SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)
[X]    Annual report pursuant to section 13 or 15 (d) of the Securities Exchange
       Act of 1934
       For the fiscal year ended December 31, 1998  
                                 -------------------

[ ]    Transition  report  pursuant  to  section  13 or 15(d) of  the Securities
       Exchange Act of 1934
       For the transition period from ___________ to _____________.

Commission File No. 0-24037

                       First Kansas Financial Corporation
                 ----------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

            Kansas                                               48-1198888 
----------------------------------------                    --------------------
(State or Other Jurisdiction of                               (I.R.S. Employer
 Incorporation or Organization)                              Identification No.)

600 Main Street, Osawatomie, Kansas                                66064      
----------------------------------------                    --------------------
(Address of Principal Executive Offices)                         (Zip Code)

Issuer's Telephone Number, Including Area Code:   (913) 755-3033 
                                                  --------------          

Securities registered under Section 12(b) of the Exchange Act:   None
                                                                 ----
Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock, par value $0.10 per share
                     ---------------------------------------
                                (Title of Class)

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

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

         State issuer's revenues for its most recent fiscal year:  $7.6 million.

         The aggregate  market value of the voting stock held by  non-affiliates
of the registrant,  based on the average bid and asked price of the registrant's
Common Stock on March 8, 1999, was $13.6 million.

         As of March 8, 1999,  there  were  issued  and  outstanding  $1,553,938
shares of the registrant's Common Stock.

         Transitional Small Business Disclosure Format (check one):  YES   NO X 
                                                                        --   -- 

                                        DOCUMENTS INCORPORATED BY REFERENCE

1.       Portions of the Annual Report to Stockholders for the Fiscal Year ended
         December 31, 1998. (Part II) 
2.       Portions of the Proxy Statement for the Annual Meeting of  Stockholders
         for the Fiscal Year ended December 31, 1998. (Part III)


<PAGE>


                                     PART I

Forward-Looking Statements

         First Kansas  Financial  Corporation  (the  "Company") may from time to
time make written or oral  "forward-looking  statements",  including  statements
contained in the Company's  filings with the Securities and Exchange  Commission
(including this Annual Report on Form 10-KSB and the exhibits  thereto),  in its
reports to stockholders and in other  communications  by the Company,  which are
made in good faith by the Company  pursuant to the "safe  harbor"  provisions of
the Private Securities Litigation Reform Act of 1995.

         These forward-looking statements involve risks and uncertainties,  such
as statements of the Company's plans,  objectives,  expectations,  estimates and
intentions,  that are subject to change based on various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's  financial  performance to differ  materially from the
plans,  objectives,  expectations,  estimates and  intentions  expressed in such
forward-looking statements: the strength of the United States economy in general
and  the  strength  of  the  local  economies  in  which  the  Company  conducts
operations;  the effects of, and changes in, trade, monetary and fiscal policies
and laws,  including  interest  rate  policies of the Board of  Governors of the
Federal  Reserve  System,   inflation,   interest  rates,  market  and  monetary
fluctuations;  the timely  development  of and  acceptance  of new  products and
services of the Company and the perceived  overall  value of these  products and
services by users,  including  the  features,  pricing  and quality  compared to
competitors'  products and  services;  the  willingness  of users to  substitute
competitors' products and services for the Company's products and services;  the
success of the  Company in  gaining  regulatory  approval  of its  products  and
services,  when required;  the impact of changes in financial services' laws and
regulations   (including  laws  concerning   taxes,   banking,   securities  and
insurance);  technological changes,  acquisitions;  changes in consumer spending
and  saving  habits;  and the  success  of the  Company  at  managing  the risks
resulting from these factors.

         The Company  cautions that the listed  factors are not  exclusive.  The
Company does not  undertake  to update any  forward-looking  statement,  whether
written  or oral,  that may be made  from  time to time by or on  behalf  of the
Company.

Item 1.  Description of Business
--------------------------------

General

         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.

                                        2

<PAGE>

         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").  The Bank is a member of and owns capital stock in the 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.

Competition

         Competition   for   deposits   comes  from  other   insured   financial
institutions  such as commercial  banks,  thrift  institutions,  credit  unions,
finance  companies,  and multi-state  regional banks in the Bank's market areas.
Competition for funds also includes a number of insurance products sold by local
agents and investment products such as mutual funds and other securities sold by
local and  regional  brokers.  Loan  competition  varies  depending  upon market
conditions and comes from commercial banks, thrift  institutions,  credit unions
and mortgage bankers.

Lending Activities

         The  following  table sets forth  information  concerning  the types of
loans held by the Bank.

<TABLE>
<CAPTION>
                                                              At December 31,
                                                              ---------------
                                                      1998                       1997
                                                      ----                       ----
                                             Amount        Percent      Amount         Percent
                                             ------        -------      ------         -------
                                                          (Dollars in thousands)
<S>                                            <C>          <C>        <C>              <C>   
Type of Loans:
Mortgage loans:
  One- to four-family..................        37,884       91.47%     $42,853          91.29%
  Multi-family.........................             0        0.00        1,045           2.23
  Commercial...........................           471        1.13          535           1.14
  Land.................................           264         .64          141           0.30
  Construction.........................           151         .36          126           0.27
                                               ------       -----       ------         ------
    Total mortgage loans...............        38,770       93.60       44,700          95.23
                                               ------       -----       ------         ------
Consumer loans.........................         2,115        5.10        1,728           3.68
Commercial loans.......................           537        1.30          513           1.09
                                               ------       -----       ------         ------
    Total loan portfolio...............        41,422      100.00%      46,941         100.00%
                                               ------      ======       ------         ======
Less:
  Loans in process.....................            31                       81
  Deferred fees and discounts..........           116                      118
  Allowance for loan losses............           206                      179
                                               ------                   ------
    Total loans receivable, net........        41,069                  $46,563
                                               ======                   ======
</TABLE>


                                        3

<PAGE>

         The  following  table sets forth the  estimated  maturity of the Bank's
loan  portfolio at December 31, 1998.  The table does not include the effects of
possible prepayments or scheduled principal  repayments.  All mortgage loans are
shown as  maturing  based on the date of the last  payment  required by the loan
agreement. All commercial and consumer loans shown in the table below have fixed
interest rates. The mortgage portfolio is comprised of $13,695,000 in fixed rate
loans and $25,075,000 in variable rate loans.

<TABLE>
<CAPTION>

                                              Mortgage    Commercial    Consumer       Total
                                              Loans(1)       Loans       Loans         Loans
                                              --------    ----------    --------       -----
                                                                (In thousands)
<S>                                         <C>           <C>          <C>         <C>    
Amounts due:
Within 1 year...................              $   220       $   79       $  471      $   770
Over 1 to 5 years...............                1,249          401        1,555        3,205
Over 5 years....................               37,301           57           89       37,447
                                               ------        -----        -----       ------
  Total amount due..............              $38,770       $  537       $2,115      $41,442
                                               ======        =====        =====       ======
</TABLE>

------------------------
(1)      Includes construction loans.

Mortgage Loans:

         One- to  Four-Family  Residential  Loans.  The Bank's  primary  lending
activity consists of originating and purchasing one- to four-family  residential
mortgage  loans secured by property  located in the Bank's  market areas.  About
two-thirds of the Bank's loan portfolio is comprised of adjustable-rate mortgage
("ARM") loans which the Bank retains for its portfolio.  The remainder  consists
of fixed-rate loans which the Bank originates  either to resell in the secondary
market or to retain in its portfolio,  depending on the yield on the loan and on
its asset/liability  management objectives.  Residential real estate loans often
remain  outstanding for  significantly  shorter  periods than their  contractual
terms because borrowers may refinance or repay loans at their option.

         The  interest  rate on the Bank's ARM loans is based on an index plus a
stated margin.  The Bank usually offers discounted initial interest rates on ARM
loans. Borrowers qualify for the ARM loan at the initial interest rate. However,
ARM loan borrowers are, for loan approval, required to meet lower income-to-debt
ratios than those required for fixed-rate  loans. ARM loans provide for periodic
interest rate  adjustments  upward or downward of up to 1% per  adjustment.  The
interest  rate may not  increase  more  than 5% over the life of the  loan.  The
Bank's ARM loans typically reprice annually, after the initial adjustment period
of one year, three years or five years, with most loans having terms to maturity
of 30 years. ARM loans are offered to all applicants;  however,  in a relatively
low interest rate  environment,  borrowers may prefer a fixed-rate to ARM loans.
Consumer  preference  in the Bank's  market area for ARM loans has recently been
weak.

         The Bank's fixed-rate loans generally have terms of 15 or 30 years with
principal and interest  payments  calculated using up to a 30-year  amortization
period.  Loans  originated with a  loan-to-value  ratio in excess of 80% require
private mortgage  insurance.  The maximum  loan-to-value ratio on mortgage loans
secured by nonowner  occupied  properties  generally is limited to 80%. The Bank
conforms  its  loans to the  standards  that are used in the  mortgage  industry
allowing its loans to be readily sold in the secondary market. The Bank does not
currently retain servicing rights to those loans sold in the secondary market.

         ARM loans decrease the risk  associated  with changes in interest rates
by  periodically  repricing,  but involve other risks because as interest  rates
increase, the underlying payments by the borrower increase,  thus increasing the
potential for default by the borrower.  At the same time, the  marketability  of
the underlying

                                        4

<PAGE>


collateral may be adversely affected by higher interest rates. Upward adjustment
of the  contractual  interest  rate is also limited by the maximum  periodic and
lifetime  interest  rate  adjustment  permitted  by  the  loan  documents,  and,
therefore is  potentially  limited in  effectiveness  during  periods of rapidly
rising interest rates.

         Mortgage  loans  originated  and  held by the  Bank  generally  include
due-on-sale clauses.  This gives the Bank the right to deem the loan immediately
due and payable in the event the  borrower  transfers  ownership of the property
securing the mortgage loan without the Bank's consent.

         Multi-Family  and Commercial  Loans.  Multi-family and commercial loans
generally  have a  loan-to-value  ratio of 80% or less.  These loans do not have
terms  greater  than 30 years.  The  Bank's  multi-family  loans are  secured by
multiple six-plex and four-plex units.  Commercial real estate loans are secured
by office buildings, churches and other commercial properties.

         Multi-family  and commercial  real estate lending  entails  significant
additional risks compared to residential property lending. These loans typically
involve large loan balances to single borrowers or groups of related  borrowers.
The repayment of these loans typically is dependent on the successful  operation
of the real estate project  securing the loan.  These risks can be significantly
affected  by supply  and demand  conditions  in the market for office and retail
space and may also be subject to adverse conditions in the economy.  To minimize
these risks,  the Bank generally  limits this type of lending to its market area
and to borrowers who are  otherwise  well known to the Bank.  Most  construction
loans convert to permanent loans with the Bank after 6 months.

         Residential Construction Loans. The Bank makes residential construction
loans/permanent  loans  on  one-  to  four-family  residential  property  to the
individuals   who  will  be  the  owners  and  occupants   upon   completion  of
construction.  Only interest payments are required during construction and these
are to be paid from the borrower's own funds. These loans are underwritten using
the same criteria as applied in the underwriting of one- to four-family mortgage
loans. The maximum  loan-to-value ratio is 80%. Upon completion of construction,
regular principal and interest payments commence.

         Land  Loans.  The Bank also makes land loans  which are  secured by raw
land in its market area, to be used for agriculture or residential construction.
At December 31, 1998,  land loans totalled  $264,000 or .64% of the Bank's total
loan portfolio.

Consumer Loans:

         The Bank  offers  consumer  loans in order to provide a wider  range of
financial  services to its  customers  and because  these loans  provide  higher
interest  rates and shorter terms than many of the Bank's other loans.  Consumer
loans  totalled  $2.1 million or 5.10% of the Bank's total loans at December 31,
1998. The Bank's consumer loans consist primarily of direct automobile loans.

         Consumer loans may entail greater risk than residential mortgage loans,
particularly  in the case of  consumer  loans that are  unsecured  or secured by
assets that depreciate rapidly.  Repossessed collateral for a defaulted consumer
loan may not be  sufficient  for  repayment  of the  outstanding  loan,  and the
remaining deficiency may not be collectible.

Commercial Loans:

         The Bank's  commercial  loan portfolio is comprised of loans to several
local businesses, and at December 31, 1998 represented $537,000, or 1.30% of the
Bank's total loan portfolio.


                                        5

<PAGE>


         Loan Approval  Authority and  Underwriting.  The Bank's loan committee,
which is  comprised  of Larry V.  Bailey,  Daniel G. Droste and Galen E. Graham,
approves all loans.  The loan  committee  has  authority to approve loans in any
category up to $400,000. Loan requests above this amount must be approved by the
Board of Directors.

         Upon  receipt  of a  completed  loan  application  from  a  prospective
borrower,  a credit report is ordered.  Income and certain other  information is
verified. If necessary,  additional financial  information may be requested.  An
appraisal or other  estimate of value of the real estate  intended to be used as
security  for the  proposed  loan  is  obtained.  Appraisals  are  processed  by
independent fee appraisers.  Private mortgage insurance will also be required in
certain instances.

         Construction/permanent  loans are made on individual properties.  Funds
advanced during the construction  phase are held in a  loans-in-process  account
and disbursed at various stages of completion,  following physical inspection of
the construction by a loan officer or appraiser.

         Either title insurance or a title opinion is generally  required on all
real estate loans. Borrowers also must obtain fire and casualty insurance. Flood
insurance is also  required on loans  secured by property  which is located in a
flood zone.

         Loan  Commitments.   Written   commitments  are  given  to  prospective
borrowers on all approved real estate loans. Generally,  the commitment requires
acceptance within 60 days of the loan application. Loan commitments in excess of
this period may be issued upon payment of a non-refundable fee or upon agreement
on an interest rate float,  allowing the Bank to adjust the interest rate on the
loan. As of December 31, 1998, there were no outstanding mortgage commitments.

         Loans to One Borrower.  The maximum  amount of loans which the Bank may
make to any one  borrower  may not exceed the  greater of $500,000 or 15% of its
unimpaired capital and unimpaired  surplus.  The Bank may lend an additional 10%
of its unimpaired capital and unimpaired surplus if the loan is fully secured by
readily marketable collateral. The Bank's maximum loan to one borrower limit was
$3.2 million at December 31, 1998. At December 31, 1998, the aggregate  loans of
the Bank's five largest borrowers have outstanding  balances of between $266,000
and $414,000. All of these loans were performing in accordance with their terms.

Non-performing and Problem Assets

         Loan  Delinquencies.  When a mortgage  loan becomes 16 days past due, a
notice of  nonpayment  is sent to the  borrower.  After the loan becomes 22 days
past due,  another notice of nonpayment,  accompanied by a personal  letter,  is
sent to the borrower.  If the loan continues in a delinquent  status for 90 days
past due and no repayment  plan is in effect,  foreclosure  proceedings  will be
initiated. The borrower will be notified when foreclosure is commenced.

         Loans are reviewed on a monthly  basis and are placed on a  non-accrual
status when, in management's  opinion,  the collection of additional interest is
doubtful. Interest accrued and unpaid at the time a loan is placed on nonaccrual
status is charged against interest income. Subsequent interest payments, if any,
are either applied to the outstanding  principal balance or recorded as interest
income, depending on the assessment of the ultimate collectibility of the loan.


                                        6

<PAGE>



         Non-performing  Assets.  The  following  table sets  forth  information
regarding nonaccrual loans and real estate owned, as of the dates indicated. For
the year ended December 31, 1998,  interest income that would have been recorded
on loans  accounted for on a nonaccrual  basis under the original  terms of such
loans was immaterial.
                                                          At December 31,
                                                          ---------------
                                                        1998           1997
                                                        ----           ----
                                                           (In thousands)
Loans accounted for on a non-accrual basis:        
  One- to four-family..............................    $   --        $   75
  Consumer.........................................         5             4
                                                        -----         -----
    Total .........................................         5            79
                                                        -----         -----

Accruing loans delinquent 90 days or more:
  One- to four-family..............................                      --
  Consumer.........................................        --            --
                                                        -----         -----
    Total..........................................        --            --
                                                        -----         -----
      Total non-performing loans...................         5            79
                                                        -----         -----

Foreclosed assets:
  One- to four-family..............................                      --
  Consumer.........................................        --            --
                                                        -----         -----
    Total..........................................        --            --
                                                        -----         -----

Total non-performing assets........................    $    5        $   79
                                                        =====         =====
Total non-performing loans as a
  percentage of net loans..........................      0.01%         0.17%
                                                         ====          ====
Total non-performing assets as a
  percentage of total assets.......................      0.01%         0.08%
                                                         ====          ====


         Classified Assets. OTS regulations provide for a classification  system
for problem  assets of savings  associations  which  covers all problem  assets.
Under this classification system, problem assets of savings institutions such as
the Bank are  classified as  "substandard,"  "doubtful,"  or "loss." An asset is
considered  substandard if it is inadequately protected by the current net worth
and paying  capacity  of the  borrower  or of the  collateral  pledged,  if any.
Substandard  assets include those  characterized  by the "distinct  possibility"
that the savings  institution  will sustain "some loss" if the  deficiencies are
not corrected. Assets classified as doubtful have all of the weaknesses inherent
in  those  classified  substandard,  with  the  added  characteristic  that  the
weaknesses  present make  "collection  or  liquidation in full," on the basis of
currently  existing facts,  conditions,  and values,  "highly  questionable  and
improbable." Assets classified as loss are those considered  "uncollectible" and
of such little value that their  continuance as assets without the establishment
of a specific loss reserve is not warranted.  Assets may be designated  "special
mention"   because  of  potential   weakness  that  do  not  currently   warrant
classification in one of the aforementioned categories.

         When  a  savings  association   classifies  problem  assets  as  either
substandard or doubtful,  it may establish general allowances for loan losses in
an amount  deemed  prudent by  management.  General  allowances  represent  loss
allowances which have been established to recognize the inherent risk associated
with lending activities,  but which, unlike specific  allowances,  have not been
allocated to particular problem assets.  When a savings  association  classifies
problem assets as loss, it is required either to

                                        7

<PAGE>


establish a specific  allowance  for losses equal to 100% of that portion of the
asset so  classified  or to charge  off such  amount.  A  savings  association's
determination  as to the  classification  of its  assets  and the  amount of its
valuation  allowances  is  subject  to  review  by the OTS,  which may order the
establishment of additional  general or specific loss  allowances.  A portion of
general loss  allowances  established to cover possible losses related to assets
classified as  substandard  or doubtful may be included in determining a savings
association's regulatory capital.  Specific valuation allowances for loan losses
generally do not qualify as regulatory capital.

         At December 31, 1998, the Bank had loans classified as special mention,
substandard, doubtful and loss as follows:
                                                       At
                                                  December 31,
                                                      1998
                                                      ----
                                                 (In thousands)

Special mention.............................        $    0
Substandard.................................            19
Doubtful assets.............................             4
Loss assets.................................             0
                                                     -----
     Total..................................        $   23
                                                     =====



         Allowances  for Loan Losses.  A provision for loan losses is charged to
operations  based on management's  evaluation of the losses that may be incurred
in the Bank's loan portfolio. The evaluation, including a review of all loans on
which full  collectibility  of  interest  and  principal  may not be  reasonably
assured,  considers:  (i) the Bank's past loan loss  experience,  (ii) known and
inherent risks in the Bank's 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.

         The Bank monitors its allowance for loan losses and makes  additions to
the allowance as economic  conditions  dictate.  Although the Bank maintains its
allowance for loan losses at a level that management  considers adequate for the
inherent risk of loss in the Bank's loan  portfolio,  future losses could exceed
estimated  amounts and additional  provisions for loan losses could be required.
In addition,  management's  determination as to the amount of allowance for loan
losses is  subject  to review by the OTS,  as part of its  examination  process.
After  a  review  of the  information  available,  the  OTS  might  require  the
establishment of an additional allowance.



                                        8

<PAGE>

         The following  table  illustrates  the  allocation of the allowance for
loan losses for each category of loans.  The allocation of the allowance to each
category is not necessarily indicative of future loss in any particular category
and does not restrict the Bank's use of the  allowance to absorb losses in other
loan categories.
<TABLE>
<CAPTION>

                                                                 At December 31,
                                                                 -------------
                                                         1998                      1997
                                                         ----                      ----
                                                             Percent of                 Percent of
                                                             Loans in                    Loans in
                                                               Each                        Each
                                                             Category                    Category
                                                             to Total                    to Total
                                                  Amount       Loans        Amount        Loans
                                                  ------       -----        ------        -----
                                                              (Dollars in thousands)
<S>                                            <C>            <C>          <C>         <C>   
Mortgage loans
  One- to four-family......................       $  155         91.47%      $137         91.29%
  Multi-family.............................           --            --         --          2.23
  Commercial...............................           --          1.13         --          1.14
  Land.....................................           --           .64         --          0.30
  Construction.............................           --           .36         --          0.27

Consumer loans.............................           51          5.10         42          3.68
Commercial loans...........................           --          1.30         --          1.09
                                                   -----        ------        ---        ------
     Total allowance.......................       $  206        100.00%      $179        100.00%
                                                   =====        ======        ===        ======
</TABLE>


         The following table sets forth  information  with respect to the Bank's
allowance for loan losses at the dates and for the periods indicated:

                                                        At December 31,
                                                        ---------------
                                                    1998               1997
                                                    ----               ----
                                                     (Dollars in thousands)

Balance at beginning of period...............    $    179            $    146
                                                  -------             -------
Charge-offs:
  One- to four-family........................          --    
  Consumer...................................          (5)                 (5)
                                                  -------             -------
                                                       (5)                 (5)
                                                  -------             -------
Recoveries:
  One- to four-family........................          --    
  Consumer ..................................           2                   3
                                                  -------             -------
                                                        2                   3
                                                  -------             -------
Net charge-offs..............................         (3)                 (2)
Provision for loan losses....................          30                  35
                                                  -------             -------
Balance at end of period.....................    $    206            $    179
                                                  =======             =======

Allowance for loan losses to total non-
  performing loans at end of period..........     4,120.0%             226.58%
                                                  =======             =======

Allowance for loan losses to net
  loans at end of period.....................         .50%               0.38%
                                                  =======             =======


                                        9

<PAGE>


Investment Activities

         Investment  Securities.  The Bank is required under federal regulations
to maintain a minimum amount of liquid assets which may be invested in specified
short-term securities and certain other investments.  See "Regulation -- Savings
Institution  Regulation  -- Federal  Home Loan Bank  System"  and  "Management's
Discussion and Analysis -- Liquidity and Capital Resources." The level of liquid
assets  varies  depending  upon several  factors,  including:  (i) the yields on
investment alternatives,  (ii) management's judgment as to the attractiveness of
the yields then available in relation to other opportunities,  (iii) expectation
of future yield  levels,  (iv)  asset/liability  management,  and (v) the Bank's
projections as to the short-term demand for funds to be used in loan origination
and  other  activities.   The  Bank  classifies  its  investment  securities  as
"available-for-sale"  or  "held-to-maturity" in accordance with SFAS No. 115. At
December 31, 1998, the Bank's investment portfolio policy permitted  investments
in instruments such as: (i) U.S. Treasury obligations,  (ii) U.S. federal agency
or federally  sponsored agency obligations,  (iii) local municipal  obligations,
(iv) mortgage-backed securities, (v) banker's acceptances,  (vi) certificates of
deposit,  (vii) federal funds, including FHLB overnight and term deposits (up to
six months), (viii) collateralized  automobile receivables,  and (ix) investment
grade corporate bonds,  commercial paper and mortgage derivative  products.  See
"-- Mortgage-Backed Securities." The Board of Directors may authorize additional
investments.

         The   Bank's    investment    securities    "available-for-sale"    and
"held-to-maturity"  portfolios at December 31, 1998, did not contain  securities
of any  issuer  with an  aggregate  book  value in excess  of 10% of the  Bank's
equity, excluding those issued by the United States government agencies.

         Mortgage-Backed  Securities. To supplement lending activities, the Bank
has  invested  in  residential  mortgage-backed  securities  and  collateralized
mortgage  obligations   ("CMOs").   Mortgage-backed   securities  can  serve  as
collateral for borrowings and, through sale, maturity or repayments, as a source
of liquidity. Mortgage-backed securities represent a participation interest in a
pool of  single-family  or  other  type of  mortgages.  Principal  and  interest
payments  are  passed  from the  mortgage  originators,  through  intermediaries
(generally   quasi-governmental   agencies)   that   pool  and   repackage   the
participation  interests in the form of  securities,  to  investors  such as the
Bank.  The  quasi-governmental  agencies  guarantee the payment of principal and
interest to  investors  and include the Federal Home Loan  Mortgage  Corporation
("FHLMC"),  the  Government  National  Mortgage  Association  ("GNMA"),  and the
Federal National Mortgage Association ("FNMA").

         At December 31, 1998, the Bank's  mortgage-backed  securities portfolio
classified as  "available-  for-sale"  totalled  $10.6  million,  and the Bank's
mortgage-backed  securities portfolio classified as "held-to- maturity" totalled
$3.5  million.  Each  security  was  issued  by GNMA,  FHLMC  or FNMA.  Expected
maturities will differ from contractual  maturities due to scheduled  repayments
and because  borrowers may have the right to call or prepay  obligations with or
without prepayment penalties.

         Mortgage-backed  securities  typically are issued with stated principal
amounts.  The  securities  are backed by pools of mortgages that have loans with
interest  rates that are  within a set range and have  varying  maturities.  The
underlying   pool  of  mortgages  can  be  composed  of  either   fixed-rate  or
adjustable-rate  mortgage  loans.   Mortgage-backed   securities  are  generally
referred to as mortgage participation certificates or pass-through certificates.
The  interest  rate risk  characteristics  of the  underlying  pool of mortgages
(i.e.,  fixed-rate or adjustable-rate) and the prepayment risk, are passed on to
the certificate holder. The life of a mortgage-backed  pass-through  security is
equal to the life of the underlying mortgages. Mortgage-backed securities issued
by FHLMC and GNMA make up a majority of the pass-through certificates market.


                                       10

<PAGE>


         CMOs have been developed in response to investor concerns regarding the
uncertainty  of  cash  flows  associated  with  the  prepayment  option  of  the
underlying  mortgagor.  A CMO can be collateralized  directly by mortgages,  but
more often is collateralized by mortgage-backed  securities issued or guaranteed
by the GNMA, FNMA or the FHLMC and held in trust for CMO investors.  In contrast
to mortgage-backed securities in which the cash flow is received pro rata by all
security  holders,  the cash flow from the  mortgage  loans  underlying a CMO is
segmented  and paid in  accordance  with a  predetermined  priority to investors
holding various CMO tranches.  Different classes of bonds are created, each with
its own stated  maturity,  estimated  average life,  coupon rate, and prepayment
characteristics.  Notwithstanding  the  importance  of the CMO  structure  to an
evaluation of timing and amount of cash flow, it is essential to understand  the
coupon  rates on the  mortgages  underlying  the CMO to  assess  the  prepayment
sensitivity  of the CMO  tranches.  Most  of the  CMOs  owned  by the  Bank  are
government agency guaranteed.  A few of the CMOs consist of small private issues
collateralized   by  mortgage  loans  and  include  extra  credit   enhancements
sufficient to earn the highest credit ratings from independent  rating agencies.
At   December   31,   1998,    the   Bank's   CMO   portfolio    classified   as
"available-for-sale"  had a carrying value of $16.7 million,  and the Bank's CMO
portfolio  classified  as  "held-to-maturity"  had a  carrying  value  of  $19.0
million.

         Investment Portfolio. The following table sets forth the carrying value
of  the  Bank's  investments.  See  Notes  3, 4 and 5 to  the  Bank's  Financial
Statements.

                                                            At December 31,
                                                            ---------------
                                                          1998          1997
                                                          ----          ----
                                                            (In thousands)

Investments:                                                        
U.S. agency securities...............................    $ 3,139       $ 3,852
Mortgage-backed securities held-to-maturity..........     22,521        20,937
Mortgage-backed securities available-for-sale........     27,282        16,833
State and municipal obligations held-to-maturity.....        624             -
Other - held-to-maturity.............................        949             -
Interest-bearing deposits............................      7,000         3,400
FHLB stock...........................................        509           661
                                                          ------       -------
   Total investments ................................    $62,024       $45,683
                                                          ======        ======



                                       11

<PAGE>



         The following table sets forth certain information  regarding scheduled
maturities,  carrying  values,  approximate  fair values,  and weighted  average
yields for the Bank's investments at December 31, 1998 by contractual  maturity.
The following  table does not take into  consideration  the effects of scheduled
repayments or the effects of possible prepayments.

<TABLE>
<CAPTION>
                                      One Year           One to          Five to            More than             Total           
                                       or Less         Five Years       Ten Years           Ten Years      Investment Securities
                                  ----------------  ---------------- -----------------  ----------------  -------------------------
                                  Carry-  Weighted  Carry-  Weighted  Carry-  Weighted  Carry-  Weighted  Carry-  Weighted  
                                  ing      Average   ing    Average    ing    Average    ing    Average    ing    Average   Market
                                  Value    Yield    Value    Yield    Value    Yield    Value    Yield    Value    Yield     Value
                                  ------  -------   ------  --------  ------  --------  ------  --------  ------  --------  ------- 
                                                                     (Dollars in thousands)
<S>                             <C>       <C>     <C>      <C>     <C>       <C>     <C>      <C>     <C>         <C>     <C>    
Investments:                                  
  U.S. agency securities.......  $   --      --%   $1,000    6.34%   $1,000    6.30%  $ 1,139   8.05%   $ 3,139     6.95%   $ 3,148
  Mortgage-backed securities...      --      --        --      --     6,021    6.45    43,781   5.71     49,802     5.80     49,926
  Interest-bearing deposits....   7,000    4.75        --      --        --      --        --     --      7,000     4.75      7,000
  FHLB stock...................      --      --        --      --        --      --       509   6.75        509     6.75        509
  State municipal obligations..      --      --        --      --        --      --       624   4.59        624     4.59        632
  Other debt securities........      --      --        --      --        --      --       949   6.60        949     6.60        949
                                  -----    ----     -----   -----     -----    ----    ------   ----     ------     ----     ------
     Total investments.........  $7,000    4.75%   $1,000    6.34%   $7,021    6.43%  $47,002   5.78%   $62,023     5.75%   $62,164
                                  =====    ====     =====    ====     =====    ====    ======   ====     ======     ====     ======
</TABLE>
                                                        

                                       12

<PAGE>


Sources of Funds

         Deposits are the Bank's major external  source of funds for lending and
other investment  purposes.  Funds are also derived from the receipt of payments
on loans and  prepayment of loans and  maturities of investment  securities  and
mortgage-backed  securities  and,  to  a  much  lesser  extent,  borrowings  and
operations.  Scheduled loan principal  repayments are a relatively stable source
of  funds,   while  deposit  inflows  and  outflows  and  loan  prepayments  are
significantly influenced by general interest rates and market conditions.

         Deposits.  Consumer and commercial  deposits are attracted  principally
from within the Bank's  primary  market area through the offering of a selection
of deposit  instruments  including checking accounts,  regular savings accounts,
money market  accounts,  and term  certificate  accounts.  IRA accounts are also
offered.  Deposit account terms vary according to the minimum balance  required,
the time period the funds must remain on deposit, and the interest rate.

         The  interest  rates paid by the Bank on deposits are set weekly at the
direction of the Bank's senior  management.  Interest rates are determined based
on the  Bank's  liquidity  requirements,  interest  rates  paid  by  the  Bank's
competitors,  and the Bank's growth goals and applicable regulatory restrictions
and requirements.

         Non-interest bearing demand,  regular savings,  money market demand and
NOW  accounts  constituted  $30.8  million,  or  36.5%,  of the  Bank's  deposit
portfolio  at  December  31,  1998 and the  average  interest  rate paid on such
interest-bearing  accounts  at that  date was  2.50%.  Certificates  of  deposit
constituted  $53.6 million,  or 63.5%, of the deposit  portfolio,  of which $3.3
million,  or 3.9%, of the deposit  portfolio were  certificates  of deposit with
balances of $100,000 or more. Such deposits are offered at negotiated rates. The
average  interest rates paid on certificates  of deposits with deposit  balances
under $100,000 and over $100,000 were 5.47% and 5.48%, respectively, at December
31, 1998. As of December 31, 1998, the Bank had no brokered deposits.

         The following table indicates the amount of the Bank's  certificates of
deposit of $100,000 or more by time remaining  until maturity as of December 31,
1998.

                                           Certificates
          Maturity Period                  of Deposits
          ---------------                  ------------
                                          (In thousands)

          Within three months                 $   300       
          Three through six months                600
          Six through twelve months             1,400
          Over twelve months                    1,000
                                                -----
                                               $3,300
                                                =====

         Borrowings.  Advances  (borrowings)  may be  obtained  from the FHLB of
Topeka to supplement the Bank's supply of lendable funds. Advances from the FHLB
of Topeka are  typically  secured by a pledge of the Bank's stock in the FHLB of
Topeka, a portion of the Bank's first mortgage loans and other assets. Each FHLB
credit program has its own interest rate (which may be fixed or adjustable)  and
range of  maturities.  The Bank may borrow up to $69.6  million from the FHLB of
Topeka.  If the need arises,  the Bank may also access the Federal  Reserve Bank
discount window to supplement its supply of lendable

                                       13

<PAGE>


funds  and to meet  deposit  withdrawal  requirements.  At  December  31,  1998,
borrowings from the FHLB of Topeka totalled $0.7 million.  The Bank had no other
borrowings outstanding.

         The following table sets forth the terms of the Bank's  short-term FHLB
advances.

                                           At or for the period ended
                                           --------------------------
                                     December 31, 1998   December 31, 1997
                                     -----------------   -----------------
                                            (Dollars in thousands)

Balance at year end.................      $  650            $  2,550
Average balance outstanding
  during the period.................         808               7,748
Maximum amount outstanding
  at any month-end during
  the period........................       2,550              10,350
Weighted average interest rate
  during the period.................        5.73%               6.71%


Personnel

         At  December  31,  1998,  the Bank had 29  full-time  employees  and 12
part-time  employees.  None  of  the  Bank's  employees  are  represented  by  a
collective bargaining group.  Management believes that its relationship with the
employees is good.

Subsidiary Activity

         The Bank is  permitted  to invest up to 2% of its assets in the capital
stock of, or loans to, subsidiary  corporations.  An additional investment of 1%
of assets is permitted when the additional  investment is utilized primarily for
community  development purposes.  Pursuant to these limitations,  as of December
31, 1998, the Bank was authorized to invest up to approximately  $2.1 million in
the stock of, or loans to, service  corporations (based upon the 2% limitation).
The Bank has one  wholly-owned  service  corporation,  First  Enterprises,  Inc.
("FEI").  In recent years, FEI has been primarily  utilized as an agency for the
sale of credit life  insurance,  mortgage life  insurance and certain fixed- and
variable-rate  annuities.  However,  in  August  1995,  the Bank  purchased  for
development  through  FEI an 8.3 acre tract of land in Paola,  known as Baptiste
Commons,  as seven commercial  sites, one of which is the site of our new office
building.  The Bank's  investment in this real estate  development  project will
continue to decline as the remaining  lots are sold.  At December 31, 1998,  the
total investment in this real estate was $361,000.

Legal Proceedings

         The Bank is, from time to time, a party to legal proceedings arising in
the ordinary course of its business,  including legal proceedings to enforce its
rights against borrowers. The Bank is not a party to any legal proceedings which
are expected to have a material adverse effect on its financial statements.


                                       14

<PAGE>


Regulation

         Set  forth  below is a brief  description  of  certain  laws  which are
related to the regulation of the Company and the Bank. The following description
does not purport to be complete and is qualified in its entirety by reference to
all applicable laws and regulations.

Company Regulation

         General.  The  Company is a unitary  savings and loan  holding  company
subject to  regulatory  oversight by the OTS. The Company files reports with the
OTS and is subject to regulation and  examination  by the OTS. In addition,  the
OTS has enforcement  authority over the Company and its non- savings association
subsidiaries,  should such subsidiaries be formed, which also permits the OTS to
restrict or prohibit  activities that are determined to be a serious risk to the
subsidiary  savings  association.  This  regulation  and  oversight  is intended
primarily  for the  protection  of the  depositors  of the  Bank and not for the
benefit of stockholders of the Company.

         Qualified  Thrift  Lender Test.  As a unitary  savings and loan holding
company, the Company generally is not subject to activity restrictions, provided
the Bank  satisfies  the Qualified  Thrift  Lender  ("QTL") test. If the Company
acquires  control of another savings  association as a separate  subsidiary,  it
would become a multiple savings and loan holding company,  and the activities of
the  Company  and any of its  subsidiaries  (other  than the  Bank or any  other
savings association  insured by the Savings Association  Insurance Fund (SAIF"))
would become subject to restrictions applicable to bank holding companies unless
such  other  associations  each also  qualify  as a QTL and were  acquired  in a
supervisory acquisition.

Bank Regulation

         General. As a federally  chartered,  SAIF-insured  savings association,
the Bank is subject to extensive  regulation by the OTS and the Federal  Deposit
Insurance  Corporation (the "FDIC").  Lending  activities and other  investments
must comply with various federal statutory and regulatory requirements. The Bank
is also subject to certain reserve requirements promulgated by the FRB.

         The OTS, in conjunction with the FDIC,  regularly examines the Bank and
prepares  reports for the  consideration of the Bank's Board of Directors on any
deficiencies that are found in the Bank's  operations.  The Bank's  relationship
with its depositors and borrowers is also regulated to a great extent by federal
and state law,  especially in such matters as the ownership of savings  accounts
and the form and content of the Bank's mortgage documents.

         The Bank must file  reports  with the OTS and the FDIC  concerning  its
activities  and  financial  condition,   in  addition  to  obtaining  regulatory
approvals  prior to entering into certain  transactions  such as mergers with or
acquisitions  of other savings  institutions.  This  regulation and  supervision
establishes a comprehensive  framework of activities in which an institution can
engage and is intended  primarily for the protection of the SAIF and depositors.
The  regulatory  structure  also  gives  the  regulatory  authorities  extensive
discretion in connection with their  supervisory and enforcement  activities and
examination  policies,  including policies with respect to the classification of
assets and the  establishment  of adequate  loan loss  reserves  for  regulatory
purposes.  Any change in such regulations,  whether by the OTS, the FDIC, or the
U.S. Congress could have a material adverse impact on the Company, the Bank, and
their operations.

                                       15

<PAGE>


         Insurance of Deposit Accounts.  The Bank's deposit accounts are insured
by the SAIF to a maximum of $100,000 for each insured  member (as defined by law
and  regulation).  Insurance  of deposits may be  terminated  by the FDIC upon a
finding that the institution has engaged in unsafe or unsound  practices,  is in
an unsafe or unsound  condition  to  continue  operations  or has  violated  any
applicable law, regulation,  rule, order or condition imposed by the FDIC or the
institution's primary regulator.

         As a member of the SAIF, the Bank paid an insurance premium to the FDIC
equal to a minimum  of .061% of its  total  deposits.  The FDIC  also  maintains
another insurance fund, the Bank Insurance Fund ("BIF"), which primarily insures
commercial  bank  deposits.  Effective  September 30, 1995, the FDIC lowered the
insurance  premium of BIF insured deposits to a range of between 0.04% and 0.31%
of deposits with the result that most commercial banks would pay the lowest rate
of 0.04%.  Effective  January 1, 1996, the annual insurance premium for most BIF
members was lowered to $2,000.  These  reductions in insurance  premiums for BIF
members placed SAIF members at a competitive disadvantage to BIF members.

         Effective  September  30,  1996,  federal  law was revised to mandate a
one-time  special  assessment on SAIF members such as the Bank of  approximately
 .657% of deposits  held on March 31, 1995.  The Savings Bank recorded a $355,000
pre-tax expense for this assessment at September 30, 1996.  Beginning January 1,
1997,  the deposit  insurance  assessment  for most SAIF  members was reduced to
approximately  .065% of  deposits  on an annual  basis  through the end of 1999.
During this same  period,  BIF members will be assessed  approximately  .013% of
deposits.  After 1999,  assessments for BIF and SAIF members should be the same.
It is expected that these  continuing  assessments for both SAIF and BIF members
will be used to repay outstanding Financing  Corporation bond obligations.  As a
result  of these  changes,  beginning  January  1,  1997,  the  rate of  deposit
insurance assessed the Bank declined by approximately 70%.

         Regulatory  Capital  Requirements.   OTS  capital  regulations  require
savings  institutions to meet two capital standards:  (1) a leverage ratio (core
capital)  equal to at least 4% of total  adjusted  assets,  and (2) a risk-based
capital requirement equal to 8.0% of total risk-weighted assets.

         Dividend and Other Capital  Distribution  Limitations.  OTS regulations
require  the  Bank  to  give  the OTS 30 days  advance  notice  of any  proposed
declaration of dividends to the Company, and the OTS has the authority under its
supervisory  powers to prohibit  the payment of  dividends  to the  Company.  In
addition,  the Bank may not declare or pay a cash  dividend on its capital stock
if the effect of the dividend would be to reduce the  regulatory  capital of the
Bank  below the amount  required  for the  liquidation  account  established  in
connection with the Conversion.

         OTS regulations  impose  limitations upon all capital  distributions by
savings  institutions,  such  as  cash  dividends,  payments  to  repurchase  or
otherwise acquire its shares, payments to shareholders of another institution in
a cash-out merger,  and other  distributions  charged against capital.  The rule
establishes  three tiers of  institutions,  based primarily on an  institution's
capital  level.  An  institution  that  exceeds  all  fully  phased-in   capital
requirements  before  and  after  a  proposed  capital   distribution  ("Tier  1
institution")  and has not  been  advised  by the OTS that it is in need of more
than the normal  supervision can, after prior notice but without the approval of
the OTS, make capital  distributions during a calendar year equal to the greater
of (i) 100% of its net income to date during the  calendar  year plus the amount
that would reduce by one-half its "surplus  capital  ratio" (the excess  capital
over its fully phased-in capital  requirements) at the beginning of the calendar
year,  or (ii) 75% of its net income over the most recent four  quarter  period.
Any additional capital  distributions  require prior regulatory approval.  As of
December 31, 1998,  the Bank was a Tier 1  institution.  In the event the Bank's
capital fell below its fully

                                       16

<PAGE>


phased-in  requirement  or the OTS  notified it that it was in need of more than
normal  supervision,  the Bank's ability to make capital  distributions could be
restricted.  In addition, the OTS could prohibit a proposed capital distribution
by any institution, which would otherwise be permitted by the regulation, if the
OTS  determines  that such  distribution  would  constitute an unsafe or unsound
practice.

         Additionally, a savings association is prohibited from making a capital
distribution if, after making the distribution, the savings association would be
undercapitalized   (not  meet   either  of  its   minimum   regulatory   capital
requirements).

         In January 1999, the OTS issued an amendment to its current regulations
with  respect to capital  distributions  by savings  associations.  The  amended
regulations will be effective April 1, 1999.  Under the new regulation,  savings
associations  that would remain at least  adequately  capitalized  following the
capital distribution,  and that meet other specified requirements,  would not be
required to file a notice or application for capital distributions (such as cash
dividends) declared below specified amounts.  Under the new regulation,  savings
associations  which are  eligible  for  expedited  treatment  under  current OTS
regulations are not required to file a notice or an application  with the OTS if
(i) the  savings  association  would  remain  at  least  adequately  capitalized
following the capital  distribution and (ii) the amount of capital  distribution
does not exceed an amount equal to the savings association's net income for that
year to  date,  plus the  savings  association's  retained  net  income  for the
previous two years.  Thus,  under the new  regulation,  only  undistributed  net
income for the prior two years may be  distributed  in  addition  to the current
year's  undistributed  net income without the filing of an application  with the
OTS. Savings  associations which do not qualify for expedited treatment or which
desire to make a capital  distribution in excess of the specified  amount,  must
file an  application  with,  and obtain the approval of, the OTS prior to making
the  capital  distribution.  A savings  association  that is a  subsidiary  of a
savings and loan holding company, and under certain other circumstances, will be
required to file a notice with OTS prior to making the capital distribution. The
new OTS  limitations  on capital  distributions  are similar to the  limitations
imposed upon national banks.

         Qualified Thrift Lender Test. Savings institutions must meet a QTL test
or the definition of a domestic building and loan association under Section 7701
of the Internal Revenue Code (the "Code").  If the Bank maintains an appropriate
level of qualified  thrift  investments  (primarily  residential  mortgages  and
related  investments,   including  certain   mortgage-related   securities)  and
otherwise  qualifies as a QTL or a domestic  building and loan  association,  it
will continue to enjoy full borrowing  privileges from the FHLB of Atlanta.  The
required  percentage of qualified thrift  investments is 65% of assets while the
Code requires investments of 60% of assets.

         Federal Reserve System. The FRB requires all depository institutions to
maintain  non-interest  bearing  reserves  at  specified  levels  against  their
transaction accounts (primarily checking,  NOW, and Super NOW checking accounts)
and non-personal time deposits.

         Year  2000   Readiness.   The   approaching   millennium   is   causing
organizations  of all types to review their computer  systems for the ability to
properly  accommodate the year 2000. When computer systems were first developed,
two digits were used to  designate  the year in date  calculations  and "19" was
assumed for the century.  As a result,  there is  significant  concern about the
integrity of date sensitive calculations when the calendar rolls over to January
1, 2000. An older system could interpret 01/01/00 as January 1, 1900 potentially
causing major problems calculating  interest,  payment,  delinquency or maturity
dates.


                                       17

<PAGE>

         In 1997, the Company  initiated a review and assessment of all hardware
and software to determine its Year 2000 readiness.  The Company  utilizes and is
dependent upon data processing systems and software to conduct its business. The
data processing  systems and software  include those developed and maintained by
the  Company's  data  processing  provider and other  commercial  software.  The
Company's data processing  provider and many other mission critical vendors have
indicated their hardware and/or software is now Year 2000 compliant. The Company
has now  completed  the  installation  of its  renovated  hardware  and software
applications  and has  completed  the first stage of  testing.  A second test is
planned  early in the second  quarter  of 1999.  While  there  will be  expenses
incurred  during  the  next  two  years,  the  Company  has not  identified  any
situations at this time that will require  material cost  expenditures to become
fully  compliant.  Total costs to become Year 2000 compliant are estimated to be
less than $100,000.  Year 2000 expenditures through December 31, 1998 aggregated
approximately  $12,000. A worst case Year 2000 scenario for the Company would be
the absence of electrical  power and/or  communications  to the data  processing
center  which  supports  the  majority  of the mission  critical  systems to the
Company . The Company has considered  this and other scenarios in plans for Year
2000 readiness.  The Company has developed a Contingency Plan to address mission
critical  systems  failures  caused  by the Year  2000.  The plan  provides  for
procedures and resources necessary for the Company to provide continued services
to its customers for a period of time under a worst case scenario.

Item 2. Description of Property
-------------------------------

(a)      Properties.

         The Bank owns 4 of its 6  offices  and  leases 2 of them.  The net book
value of this real  property at December 31, 1998,  was  $1,331,000.  The Bank's
total  investment  in  office  equipment  had a net book  value of  $467,000  at
December 31, 1998.

                                Leased     Year       Year   Net Book Value Of
                                  or     Leased or   Lease   Real Property at
     Location                   Owned    Acquired   Expires  December 31, 1998
  ---------------               ------   ---------  -------  -----------------

MAIN OFFICE:
600 Main Street                  Owned       1974      N/A        $ 210,000  
Osawatomie, Kansas 66064                                          
                                                                  
2205 South Main                  Owned       1981      N/A        $ 152,000
Fort Scott, Kansas  66701                                         
                                                                  
100 West Amity                   Owned       1974      N/A        $  52,000
Louisburg, Kansas  66053                                          
                                                                  
125 North Mill                  Leased       1984      2002       $   2,000
Beloit, Kansas  67420                                             
                                                                  
762 4th Street                  Leased       1984      2004       $      --
Phillipsburg, Kansas  67661                                       
                                                                  
1310 Baptiste Drive              Owned       1998      N/A        $ 915,000
Paola, Kansas  66071                                                  
                                                                    

                                       18

<PAGE>


(b)      Investment Policies.

         See "Item 1.  Business"  above for a general  description of the Bank's
investment  policies and any  regulatory  or Board of  Directors'  percentage of
assets  limitations  regarding certain  investments.  The Bank's investments are
primarily acquired to produce income,  and to a lesser extent,  possible capital
gain.

         (1)      Investments in Real Estate or  Interests in  Real Estate.  See
"Item 1.  Business - Lending Activities and - Regulation of the Bank," and "Item
2.  Description of Property."

         (2)      Investments in Real Estate Mortgages.  See "Item 1.  Business
- Lending Activities and - Regulation of the Bank."

         (3)  Investments  in  Securities  of or Interests in Persons  Primarily
Engaged in Real Estate  Activities.  See "Item 1. Business - Lending  Activities
and - Regulation of the Bank."

(c)      Description of Real Estate and Operating Data.

         Not Applicable.

Item 3. Legal Proceedings
-------------------------

         There are various  claims and lawsuits in which the Company or the Bank
are  periodically  involved,  such as  claims  to  enforce  liens,  condemnation
proceedings  on properties in which the Bank holds  security  interests,  claims
involving  the making and  servicing of real  property  loans,  and other issues
incident to the Bank's business. In the opinion of management,  no material loss
is expected from any of such pending claims or lawsuits.

Item  4.  Submission of Matters to a Vote of Security Holders
-------------------------------------------------------------

         No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year.

                                     PART II

Item  5.  Market for Common Equity and Related Stockholder Matters
------------------------------------------------------------------

         The information  contained under the section captioned "Market Price of
the Common Stock" of the Company's  Annual Report to Stockholders for the fiscal
year ended December 31, 1998 (the "Annual  Report"),  is incorporated  herein by
reference.

Item  6.  Management's Discussion and Analysis or Plan of Operation
-------------------------------------------------------------------

         The  information  contained  in  the  section  captioned  "Management's
Discussion and Analysis of Financial Condition and Results of Operations" of the
Annual Report is incorporated herein by reference.

Item  7.  Financial Statements
------------------------------

         The  Registrant's   financial  statements  listed  under  Item  13  are
incorporated herein by reference.


                                       19

<PAGE>


Item  8.  Changes  in  and  Disagreements  with  Accountants  On  Accounting and
Financial Disclosure.
--------------------------------------------------------------------------------

         Not applicable.

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons: Compliance
with Section 16(a) of the Exchange Act.
--------------------------------------------------------------------------------

         The information  contained under the sections  captioned "Section 16(a)
Beneficial Ownership Reporting  Compliance" and "I - Information with Respect to
Nominees for Director,  Directors Continuing in Office, and Executive Officers -
Election of Directors" and " - Biographical  Information" in the Proxy Statement
is incorporated herein by reference.

Item 10.  Executive Compensation
--------------------------------

         The  information  contained  in the  section  captioned  "Director  and
Executive Officer Compensation" in the Proxy Statement is incorporated herein by
reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

         (a)      Security Ownership of Certain Beneficial Owners

                  Information  required by this item is  incorporated  herein by
                  reference  to the first  chart in the section  captioned  "I -
                  Information  with Respect to Nominees for Director,  Directors
                  Continuing  in Office,  and  Executive  Officers" in the Proxy
                  Statement.

         (b)      Security Ownership of Management

                  Information  required by this item is  incorporated  herein by
                  reference  to the first  chart in the section  captioned  "I -
                  Information  with Respect to Nominees for Director,  Directors
                  Continuing  in Office,  and  Executive  Officers" in the Proxy
                  Statement.

         (c)      Management  of  the  Registrant   knows  of  no  arrangements,
                  including  any  pledge  by any  person  of  securities  of the
                  Registrant,  the  operation of which may at a subsequent  date
                  result in a change in control of the Registrant.

Item 12.  Certain Relationships and Related Transactions
--------------------------------------------------------

         The  information  required  by this  item  is  incorporated  herein  by
reference  to  the  section   captioned   "Certain   Relationships  and  Related
Transactions" in the Proxy Statement.


                                       20

<PAGE>



Item 13. Exhibits, List, and Reports on Form 8-K
------------------------------------------------

         (a) Listed below are all  financial  statements  and exhibits  filed as
part of this report.

                  1.    The  consolidated  balance  sheets  of  First  Kansas
                        Financial  Corporation  as of  December  31, 1998 and
                        1997  and  the  related  consolidated  statements  of
                        earnings,  changes in  stockholders'  equity and cash
                        flows  for each of the  years in the two year  period
                        ended  December 31, 1998,  together  with the related
                        notes and the  independent  auditors'  report of KPMG
                        LLP independent certified public accountants.

                  2.    Schedules omitted as they are not applicable.

                  3.    The following exhibits are included in this Report or
                        incorporated herein by reference:

                        (a)     List of Exhibits:

                         3(i)   Articles   of  Incorporation  of  First  Kansas
                                Financial Corporation *
                         3(ii)  Bylaws of First Kansas Financial Corporation *
                        10      Employment Agreement with Larry V. Bailey
                        13      Annual Report to Stockholders for the fiscal
                                year ended December 31, 1998
                        21      Subsidiaries of the Registrant
                        27      Financial Data Schedule (electronic filing only)

---------------------
*         Incorporated by reference to the Company's  Registration  Statement on
          Form SB-2 (File No. 333- 48093)  declared  effective by the SEC on May
          8, 1998.



         (b)      Not applicable

                                       21

<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended,  the registrant has duly caused this report to
be signed on its behalf by the  undersigned,  thereunto  duly  authorized  as of
March 25, 1999.

                                       FIRST KANSAS FINANCIAL CORPORATION


                                       By: /s/Larry V. Bailey  
                                           -------------------------------------
                                           Larry V. Bailey
                                           President and Chief Executive Officer
                                           (Duly Authorized Representative)


         Pursuant to the requirement of the Securities  Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated as of March 25, 1999.



/s/J. Darcy Domoney                          /s/James E. Breckenridge
----------------------------------           -----------------------------------
J. Darcy Domoney                             James E. Breckenridge
Chairman                                     Director


/s/William R. Butler, Jr.                    /s/Roger L. Coltrin 
----------------------------------           -----------------------------------
William R. Butler, Jr                        Roger L. Coltrin
Director                                     Director


/s/Donald V. Meyer                           /s/Larry V. Bailey 
----------------------------------           -----------------------------------
Donald V. Meyer                              Larry V. Bailey
Director                                     Director, President, CEO and CFO