                              (598)          (925)
                                                                                    -----------    -----------

             Net cash used in investing activities                                $    (39,666)        (7,850)
                                                                                    -----------    -----------
</TABLE>

                                      F-5
                                                                     (Continued)
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                      Consolidated Statements of Cash Flows, Continued

                     Years ended December 31, 1999 and 1998
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                       1999           1998
                                                                                    -----------    -----------
<S>                                                                             <C>                  <C>
Cash flows from financing activities:
    Net decrease in deposits                                                      $     (2,119)        (1,215)
    Repayment of borrowings from FHLB                                                   (3,150)        (1,900)
    Increase in borrowings from the FHLB                                                43,000             --
    Proceeds from issuance of common stock, net of costs                                    --         13,745
    Purchases of stock for the treasury and for the RSP                                 (3,155)            --
    Cash dividends paid on common stock                                                   (221)            --
    Net decrease in advances from borrowers
      for taxes and insurance                                                                8              6
                                                                                    -----------    -----------
             Net cash provided by financing activities                                  34,363         10,636
                                                                                    -----------    -----------

             Net (decrease) increase in cash and cash equivalents                       (4,053)         3,543

Cash and cash equivalents at beginning of year                                           8,143          4,600
                                                                                    -----------    -----------
Cash and cash equivalents at end of year                                          $      4,090          8,143
                                                                                    ===========    ===========

Supplemental disclosure of cash flow information:
    Cash paid during the year for income taxes                                    $        378            854
                                                                                    ===========    ===========
    Cash paid during the year for interest                                        $      4,847          3,846
                                                                                    ===========    ===========


Noncash activities - loans transferred to real estate owned                       $    142,000             --
                                                                                    ===========    ===========

</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-6

<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


  (1)   Summary of Significant Accounting Policies

        (a)   Principles of Consolidation and Basis of Presentation

              The  consolidated  financial  statements  include the  accounts of
              First   Kansas   Financial   Corporation   and  its  wholly  owned
              subsidiary,  First  Kansas  Federal  Savings Bank (the "Bank" and,
              collectively,   the   "Company").    Intercompany   balances   and
              transactions  have been  eliminated.  The  Company is  principally
              engaged in single family home lending in the State of Kansas.  The
              Company also makes consumer and commercial  loans depending on the
              demand and management's assessment of the quality of such loans.

        (b)   Cash Equivalents

              Cash  equivalents  consist  of  interest-bearing  deposits  in the
              Federal  Home Loan  Bank  (FHLB)  of  Topeka  and other  financial
              institutions with an original maturity of three months or less.

        (c)   Investment Securities

              The Company  accounts for its investment  securities in accordance
              with Statement of Financial  Accounting  Standards (SFAS) No. 115,
              Accounting for Certain  Investments in Debt and Equity Securities.
              Accordingly, investments are classified as held-to-maturity, which
              are carried at amortized  cost, or  available-for-sale,  which are
              carried at fair value with  unrealized  gains and losses  excluded
              from  earnings  and  reported  in a  separate  component  of other
              comprehensive income, net of related income taxes.

              Amortization  and accretion of premiums and discounts are computed
              using the interest  method over the estimated  life of the related
              security and are  recorded as an  adjustment  of interest  income.
              Gains  and  losses  on sales are  calculated  using  the  specific
              identification method.

        (d)   Loans

              Loans  receivable  that  management  has the intent and ability to
              hold until  maturity or pay off are reported at their  outstanding
              principal balance adjusted for any charge-offs,  the allowance for
              loan losses and any deferred  fees or costs on  originated  loans,
              and unamortized premiums or discounts on purchased loans.

              The Company determines at the time of origination whether mortgage
              loans  will be held  for the  Company's  portfolio  or sold in the
              secondary  market.  Loans  originated and intended for sale in the
              secondary  market are recorded at the lower of  aggregate  cost or
              estimated  market value.  Fees received on such loans are deferred
              and recognized in income as part of the gain or loss on sale.

              Loan origination,  commitment and related fees, and certain direct
              origination costs related to loans for the Company's portfolio are
              deferred.  The  deferred  fees  and  costs  are  amortized  as  an
              adjustment of yield over the  contractual  term of the  individual
              loans using the interest method.


                                      F-7
                                                                     (Continued)
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


        (e)   Mortgage Banking Activities

              At December 31, 1999 and 1998, the Company was servicing loans for
              others  amounting to $450,000  and  $663,000,  respectively.  Loan
              servicing  fees include  servicing fees from investors and certain
              charges collected from borrowers, such as late payment fees, which
              are recorded when received. The amount of escrow balances held for
              borrowers at December 31, 1999 and 1998 was insignificant.

              SFAS No. 122, Accounting for Mortgage Servicing Rights, as amended
              by SFAS  No.  125,  Accounting  for  Transfers  and  Servicing  of
              Financial Assets and Extinguishments of Liabilities, requires that
              originated  servicing rights be valued and recorded as assets when
              the loan is originated,  and subsequently amortized as a component
              of servicing cost over the expected life of the loan.  Because the
              Company has not retained any servicing  rights on loans originated
              and sold since the  adoption of SFAS No. 122,  the Company has not
              recorded  any   mortgage   servicing   rights  in  its   financial
              statements.

        (f)   Provisions for Losses on Loans and Interest Receivable

              Provisions   for  losses  on  loans   receivable  are  based  upon
              management's  estimate  of the  amount  required  to  maintain  an
              adequate  allowance for losses,  relative to the risks in the loan
              portfolio.   This  estimate  is  based  on  reviews  of  the  loan
              portfolio,  including  assessment of the estimated net  realizable
              value of the related underlying  collateral,  and consideration of
              historical loss experience,  current economic conditions, and such
              other factors which, in the opinion of management, deserve current
              recognition. Loans are charged off when the probability of loss is
              established,   taking  into  consideration  such  factors  as  the
              borrower's  financial  condition,   underlying   collateral,   and
              guarantees.  Loans are also  subject to  periodic  examination  by
              regulatory  agencies.  Such  agencies may require  charge-offs  or
              additions  to the  allowance  based  upon  their  judgments  about
              information available at the time of their examination.

              Accrual  of  interest  income on loans is  discontinued  for those
              loans with interest more than ninety days  delinquent or sooner if
              management   believes   collectibility  of  the  interest  is  not
              probable.  Management's  assessment of collectibility is primarily
              based  on a  comparison  of  the  estimated  value  of  underlying
              collateral  to the related  loan and accrued  interest  receivable
              balances.  When  interest  accrual  is  discontinued,  all  unpaid
              accrued  interest is reversed.  Nonaccruing  loans are returned to
              accrual status when  principal and interest is reasonably  assured
              and a  consistent  record of  performance  has been  demonstrated.
              Payments  received on impaired or nonaccrual  loans are applied to
              principal and interest in accordance with the contractual terms of
              the loan unless full  payment of  principal  is not  expected,  in
              which case both  principal  and  interest  payments  received  are
              applied as a reduction of the carrying value of the loan.


                                      F-8

                                                                     (Continued)
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


              A loan is considered impaired when it is probable the Company will
              be unable to collect all amounts due - both principal and interest
              - according to the contractual  terms of the loan agreement.  When
              measuring  impairment,  the  expected  future  cash  flows  of  an
              impaired  loan are  discounted  at the loan's  effective  interest
              rate.   Impairment  may  also  be  measured  by  reference  to  an
              observable  market price, if one exists,  or the fair value of the
              collateral  for a  collateral-dependent  loan.  Regardless  of the
              historical   measurement   method  used,   the  Company   measures
              impairment  based on the  fair  value  of the  collateral  when it
              determines foreclosure is probable. Additionally,  impairment of a
              restructured  loan is measured by  discounting  the total expected
              future  cash flows at the loan's  effective  rate of  interest  as
              stated in the original loan agreement.

              The Company  applies the methods  described  above to  multifamily
              real estate loans,  commercial real estate loans, and restructured
              loans.    Smaller   balance,    homogeneous    loans,    including
              one-to-four-family residential and construction loans and consumer
              loans, are collectively evaluated for impairment.

        (g)   Real Estate Owned and Held for Development

              Real estate properties  acquired through foreclosure are initially
              recorded  at the  lower  of cost or  estimated  fair  value,  less
              selling  costs,  at the date of  foreclosure.  Costs  relating  to
              development and improvement of property are  capitalized,  whereas
              holding  costs  are  expensed  when   incurred.   Valuations   are
              periodically  performed by management  and an allowance for losses
              is  established by a charge to operations if the carrying value of
              a property exceeds its estimated fair value, less selling costs.

              Real estate held for development  consists of a parcel of land and
              improvements zoned for commercial development.  The development is
              carried  at cost that is less  than the  estimated  market  value.
              Direct costs,  including  interest,  are  capitalized  as property
              costs during the development period. Gains on sales are recognized
              by allocating  costs to parcels sold using the relative fair value
              method.

        (h)   Stock in FHLB of Topeka

              The  Company  is a member of the FHLB  system.  As a  member,  the
              Company  is  required  to  purchase  and hold stock in the FHLB of
              Topeka  in an  amount  equal to the  greater  of (a) 1% of  unpaid
              residential loans, (b) 5% of outstanding FHLB advances, or (c) .3%
              of total assets. FHLB stock is carried at cost in the accompanying
              consolidated balance sheets.

        (i)   Premises and Equipment

              Premises  and  equipment  are  stated  at  cost  less  accumulated
              depreciation.  Depreciation  is provided using both  straight-line
              and  accelerated  methods over the  estimated  useful lives of the
              assets,  which  range  from  three  to  thirty-five  years.  Major
              replacements   and  betterments   are  capitalized   while  normal
              maintenance  and  repairs are  charged to expense  when  incurred.
              Gains  or  losses  on   dispositions   are  reflected  in  current
              operations.


                                      F-9
                                                                     (Continued)
<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


        (j)   Income Taxes

              Deferred tax assets and  liabilities are recognized for the future
              tax   consequences   attributable   to  differences   between  the
              consolidated  financial  statement  carrying  amounts of  existing
              assets and liabilities and their respective  income tax bases. The
              effect on deferred tax assets and  liabilities  of a change in tax
              rate is  recognized  in income in the  period  that  includes  the
              enactment date.

        (k)   Use of Estimates

              Management  of the  Company  has made a number  of  estimates  and
              assumptions  relating to the  reporting of assets and  liabilities
              and the disclosure of contingent assets and liabilities to prepare
              these  consolidated   financial   statements  in  conformity  with
              generally  accepted  accounting  principles.  Actual results could
              differ from those estimates.

        (l)   New Accounting Pronouncements

              The  Financial  Accounting  Standards  Board  issued SFAS No. 133,
              Accounting  for  Derivative  Financial   Instruments  and  Hedging
              Activities,  in June 1998. This statement  establishes  accounting
              and reporting  standards  for  derivative  instruments,  including
              certain derivative instruments embedded in other contracts and for
              hedging  activities.  SFAS No. 133, as amended by SFAS No. 137, is
              effective for all fiscal  quarters of fiscal years beginning after
              June 15, 2000 and will be adopted by the Company  January 1, 2001.
              The  adoption  of SFAS No. 133 is not  expected to have a material
              impact on the Company's consolidated financial statements.

        (m)   Earnings Per Common Share

              Basic earnings per share is based upon the weighted average number
              of common shares outstanding  during the periods presented.  Basic
              earnings per share  excludes  dilution and is computed by dividing
              income  available to common  stockholders by the weighted  average
              number of common  shares  outstanding  during the period.  Diluted
              earnings per share includes the potential  dilutive  common shares
              outstanding  during the  period.  Earnings  per share for the year
              ended  December  31,  1998 is pro forma as if the  conversion  and
              acquisition  occurred  on January 1, 1998.  Unallocated  shares of
              common stock held by the  employee  stock  ownership  plan are not
              included in the weighted average shares outstanding computation.

              The following schedule summarizes the number of average shares and
              equivalents used in the computation of earnings per share:

                                                  1999           1998
                                              -------------  -------------

Basic shares outstanding                         1,361,335      1,429,640
Dilutive effect of stock options                     1,698             --
                                              -------------  -------------
             Diluted shares outstanding          1,363,033      1,429,640
                                              =============  =============


                                      F-10
                                                                     (Continued)
<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


  (2)   Initial Public Offering

        On June 25, 1998, the Company  completed an initial  public  offering of
        common stock, selling 1,553,938 shares of its common stock at $10.00 per
        share. Total expenses of the offering approximated $548,000.

  (3)   Cash and Cash Equivalents

        A summary of cash and cash equivalents follows (in thousands):

                                                 1999       1998
                                               --------   --------
Cash on hand                                 $   1,923        644
Deposits at other financial institutions         2,167        499
Overnight FHLB deposits                             --      7,000
                                               --------   --------
                                             $   4,090      8,143
                                               ========   ========


                                      F-11
                                                                     (Continued)
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


  (4)   Investment Securities

        A summary of  investment  securities  held-to-maturity  and  information
        relating to amortized  cost,  approximate  fair values,  and  unrealized
        gains  (losses)  at  December  31,  1999  and  1998  is as  follows  (in
        thousands):
<TABLE>
<CAPTION>
                                                                                  1999
                                                         -------------------------------------------------------
                                                          Amortized      Unrealized      Unrealized      Fair
                                                             cost           gains          losses        value
                                                         -------------  --------------  --------------  --------
<S>                                                   <C>                     <C>               <C>     <C>
U. S. government and agency obligations
    maturing after one year but within five years      $        1,000              --             (11)      989
U. S. government and agency obligations
    maturing after five years but within ten years              2,000              --            (111)    1,889
U. S. government and agency obligations
    maturing after ten years                                    1,232              --             (49)    1,183
State and municipal obligations maturing
    after ten years                                             1,115              --            (127)      988
Other debt securities maturing after
    ten years                                                     914              --              --       914
                                                         -------------  --------------  --------------  --------
                                                       $        6,261              --            (298)    5,963
                                                         =============  ==============  ==============  ========
</TABLE>

<TABLE>
<CAPTION>
                                                                                 1998
                                                         -------------------------------------------------------
                                                          Amortized      Unrealized      Unrealized      Fair
                                                             cost           gains          losses        value
                                                         -------------  --------------  --------------  --------
<S>                                                   <C>                     <C>               <C>     <C>
U. S. government and agency obligations
    maturing after one year but within five years      $        1,000               4              --     1,004
U. S. government and agency obligations
    maturing after five years but within ten years              1,000              --              --     1,000
U. S. government and agency obligations
    maturing after ten years                                    1,139               5              --     1,144
State and municipal obligations maturing
    after ten years                                               624               8              --       632
Other debt securities maturing after
    ten years                                                     949              --              --       949
                                                         -------------  --------------  -------------  ---------
                                                       $        4,712              17              --     4,729
                                                         =============  ==============  ==============  ========
</TABLE>

                                      F-12
                                                                     (Continued)
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


  (5)   Mortgage-backed Securities

        A summary of  mortgage-backed  securities  and  information  relating to
        amortized cost,  approximate fair values,  and unrealized gains (losses)
        at December 31, 1999 and 1998 is as follows (in thousands):
<TABLE>
<CAPTION>
                                                                            1999
                                               ---------------------------------------------------------
                                                Amortized      Unrealized      Unrealized       Fair
                                                   cost           gains          losses         value
                                               -------------  --------------  --------------  ----------
<S>                                        <C>                   <C>            <C>            <C>
Available-for-sale:
    Government agency mortgage- backed securities:
        Federal Home Loan Mortgage
           Corporation (FHLMC)               $        1,538              --             (27)      1,511
        Federal National Mortgage
           Association (FNMA)                         2,658              19             (35)      2,642
        Government National Mortgage
           Association (GNMA)                         3,411              21              --       3,432
    Collateralized mortgage obligations              13,634              17            (441)     13,210
                                               -------------  --------------  --------------  ----------
                                             $       21,241              57            (503)     20,795
                                               =============  ==============  ==============  ==========

Held-to-maturity:
    Government agency mortgage-
      backed securities:
        FHLMC                                $           66               1              --          67
        FNMA                                         15,677               5            (816)     14,866
        GNMA                                         19,489              16            (895)     18,610
    Collateralized mortgage obligations              22,733              --            (679)     22,054
                                               -------------  --------------  --------------  ----------
                                             $       57,965              22          (2,390)     55,597
                                               =============  ==============  ==============  ==========


</TABLE>

                                      F-13

                                                                     (Continued)
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998
<TABLE>
<CAPTION>

                                                                                   1998
                                                      ---------------------------------------------------------
                                                       Amortized      Unrealized      Unrealized       Fair
                                                          cost           gains          losses         value
                                                      -------------  --------------  --------------  ----------
<S>                                               <C>                    <C>              <C>        <C>
Available-for-sale:
    Government agency mortgage- backed securities:
        FHLMC                                       $        2,121              21              (2)      2,140
        FNMA                                                 4,303              11             (15)      4,299
        GNMA                                                 4,128              27              --       4,155
    Collateralized mortgage obligations                     16,765              33            (110)     16,688
                                                      -------------  --------------  --------------  ----------
                                                    $       27,317              92            (127)     27,282
                                                      =============  ==============  ==============  ==========

Held-to-maturity:
    Government agency mortgage-
      backed securities:
        FHLMC                                       $           90               2              --          92
        FNMA                                                 3,092              43              (1)      3,134
        GNMA                                                   339              25              --         364
    Collateralized mortgage obligations                     19,000              95             (41)     19,054
                                                      -------------  --------------  --------------  ----------
                                                    $       22,521             165             (42)     22,644
                                                      =============  ==============  ==============  ==========
</TABLE>

        The Company's portfolio of government agency mortgage-backed  securities
        and federal agency-backed  collateralized  mortgage obligations consists
        primarily  of  first  and  second  tranche   securities   with  expected
        maturities of three to five years.  At December 31, 1999, the government
        agency  mortgage-backed  securities  had a carrying value of $42,817,000
        and consisted of approximately  $34,954,000 of fixed rate securities and
        $7,863,000  of variable rate  securities.  The  collateralized  mortgage
        obligations  had a  carrying  value  of  $35,943,000  and  consisted  of
        approximately  $18,996,000 of fixed rate  securities and  $16,947,000 of
        variable rate  securities.  Collateralized  mortgage  obligations of the
        Company are generally government agency guaranteed.  There were no sales
        of mortgage-backed securities during 1999.

        At  December  31,  1999  and  1998,  mortgage-backed  securities  with a
        carrying value of approximately $1,125,000 and $1,850,000, respectively,
        were pledged to secure public funds on deposit.


                                      F-14
                                                                     (Continued)
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


  (6)   Loans Receivable

        Loans receivable  consist of the following at December 31, 1999 and 1998
(in thousands):

                                                         1999        1998
                                                       ----------  ----------
Mortgage loans:
    One-to-four-family                               $    43,760      37,884
    Commercial                                               567         471
    Land                                                     278         264
    Construction                                           1,079         151
                                                       ----------  ----------
             Total mortgage loans                         45,684      38,770

Consumer loans                                             2,245       2,115
Commercial loans                                             618         537
                                                       ----------  ----------
             Total                                        48,547      41,422

Less:
    Unearned premiums, discounts, and deferred fees           73         116
    Allowance for loan losses                                241         206
    Undisbursed portion of loans in process                  482          31
                                                       ----------  ----------
             Total, net                              $    47,751      41,069
                                                       ==========  ==========

        The Company evaluates each customer's creditworthiness on a case-by-case
        basis.  Residential  loans with a loan-to-value  ratio exceeding 80% are
        required to have  private  mortgage  insurance.  The  Company's  primary
        lending area is in the State of Kansas.

        The  weighted   average   annual   interest   rates  on  mortgage  loans
        approximated   7.32%  and  7.51%  at   December   31,   1999  and  1998,
        respectively.  Adjustable  rate  loans  have  interest  rate  adjustment
        limitations  and are generally  indexed to the national  average-cost of
        funds.  Future market factors may affect the correlation of the interest
        rate  adjustment  with the  rates  the  Company  pays on the  short-term
        deposits that have been primarily utilized to fund these loans.

        At  December  31,  1999,  the  Company had  outstanding  commitments  to
        originate  mortgage  loans of $808,000 and  outstanding  commitments  to
        purchase loans of $2,242,000.


                                      F-15
                                                                     (Continued)
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


        Loans  made  to  directors  and   executive   officers  of  the  Company
        approximated  $619,000  and  $579,000  at  December  31,  1999 and 1998,
        respectively.  Such loans were made in the ordinary  course of business.
        Changes in such loans for 1999 are as follows (in thousands):

                    Balance at January 1, 1999           $     579
                    Additions                                  235
                    Amounts collected                         (195)
                                                            -------
                    Balance at December 31, 1999         $     619
                                                            =======

        A summary of the activity in the allowance  for loan losses  follows (in
thousands):
                                      1999      1998
                                     -------   -------
Balance at beginning of year       $    206       179
Provision                                36        30
Charge-offs                              (1)       (5)
Recoveries                               --         2
                                     -------   -------
Balance at end of year             $    241       206
                                     =======   =======

        Loans  delinquent  ninety  days or more at  December  31,  1999 and 1998
        aggregated $82,000 and $5,000,  respectively.  Impaired loans, exclusive
        of delinquent loans, were insignificant at December 31, 1999 and 1998.

  (7)   Premises and Equipment

        Premises and equipment consist of the following (in thousands):

                                         1999      1998
                                       ---------  --------
Land                                 $      217       217
Buildings and improvements                2,068     1,688
Construction in progress                     --        38
Furniture and equipment                   1,357     1,114
                                       ---------  --------
             Total                        3,642     3,057

Less accumulated depreciation             1,429     1,282
                                       ---------  --------
             Total                   $    2,213     1,775
                                       =========  ========

                                      F-16
                                                                     (Continued)
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998



  (8)   Real Estate Held for Development

        The  Company's  subsidiary  acquired  a parcel of land in 1996 in Paola,
        Kansas for the  purpose of  development  and sale.  Total cost  incurred
        through December 31, 1999,  including  capitalized  interest of $37,000,
        aggregated  $658,000.  There were no sales or transfers  associated with
        the parcel of land during 1999 or 1998.

  (9)   Premium on Deposits Assumed

        In accordance with the FSLIC Transfer Agreement dated November 19, 1982,
        the Company assumed certain  deposits of the former North Kansas Savings
        Company, paying a premium on deposits assumed of $1,212,000. The Company
        is amortizing the premium over twenty years on the straight-line method.
        Accumulated  amortization  on such premium was  $1,034,000 and $973,000,
        respectively, at December 31, 1999 and 1998.

 (10)   Deposits

        Deposits are summarized as follows (in thousands):

                                                  1999        1998
                                              ----------  ----------

Noninterest bearing demand                  $     2,612       2,477
Savings and interest-bearing demand              28,570      28,312
Time                                             51,135      53,647
                                              ----------  ----------
                                            $    82,317      84,436
                                              ==========  ==========

        The weighted average interest rates on deposits  approximated  4.47% and
        4.68% at December 31, 1999 and 1998, respectively.

        Scheduled  maturities  of time  deposits  at  December  31,  1999 are as
follows (in thousands):

                         2000         $    36,071
                         2001               8,883
                         2002               3,612
                         2003               1,408
                         2004                 484
                      Thereafter              677
                                        ----------
                        Total         $    51,135
                                        ==========

                                      F-17
                                                                     (Continued)

<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


        A summary of interest expense is as follows (in thousands):

                                             1999      1998
                                           ---------  --------
Passbook and certificate accounts        $    2,965     3,185
NOW                                             574       561
                                           ---------  --------
                                         $    3,539     3,746
                                           =========  ========

        Certificates  of deposit in amounts  greater  than or equal to  $100,000
        amounted to  $2,458,000  and  $3,300,000  at December 31, 1999 and 1998,
        respectively.  Individual  deposit amounts in excess of $100,000 are not
        federally insured.

 (11)   Borrowings from FHLB of Topeka

        Borrowings  outstanding from the FHLB of Topeka at December 31, 1999 and
1998 are as follows:

                                                                1999      1998
                                                              ---------- -------

Advance from FHLB of Topeka with an adjustable rate
    based on one month LIBOR, maturing in 2002              $        --     650
Advance from FHLB of Topeka at 4.92% interest and
    maturity date in January 2009                                10,000      --
Advance from FHLB of Topeka at 4.88% interest and
    maturity date in January 2009                                10,000      --
Advance from FHLB of Topeka at 5.30% interest and
    maturity date in May 2009                                    10,000      --
Advance from FHLB of Topeka with an adjustable rate
    based on one month LIBOR rate on two basis points
    (6.44% at December 31, 1999) and maturity date
    in September 2000                                             8,000      --
Borrowing under $8 million FHLB of Topeka line of credit
    with an adjustable interest rate (5.0% at December 31,
    1999) and maturity date in May 2000                           2,500      --
                                                              ---------- -------
                                                            $    40,500     650
                                                              ========== =======

                                      F-18
                                                                     (Continued)

<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


        FHLB  borrowings  are secured by all  unpledged  single and  multifamily
        first  mortgage  loans,   mortgage-backed   securities,   United  States
        government and agency  obligations,  interest-bearing  deposits in other
        financial  institutions,  stock in FHLB,  and FHLB  overnight  deposits.
        Weighted  average  interest  rates for the years ended December 31, 1999
        and 1998 were 5.03% and 5.73%, respectively, on such borrowings.

        Principal  maturities of borrowings  from FHLB of Topeka at December 31,
1999 are as follow (in thousands):

                               Year       Amount
                              --------   ----------
                               2000    $    10,500
                               2009         30,000
                                         ----------
                                       $    40,500
                                         ==========

 (12)   Income Taxes

        The components of income tax expense from  operations are as follows for
        the years ended December 31 (in thousands):
<TABLE>
<CAPTION>
                                 1999                               1998
                    --------------------------------  ----------------------------------
                     Federal      State      Total     Federal       State       Total
                    -----------   -------   --------  -----------  -----------   -------
<S>              <C>                 <C>       <C>          <C>         <C>      <C>
Current           $        466        54        520          452           67       519
Deferred                     2        --          2          (34)         (13)      (47)
                    -----------   -------   --------  -----------  -----------   -------
                  $        468        54        522          418           54       472
                    ===========   =======   ========  ===========  ===========   =======

</TABLE>

        The reasons for the differences  between the effective tax rates and the
        expected federal income tax rate of 34% are as follows:

                                                 Percentage
                                                of earnings
                                                   before
                                                income taxes
                                             -------------------
                                               1999       1998
                                             -------    --------
Expected federal income tax rate               34.0 %      34.0
State taxes, net of federal tax benefit         3.0         3.0
Other, net                                      0.9         2.6
                                             -------    --------
             Effective income tax rate         37.9 %      39.6
                                             =======    ========

                                      F-19

                                                                     (Continued)
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


        Temporary  differences  that  give  rise  to a  significant  portion  of
        deferred tax assets and liabilities at December 31, 1999 and 1998 are as
        follows (in thousands):

                                                            1999      1998
                                                          --------  --------
Unrealized loss on available-for-sale securities        $     151        12
Loan origination fees                                           2         7
Employee benefits                                              29        10
Other, net                                                      4         4
                                                          --------  --------
             Deferred tax asset                               186        33
                                                          --------  --------

Premises and equipment                                       (104)      (85)
FHLB dividends                                               (162)     (125)
                                                          --------  --------
Allowance for loan losses                                     (30)      (70)
State taxes                                                   (21)      (21)
                                                          --------  --------
             Deferred tax liability                          (317)     (301)
                                                          --------  -------

             Net deferred tax liability, included
               in other liabilities                     $    (131)     (268)
                                                          ========  ========


        There was no  valuation  allowance  required  for deferred tax assets at
        December 31, 1999 or 1998.  Management  believes  that it is more likely
        than not the  results  of future  operations  will  generate  sufficient
        taxable income to realize the deferred tax assets.

        Prior to 1996,  the  Company  was  allowed to deduct  the  greater of an
        experience  method bad debt deduction  based on actual  charge-offs or a
        statutory  bad debt  deduction  based on a  percentage  (8%) of  taxable
        income before such deduction.  For income tax purposes, the Company used
        the  experience  methods in 1997 and 1998.  Under the Small Business Job
        Projection  Act (the Act) of 1996,  the  allowable  deduction  under the
        percentage  of  taxable  income  method  was  terminated  for tax  years
        beginning after 1995 and will not be available to the Company for future
        years.  The Act also provides that federal  income tax bad debt reserves
        accumulated  since 1988 (the base year reserve)  must be recaptured  and
        included in taxable income over a six-year  inclusion  period  beginning
        1998. Included in the deferred income tax liability at December 31, 1999
        and 1998 are $112,000 and $140,000, respectively, for this recapture.

        Retained  earnings at December 31, 1999 and 1998  include  approximately
        $718,000  for which no provision  for federal  income tax has been made.
        This amount  represents  allocations of income to bad debt deductions in
        years  prior  to 1988  for  tax  purposes  only.  Reduction  of  amounts
        allocated for purposes other than tax bad debt losses will create income
        for tax  purposes  only,  which  will be  subject  to the  then  current
        corporate income tax rate.


                                      F-20
                                                                     (Continued)
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


 (13)   Benefit Plans

        Pension and Retirement

        The Company  participates in a  multiemployer,  noncontributory  defined
        benefit pension plan which covers all employees who have met eligibility
        requirements. The multiemployer plan does not provide information at the
        single employer level and the Company does not make disclosures  similar
        to those of single  employer  plans.  Qualified  part-time and full-time
        employees over age twenty-one are eligible for  participation  after one
        year of service.  Pension  costs  associated  with the plan  amounted to
        $3,000  and  $2,000  for the years  ended  December  31,  1999 and 1998,
        respectively.

        The Company has a defined  contribution  plan that covers  substantially
        all  employees.  Employees  may  contribute  up to 15% of their  salary,
        subject to limitations  under the Internal Revenue Code, and the Company
        matches 50% of the employee's contribution up to 6% of compensation. The
        Company's  expense  under  the plan for  1999 and 1998 was  $24,000  and
        $22,000,  respectively.  In  addition,  the Company  made an  additional
        discretionary contribution to the plan of $21,000 in 1998.

        In December  1997,  the Company  implemented  a  supplemental  executive
        retirement  plan (SERP) for the benefit of the Company's  president that
        will provide  enhanced  benefits at retirement.  Accruals under the SERP
        commenced during 1998,  resulting in expenses of $37,000 and $29,000 for
        the years ended December 31, 1999 and 1998, respectively.

        Employee Stock Ownership Plan

        In  connection  with  the  offering  described  in note 2,  the  Company
        established an employee stock ownership plan (ESOP). Through a loan from
        the Company,  the ESOP acquired  124,315 shares of the Company's  common
        stock.  Employees age twenty-one or older who have completed one year of
        service  with the  Company  are  eligible  to  participate  in the ESOP.
        Participants become 100% vested after five years.  Contributions made by
        the  Company to the ESOP will be used to repay the loan,  and shares are
        allocated to participants by a formula based on total compensation.  The
        cost of unallocated shares is presented as unearned  compensation in the
        accompanying December 31, 1999 and 1998 consolidated balance sheets. The
        Company  recognizes  additional  compensation  expense equal to the fair
        value of shares allocated.  In connection with a principal  reduction on
        the ESOP loan,  6,216 shares were  released  and the Company  recognized
        $63,000 of  compensation  expense  during  1998 and 12,432  shares  were
        released and the Company  recognized  $132,000 of  compensation  expense
        during 1999. The fair value of the remaining 105,667  unallocated shares
        at December 31, 1999 aggregated approximately $1,162,000.


                                      F-21
                                                                     (Continued)
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


        Stock Option Plan - Restricted Stock Plan (RSP)

        In February 1999, the Company instituted an RSP and a stock option plan.
        Pursuant to the RSP, the Company purchased 62,158 shares of common stock
        during March 1999. The cost of such shares,  aggregating  $660,429,  has
        been recorded as unearned compensation in the accompanying  consolidated
        balance  sheet at December  31,  1999.  During  March 1999,  the Company
        awarded 52,826 shares of common stock to key officers and directors. The
        fair value of the shares  ($561,276)  will be  amortized to expense over
        their five-year  vesting period.  The Company  recognized  approximately
        $94,000 of additional  compensation  expense related to the amortization
        of the shares awarded for the year ended 1999.

        Pursuant  to the stock  option  plan,  the  Company  granted  options to
        acquire  132,079  shares of common  stock to certain  key  officers  and
        directors  in February  1999.  The options  enable the  participants  to
        purchase  stock at an exercise  price equal to the fair market  value of
        the stock at the date of grant ($10.75 per share). The options vest over
        five  years and  expire in 2008.  During  1999,  there  were no  options
        exercised.

        The Company applies Accounting  Principles Board (APB) No 25 and related
        interpretations in accounting for the stock option plan. Accordingly, no
        compensation   expense   has  been   recognized   in  the   accompanying
        consolidated  financial  statements.  SFAS No.  123  requires  pro forma
        disclosures  for  companies  that do not adopt its fair value  method of
        accounting  for  stock-based  employer  compensation.  Accordingly,  the
        following  pro forma  information  presents  net income and earnings per
        share  information for 1999 as if the fair value method required by SFAS
        No. 123 has been used to  measure  compensation  cost for stock  options
        granted:

Net income - as reported                       $    855,000
                                                 ===========
Net income - pro forma                         $    819,000
                                                 ===========
Basic earnings per share as reported           $       0.63
                                                 ===========
Basic earnings per share - pro forma           $       0.60
                                                 ===========

        The fair value of options  granted of $326,000 was  estimated  using the
        following weighted average information:  risk-free interest rate of 6.5%
        expected life of five years, expected volatility of stock price of 16.6%
        and expected dividends of 2.0% per year.

         (14)     Regulatory Capital Requirements

        The Financial  Institution Reform,  Recovery and Enforcement Act of 1989
        (FIRREA) and the capital regulations of the Office of Thrift Supervision
        (OTS)  promulgated  thereunder  require  institutions  to have a minimum
        regulatory  tangible capital equal to 1.5% of total assets, a minimum 4%
        leverage capital ratio, and a minimum 8% risk-based capital ratio. These
        capital standards set forth in the capital regulations must generally be
        no less  stringent  than the capital  standards  applicable  to national
        banks.  FIRREA also  specifies  the  required  ratio of  housing-related
        assets in order to qualify as a savings institution.


                                      F-22
                                                                     (Continued)
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


        The  Federal  Deposit  Insurance  Corporation  Improvement  Act of  1991
        (FDICIA)  established   additional  capital  requirements  that  require
        regulatory  action  against  depository   institutions  in  one  of  the
        undercapitalized   categories   defined  in  implementing   regulations.
        Institutions such as the Company, which are defined as well capitalized,
        must  generally  have a leverage  (core) capital ratio of at least 5%, a
        Tier 1 risk-based  capital ratio of at least 6%, and a total  risk-based
        capital  ratio of at least  10%.  FDICIA  also  provides  for  increased
        supervision  by  federal  regulatory   agencies,   increased   reporting
        requirements for insured depository  institutions,  and other changes in
        the legal and regulatory environment for such institutions.

        The Bank met all regulatory  capital  requirements at December 31, 1999.
        The Bank's actual and required capital amounts and ratios as of December
        31, 1999 were as follows (dollars in thousands):
<TABLE>
<CAPTION>
                                                                                                   To be well-
                                                                                                   capitalized
                                                                                                  under prompt
                                                                         For capital               corrective
                                                                          adequacy                   actions
                                                 Actual                   purposes                 provisions
                                          ---------------------      --------------------      --------------------
                                           Amount       Ratio         Amount      Ratio         Amount      Ratio
                                          ----------   --------      ----------  --------      ----------  --------

Tangible capital
<S>                                     <C>             <C>      <C>              <C>      <C>              <C>
    (to tangible assets)                $    13,668       9.61 %   $     2,134      1.50 %   $        --        -- %
Tier 1 leverage (core) capital
    (to adjusted tangible assets)            13,668       9.61           5,692      4.00           7,114      5.00
Risk-based capital
    (to risk-weighted assets)                13,898      33.21           3,348      8.00           4,184     10.00
Tier 1 leverage risk-based capital
    (to risk-weighted assets)                13,668      32.61              --        --           2,511      6.00
                                          ==========   ========      ==========  ========      ==========  ========
</TABLE>

        At the time of conversion, the Bank established a liquidation account in
        an  amount  equal  to  $7,038,000.   The  liquidation  account  will  be
        maintained for the benefit of eligible  account  holders who continue to
        maintain  their deposit  accounts in the Bank after  conversion.  In the
        event of a complete  liquidation of the Bank, and only in such an event,
        eligible  depositors who continue to maintain accounts shall be entitled
        to  receive a  distribution  from the  liquidation  account  before  any
        liquidation  may be made with respect to common stock.  The Bank may not
        declare or pay a cash dividend if the effect thereof would cause its net
        worth to be reduced below either the amount required for the liquidation
        account discussed below, or the regulatory capital  requirements imposed
        by the OTS.


                                      F-23
                                                                     (Continued)
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


  (15)   Comprehensive Income

        The Company adopted SFAS No. 130, Reporting Comprehensive Income, in the
        first  quarter  of  1998.   SFAS  No.  130  requires  the  reporting  of
        comprehensive income and its components. Comprehensive income is defined
        as  the  change  in  equity  from  transactions  and  other  events  and
        circumstances  from nonowner  sources,  and excludes  investments by and
        distributions  to owners.  Comprehensive  income includes net income and
        other items of  comprehensive  income  meeting the above  criteria.  The
        Company's only component of other comprehensive income is the unrealized
        holding gains and losses on available-for-sale securities.

                                                                  For the
                                                                 year ended
                                                                December 31,
                                                             -----------------
                                                              1999      1998
                                                             -------   -------
                                                              (In thousands)

Net change in unrealized holding (losses) gains            $   (411)      460
Less reclassification adjustment for
    gains included in net income                                 --         3
                                                             -------   -------
             Net unrealized (losses) gains on securities       (411)      457


Income taxes                                                    139      (155)
                                                             -------   -------
             Other comprehensive income (loss)             $   (272)      302
                                                             =======   =======

(16) Financial  Instruments With Off-balance  Sheet Risk and  Concentrations  of
     Credit Risk

        The Company is a party to financial  instruments with off-balance  sheet
        risk in the normal course of business to meet customer  financing needs.
        These financial instruments consist principally of commitments to extend
        credit.  The Company uses the same credit policies in making commitments
        and conditional obligations as it does for on-balance sheet instruments.
        The Company's  exposure to credit loss in the event of nonperformance by
        the  other  party is  represented  by the  contractual  amount  of those
        instruments.  The Company does not generally require collateral or other
        security on  unfunded  loan  commitments  until such time that loans are
        funded.


                                      F-24
                                                                     (Continued)
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


        In addition to financial  instruments with  off-balance  sheet risk, the
        Company is exposed to varying risks  associated with  concentrations  of
        credit relating primarily to lending  activities in specific  geographic
        areas.  The  Company's  primary  lending  area  consists of the State of
        Kansas, and substantially all of the Company's loans are to residents of
        or  secured  by  properties  located  in  its  principal  lending  area.
        Accordingly, the ultimate collectibility of the Company's loan portfolio
        is  dependent  upon  market  conditions  in that area.  This  geographic
        concentration  is  considered  in  management's   establishment  of  the
        allowance for loan losses.

        The Company grants  mortgage and consumer  loans to customers  primarily
        throughout  its  target  market of the  State of  Kansas.  Although  the
        Company has a diversified loan portfolio,  a substantial  portion of the
        borrower's  ability  to honor  their  contracts  is  dependent  upon the
        general economic condition of the target market.

 (17)   Fair Value of Financial Instruments

        SFAS No. 107, Disclosures About Fair Value of Financial Instruments, and
        SFAS No. 119, Disclosure About Derivative Financial Instruments and Fair
        Value  of  Financial  Instruments,  require  that the  Company  disclose
        estimated  fair values for its  financial  instruments,  both assets and
        liabilities  recognized and not recognized in the consolidated financial
        statements.  Fair value estimates have been made as of December 31, 1999
        and 1998 based on current economic  conditions,  risk characteristics of
        the various financial instruments,  and other subjective factors at such
        date.

        The  following  methods and  assumptions  were used to estimate the fair
        value of each class of financial  instrument for which it is practicable
        to estimate that value.

        Cash and Cash Equivalents

        The  carrying  amounts  approximate  fair  value  because  of the  short
        maturity of these instruments.

        Investment and Mortgage-backed Securities

        The  fair  values  of  investment  securities  are  estimated  based  on
        published bid prices or bid quotations received from securities dealers.

        Loans Receivable

        The fair values of loans receivable are estimated using the option-based
        approach.  Cash flows  consist of  scheduled  principal,  interest,  and
        prepaid principal.  Loans with similar  characteristics  were aggregated
        for purposes of these calculations.

        Stock of FHLB

        The  carrying  amount of such stock is  estimated  to  approximate  fair
        value.

        Accrued Interest

        The  carrying  amount of accrued  interest is assumed to be its carrying
        value because of the short-term nature of these items.

                                      F-25
                                                                     (Continued)
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998

        Deposits

        The fair values of  deposits  with no stated  maturity  are deemed to be
        equivalent to amounts payable on demand. The fair values of certificates
        of  deposit  are  estimated  based on the  static  discounted  cash flow
        approach using rates currently offered for deposits of similar remaining
        maturities.

        Borrowings From FHLB of Topeka

        The fair  values of FHLB  advances  are  estimated  based on  discounted
        values of contractual cash flows using the rates currently  available to
        the Company on advances of similar remaining maturities.


                                      F-26
                                                                     (Continued)
<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


        The approximate carrying value and estimated fair value of the Company's
        financial instruments are as follows (in thousands):

                                                         December 31, 1999
                                                     ---------------------------
                                                      Carrying         Fair
                                                        value         value
                                                     ------------  -------------
Financial assets:
    Cash and interest-bearing deposits
      in other financial institutions             $        4,090          4,090
    Investment securities (see note 4)                     6,261          5,963
    Mortgage-backed securities (see note 5)               78,760         76,392
    Loans receivable                                      47,751         46,253
    Stock in FHLB                                          2,114          2,114
    Accrued interest receivable                              736            736

Financial liabilities:
    Deposits                                              82,317         81,877
    FHLB borrowings                                       40,500         38,286
    Accrued interest payable                                 234            234
                                                     ============  =============


                                                         December 31, 1998
                                                     ---------------------------
                                                      Carrying         Fair
                                                        value         value
                                                     ------------  -------------
Financial assets:
    Cash and interest-bearing deposits
      in other financial institutions             $        8,143          8,143
    Investment securities (see note 4)                     4,712          4,729
    Mortgage-backed securities (see note 5)               49,803         49,926
    Loans receivable                                      41,069         41,524
    Stock in FHLB                                            509            509
    Accrued interest receivable                              485            485

Financial liabilities:
    Deposits                                              84,436         84,858
    FHLB borrowings                                          650            650
    Accrued interest payable                                  56             56
                                                     ============  =============


                                      F-27
                                                                     (Continued)

<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998


        Limitations

        Fair  value  estimates  are made at a specific  point in time,  based on
        relevant  market   information  and  information   about  the  financial
        instruments. These estimates do not reflect any premium or discount that
        could  result from  offering for sale at one time the  Company's  entire
        holdings of a particular financial instrument.  Because no market exists
        for a significant portion of the Company's financial  instruments,  fair
        value estimates are based on judgments regarding future loss experience,
        current economic  conditions,  risk characteristics of various financial
        instruments, and other factors. These estimates are subjective in nature
        and  involve  uncertainties  and  matters of  significant  judgment  and
        therefore  cannot be determined with  precision.  Changes in assumptions
        could significantly affect the estimates. Fair value estimates are based
        on existing balance sheet financial  instruments  without  attempting to
        estimate  the  value of  anticipated  future  business  and the value of
        assets and liabilities that are not considered financial instruments.

 (18)   Parent Company Condensed Financial Statements

                             Condensed Balance Sheet
                           December 31, 1999 and 1998
                                 (In thousands)
<TABLE>
<CAPTION>

                               Assets                                      1999        1998
                                                                         ---------   ----------

<S>                                                                   <C>             <C>
Cash and cash equivalents                                              $       95          279
Loan to ESOP                                                                1,057        1,181
Investment in and loan to subsidiary                                       17,709       20,044
Other assets                                                                   18           --
                                                                         ---------   ----------

             Total assets                                              $   18,879       21,504
                                                                         =========   ==========

                Liabilities and Stockholders' Equity

Accrued interest payable and other liabilities                         $        6           64
Stockholders' equity                                                       18,873       21,440
                                                                         ---------   ----------

             Total liabilities and stockholders' equity                $   18,879       21,504
                                                                         =========   ==========
</TABLE>


                                      F-28
                                                                     (Continued)

<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998

                         Condensed Statement of Income
                     Years ended December 31, 1999 and 1998
                                 (In thousands)

                                                  1999        1998
                                                ---------   ----------

Income:
    Equity in earnings of subsidiary         $       770          619
    Interest on loans                                261          148
    Interest on deposits                              --           54
                                                ---------   ----------

             Total income                          1,031          821

Expense, including income tax expense                176          101
                                                ---------   ----------

             Net income                      $       855          720
                                                =========   ==========



                                      F-29

<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1999 and 1998

                         Condensed Statement of Income
                     Years ended December 31, 1999 and 1998
                                 (In thousands)




                        Condensed Statement of Cash Flows
                     Years ended December 31, 1999 and 1998
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                           1999        1998
                                                                         ---------   ----------
<S>                                                                 <C>              <C>
Operating activities:
    Net income                                                        $       855          720
    Less equity in earnings of subsidiary                                    (770)        (619)
    Adjustments to reconcile net income to net cash provided
      by operating activities:
        Release of unallocated ESOP shares and
           amortization of RSP                                                226           63
        (Decrease) increase in payables                                       (45)          51
        Change in current taxes payable                                       (31)          13
                                                                         ---------   ----------

             Net cash provided by operating activities                        235          228
                                                                         ---------   ----------

Investing activities:
    Decrease in investment in and loan to subsidiary, net                   2,833           --
    Decrease in loan to ESOP                                                  124           --
    Investment in and loan to subsidiary                                       --      (13,695)
    Loan to ESOP                                                               --       (1,243)
                                                                         ---------   ----------

             Net cash provided by (used in) investing activities            2,957      (14,938)
                                                                         ---------   ----------

Financing activities - proceeds from issuance
    of common stock                                                            --       14,989
Purchases of stock for the treasury and for the RSP                        (3,155)          --
Cash dividends paid on common stock                                          (221)          --
                                                                         ---------   ----------


             (Decrease) increase in cash                                     (184)         279

Cash at beginning of year                                                     279           --
                                                                         ---------   ----------

Cash at end of year                                                   $        95          279
                                                                         =========   ==========
</TABLE>

        The  Company's  ability  to pay  dividends  to  stockholders  is largely
        dependent upon the dividends it receives from the Bank. The Bank may not
        declare or pay a cash dividend on any of its stock if the effect thereof
        would cause the Bank's  regulatory  capital to be reduced  below (1) the
        amount  required for the liquidation  account  established in connection
        with the conversion,  or (2) the regulatory  requirements imposed by the
        OTS.


                                      F-30
<PAGE>


Corporate Information

                       First Kansas Financial Corporation
                                 600 Main Street
                            Osawatomie, Kansas 66064
                                 (913) 755-3033

                        First Kansas Federal Savings Bank

               Main Office                              Paola Office
             600 Main Street                         1310 Baptiste Drive
           Osawatomie, Kansas                           Paola, Kansas

            Fort Scott Office                         Louisburg Office
             2205 South Main                           100 West Amity
           Fort Scott, Kansas                         Louisburg, Kansas

              Beloit Office                          Phillipsburg Office
             125 North Mill                            762 4th Street
             Beloit, Kansas                         Phillipsburg, Kansas

                               Board of Directors
           J. Darcy Domoney                        Larry V. Bailey
          Chairman of the Board          President and Chief Executive Officer

            Donald V. Meyer                     James E. Breckendridge
               Director                               Director

         William R. Butler, Jr.                    Roger L. Coltrin
              Director                               Director

                               Executive Officers
                                 Larry V. Bailey
                      President and Chief Executive Officer

                                Daniel G. Droste
                       Senior Vice President and Treasurer

                                 Galen E. Graham
                       Senior Vice President and Secretary

                            -----------------------
<TABLE>
<CAPTION>

<S>                                        <C>
Local Counsel                                Independent Auditor
Winkler, Lee, Tetwiler, Domoney & Schultz    KPMG LLP
133 South Pearl Street                       1600 Commerce Bank Building
Paola, Kansas  66071                         Kansas City, Missouri  64106

Special Counsel                              Transfer Agent and Registrar
Malizia Spidi & Fisch, PC                    American Securities Transfer & Trust, Inc.
One Franklin Square                          1825 Lawrence Street, Suite 444
1301 K Street, N.W., Suite 700 East          Denver, Colorado 80201
Washington, D.C. 20005
</TABLE>
                             ----------------------

         The  Company's  Annual  Report on Form 10-KSB for the fiscal year ended
December 31, 1999 is available  without charge upon written request.  For a copy
of the Form 10-KSB,  please write or call the Company's  Corporate  Secretary at
the Company's main office.  The Annual Meeting of  Stockholders  will be held on
April 18, 2000 at 1:00 p.m. at the Company's office.