FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                        Consolidated Financial Statements

                           December 31, 2003 and 2002

                   (With Independent Auditors' Report Thereon)




<PAGE>

                               [KPMG Letterhead]


















                          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, 2003 and
2002, 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 auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
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, 2003 and 2002, and the
results of their  operations  and their cash flows for the years then ended,  in
conformity with accounting principles generally accepted in the United States of
America.



                                        /s/ KPMG LLP



Kansas City, Missouri
March 5, 2004

<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS
                           Consolidated Balance Sheets
                           December 31, 2003 and 2002
                      (In thousands, except per-share data)
<TABLE>
<CAPTION>
                    ASSETS                                                  2003         2002
                                                                         ---------    ---------
<S>                                                                    <C>            <C>
Cash and cash equivalents                                                $  12,915        9,558
Investment securities available-for-sale, at fair value                     11,954       14,181
Mortgage-backed securities available-for-sale, at fair value                36,809       39,357
Mortgage-backed securities held-to-maturity, at cost (fair value of
     $9,716 and $22,187, respectively)                                       9,376       21,548
Loans receivable, net                                                       72,605       57,896
Stock in Federal Home Loan Bank (FHLB) of Topeka, at cost                    2,673        2,650
Premises and equipment, net                                                  1,854        2,104
Real estate held for development                                               347          347
Other real estate owned                                                        379         --
Accrued interest receivable:
     Investment and mortgage-backed securities                                 339          468
     Loans receivable                                                          261          273
Cash surrender value of bank-owned life insurance                            1,650        1,581
Prepaid expenses and other assets                                              218          169
                                                                         ---------    ---------
                 Total assets                                            $ 151,380      150,132
                                                                         =========    =========
                     LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
     Deposits                                                            $  83,524       81,954
     Advances from borrowers for property taxes and insurance                  224          189
     Borrowings from FHLB of Topeka                                         50,000       50,000
     Accrued interest payable and other liabilities                          1,184        1,150
                                                                         ---------    ---------
                 Total liabilities                                         134,932      133,293
                                                                         ---------    ---------
Commitments
Stockholders' equity:
     Preferred stock, $0.10 par value. Authorized 2,000,000 shares;
        none issued                                                             --           --
     Common stock, $0.10 par value. Authorized 8,000,000 shares;
        issued 1,553,938 shares                                                155          155
     Additional paid-in capital                                             15,056       14,964
     Treasury stock, 645,693 and 642,335 shares, respectively, at cost      (8,033)      (7,983)
     Retained earnings                                                       9,849       10,067
     Unearned compensation                                                    (677)        (913)
     Accumulated other comprehensive income                                     98          549
                                                                         ---------    ---------
                 Total stockholders' equity                                 16,448       16,839
                                                                         ---------    ---------
                 Total liabilities and stockholders' equity              $ 151,380      150,132
                                                                         =========    =========
</TABLE>

See accompanying notes to consolidated financial statements

                                       2
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS
                       Consolidated Statements of Earnings
                     Years ended December 31, 2003 and 2002
                      (In thousands, except per-share data)
<TABLE>
<CAPTION>
                                                                        2003       2002
                                                                      -------    -------
<S>                                                                 <C>        <C>
Interest income:
    Loans                                                             $ 3,876      4,212
    Investment securities                                                 481        637
    Mortgage-backed securities                                          2,175      3,168
    Interest-bearing deposits                                              74         92
    Dividends on FHLB stock                                                93        121
                                                                      -------    -------
                Total interest income                                   6,699      8,230
                                                                      -------    -------
Interest expense:
    Deposits                                                            1,581      2,464
    Borrowings                                                          2,724      2,724
                                                                      -------    -------
                Total interest expense                                  4,305      5,188
                                                                      -------    -------
                Net interest income                                     2,394      3,042
Provision for loan losses                                                  --         --
                                                                      -------    -------
                Net interest income after provision for loan losses     2,394      3,042
                                                                      -------    -------
Noninterest income:
    Deposit account service fees                                        1,168      1,131
    Gain on sale of mortgage-backed and investment
       securities available-for-sale                                       55         47
    Other                                                                 234        238
                                                                      -------    -------
                Total noninterest income                                1,457      1,416
                                                                      -------    -------
Noninterest expense:
    Compensation and benefits                                           2,212      1,851
    Occupancy and equipment                                               501        505
    Federal deposit insurance premiums and assessments                     59         59
    Data processing                                                       227        233
    Deposit account processing fees                                       250        261
    Amortization of premium on deposits assumed                          --           56
    Supplies expense                                                      109         97
    Advertising                                                           108        113
    Other                                                                 489        315
                                                                      -------    -------
                Total noninterest expense                               3,955      3,490
                                                                      -------    -------
                Earnings (loss) before income tax expense                (104)       968
Income tax expense (benefit)                                              (68)       283
                                                                      -------    -------
                Net earnings (loss)                                   $   (36)       685
                                                                      =======    =======
Net earnings (loss) per share - basic                                 $ (0.04)      0.81
Net earnings (loss) per share - diluted                                 (0.04)      0.78
</TABLE>

See accompanying notes to consolidated financial statements

                                       3
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS
    Consolidated Statements of Stockholders' Equity and Comprehensive Income
                     Years ended December 31, 2003 and 2002
                      (In thousands, except per-share data)
<TABLE>
<CAPTION>
                                                                                                         ACCUMU-
                                                                                                         LATED
                                                                                                         OTHER
                                                           ADDI-                                         COMPRE-
                                                           TIONAL                            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, 2001       $    --          155     14,920       (6,382)   9,565       (1,150)        99      17,207
Net earnings                          --           --         --           --      685           --         --         685
Change in unrealized gain (loss)
    on available-for-sale securities
    arising during the period, net of
    tax of $232                       --           --         --           --       --           --        450         450
                                                                                                                   -------
              Total comprehensive
                income                                                                                               1,135
                                                                                                                   -------
Purchase of 114,358 shares of
    treasury stock                    --           --         --       (1,601)      --           --         --      (1,601)
Allocation of ESOP shares             --           --         44           --       --          125         --         169
Amortization of RSP shares            --           --         --           --       --          112         --         112
Cash dividends paid
    ($0.20 per share)                 --           --         --           --     (183)          --         --        (183)
                                   -------     ------     ------    ---------  -------      --------    ------     -------
Balance, December 31, 2002            --          155     14,964       (7,983)  10,067         (913)       549      16,839
Net earnings (loss)                   --           --         --           --      (36)          --         --         (36)
Change in unrealized gain (loss)
    on available-for-sale securities
    arising during the period, net of
    tax of $232                       --           --         --           --       --           --       (451)       (451)
                                                                                                                    ------
              Total comprehensive
                income (loss)                                                                                         (487)
                                                                                                                   -------
Purchase of 3,358 shares of
    treasury stock                    --           --         --          (50)      --           --         --         (50)
Allocation of ESOP shares             --           --         92           --       --          124         --         216
Amortization of RSP shares            --           --         --           --       --          112         --         112
Cash dividends paid
    ($0.20 per share)                 --           --         --           --     (182)          --         --        (182)
                                   -------     ------     ------    ---------  -------     --------     ------     -------
Balance, December 31, 2003       $    --          155     15,056       (8,033)   9,849         (677)        98      16,448
                                   =======     ======     ======    =========  =======     ========     ======     =======
</TABLE>

See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS
                      Consolidated Statements of Cash Flows
                     Years ended December 31, 2003 and 2002
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                              2003        2002
                                                                            --------    --------
<S>                                                                       <C>         <C>
Cash flows from operating activities:
     Net earnings (loss)                                                    $    (36)        685
     Adjustments to reconcile net earnings (loss) to net cash provided by
        operating activities:
           Depreciation                                                          266         267
           FHLB stock dividends                                                  (23)         --
           Amortization of premium on deposits assumed                            --          57
           Deferred income taxes                                                 (73)        (50)
           Amortization of loan fees and premiums                                  4           2
           Accretion of discounts and amortization of premiums on
              investment- and mortgage-backed securities, net                    727         498
           Gain on sale of loans, net                                             (1)         --
           Gain on sale of mortgage-backed securities
              available-for-sale                                                 (55)        (47)
           Proceeds from sales of loans                                          121          --
           Originations of loans for sale                                       (120)         --
           Allocation of ESOP shares and amortization of RSP shares              328         281
           Change in accrued interest receivable, prepaids, and
              other assets                                                        23         (58)
           Change in accrued interest payable and other liabilities              340          14
                                                                            --------    --------
                 Net cash provided by operating activities                     1,501       1,649
                                                                            --------    --------
Cash flows from investing activities:
     Loan repayments, net of originations                                      5,051      10,549
     Loans purchased                                                         (20,143)     (8,748)
     Principal repayments and maturities of mortgage-backed
        securities available-for-sale                                         28,350      22,154
     Principal repayments and maturities of mortgage-backed
        securities held-to-maturity                                           12,006       7,505
     Purchases of mortgage-backed securities available-for-sale              (26,860)    (20,902)
     Purchases of mortgage-backed securities held to maturity                     --      (7,858)
     Proceeds from sale of mortgage-backed securities
        available-for-sale                                                        --       1,355
     Purchases of investment securities available-for-sale                    (3,295)     (6,760)
     Maturities/calls of investment securities available-for-sale              4,335       4,358
     Proceeds from sale of investment securities available for sale            1,055         538
     Investment in cash surrender value of bank-owned life insurance              --        (750)
     Additions of premises and equipment, net                                    (16)        (83)
                                                                            --------    --------
                 Net cash provided by investing activities                       483       1,358
                                                                            --------    --------

                                                                                     (Continued)
</TABLE>
                                       5
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS
                      Consolidated Statements of Cash Flows
                     Years ended December 31, 2003 and 2002
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                          2003        2002
                                                                         --------    --------
<S>                                                                    <C>        <C>
Cash flows from financing activities:
     Net increase (decrease) in deposits                                $  1,570      (2,369)
     Net increase in advances from borrowers for taxes and
        insurance                                                             35          10
     Purchases of treasury stock                                             (50)     (1,601)
     Cash dividends paid on common stock                                    (182)       (183)
                                                                        --------    --------
                 Net cash provided by (used in) financing activities       1,373      (4,143)
                                                                        --------    --------
                 Net increase (decrease) in cash and cash equivalents      3,357      (1,136)
Cash and cash equivalents at beginning of year                             9,558      10,694
                                                                        --------    --------
Cash and cash equivalents at end of year                                $ 12,915       9,558
                                                                        ========    ========
Supplemental disclosure of cash flow information:
     Cash paid during the year for income taxes                         $     66         345
     Cash paid during the year for interest                                4,318       5,206

Disclosure of non-cash items:
     Transfer of loans to other real estate owned                            379          --
See accompanying notes to consolidated financial statements
</TABLE>

                                       6

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

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002

(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  in
          consolidation.  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.

          A  decline  in  the  market   value  of  any   available-for-sale   or
          held-to-maturity  security  below cost that is deemed to be other than
          temporary results in a reduction in carrying amount to fair value. The
          impairment  is  charged  to  earnings,  and a new cost  basis  for the
          security is  established.  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  recorded  on a trade
          date  basis  and are  calculated  using  the  specific  identification
          method.

     (d)  LOANS

          Loans  receivable  that  management has the intent and ability to hold
          until  maturity  or  repayment  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.

                                                                     (Continued)

                                       7
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002

     (e)  MORTGAGE BANKING ACTIVITIES

          At December  31, 2003 and 2002,  the Company was  servicing  loans for
          others  amounting  to  $251,000  and  $340,000,   respectively.   Loan
          servicing  fees  include  servicing  fees from  investors  and certain
          charges collected from borrowers, such as late payment fees, which are
          recorded as other income when received.

     (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  fair  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 90 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 are
          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.

          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.

                                                                     (Continued)

                                       8
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002

     (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. 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 1% of unpaid residential loans or 5% of
          outstanding FHLB advances. FHLB stock is carried at cost.

     (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 3 to 35 years. Major replacements and betterments are
          capitalized,  while  normal  maintenance  and  repairs  are charged to
          expense as incurred.  Gains or losses on dispositions are reflected in
          current operations.

     (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.

     (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  accounting
          principles generally accepted in the United States of America.  Actual
          results could differ from those estimates.

     (l)  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  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 include the
          potential  dilutive  common  shares  outstanding  during


                                                                     (Continued)

                                       9
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002


          the period.  Unallocated  shares of common  stock held by the employee
          stock  ownership plan are not included in the weighted  average shares
          outstanding computation.

          The  following  table  summarizes  the  number of  average  shares and
          equivalents  used in the  computation  of  earnings  per share for the
          years ended December 31:
<TABLE>
<CAPTION>
                                                              2003         2002
                                                            -------      -------
<S>                                                       <C>          <C>
Basic shares outstanding                                    847,075      849,361
Dilutive effect of stock options                             48,608       28,667
                                                            -------      -------
                 Diluted shares outstanding                 895,683      878,028
                                                            =======      =======
</TABLE>

     (m)  COMPREHENSIVE INCOME

          The  Company's  only  component  of the  comprehensive  income  is the
          unrealized holding gains and losses on available-for-sale  securities.
          Other  comprehensive  income (loss) for the years ended December 31 is
          as follows (in thousands):
<TABLE>
<CAPTION>
                                                                  2003     2002
                                                                 -----    -----
<S>                                                            <C>       <C>
Change in unrealized holding gains, net of
     tax                                                         $(486)     480
Reclassification adjustment for gain included in
     net earnings, net of tax                                       35      (30)
                                                                 -----    -----
                 Change in unrealized gain on
                    available-for-sale securities arising
                    during the period, net of tax                $(451)     450
                                                                 =====    =====
</TABLE>

(2)  CASH AND CASH EQUIVALENTS

A summary of cash and cash equivalents at December 31 follows (in thousands):
<TABLE>
<CAPTION>
                                                             2003          2002
                                                           -------       -------
<S>                                                      <C>             <C>
Cash on hand                                               $ 1,239         1,210
Deposits at other financial institutions                     2,976         2,648
Overnight FHLB deposits                                      8,700         5,700
                                                           -------       -------
                                                           $12,915         9,558
                                                           =======       =======
</TABLE>
                                                                     (Continued)
                                       10
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002

(3)  INVESTMENT SECURITIES

       A summary of investment  securities and information relating to amortized
       cost, fair values, and unrealized gains (losses) at December 31, 2003 and
       2002 is as follows (in thousands):
<TABLE>
<CAPTION>
                                                                               2003
                                               ------------------------------------------------------------------------
                                                  AMORTIZED         UNREALIZED          UNREALIZED            FAIR
                                                    COST               GAINS               LOSSES             VALUE
                                               -------------      --------------      --------------     --------------
     <S>                                     <C>                   <C>                 <C>                <C>
     Available for sale
        U.S. government and agency
           obligations maturing after
           five years but within
           ten years                           $       3,809                  3                 (11)             3,801
        U.S. government and agency
           obligations maturing after
           ten years                                   2,526                  4                  (4)             2,526
        State and municipal obligations
           maturing after one year
           but within five years                         200                 13                  --                213
        State and municipal obligations
           maturing after five years
           but within ten years                          603                 14                  --                617
        State and municipal obligations
           maturing after ten years                    1,118                 40                  --              1,158
        Other debt securities maturing
           after one year but within
           five years                                  3,509                132                  (2)             3,639
                                               -------------      --------------      --------------     --------------
                                               $      11,765                206                 (17)            11,954
                                               =============      ==============      ==============     ==============

                                                                                                           (Continued)
</TABLE>

                                       11
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002
<TABLE>
<CAPTION>
                                                                            2002
                                         ----------------------------------------------------------------------------
                                            Amortized             Unrealized         Unrealized              Fair
                                               cost                  gains            losses                 value
                                           --------------       -------------      -------------          ----------
<S>                                      <C>                   <C>                <C>                   <C>
Available for sale:
     U.S. government and agency
        obligations maturing after
        one year but within
        five years                         $           56                  --                 --                  56
     U.S. government and agency
        obligations maturing after
        five years but within
        ten years                                   4,133                  58                (11)              4,180
     U.S. government and agency
        obligations maturing after
        ten years                                   3,082                   1                (12)              3,071
     State and municipal obligations
        maturing after five years
        but within ten years                          507                  11                 (2)                516
     State and municipal obligations
        maturing after ten years                    1,117                  27                 --               1,144
     Other debt securities maturing
        after one year but within
        five years                                  3,751                 169                 (1)              3,919
     Other debt securities maturing
        after five years but within
        ten years                                     513                  --                 --                 513
     Other debt securities maturing
        after ten years                               782                  --                 --                 782
                                           --------------       -------------      -------------          ----------
                                           $       13,941                 266                (26)             14,181
                                           ==============       =============      =============          ==========
</TABLE>


       The table  above  shows  that some of the  investment  securities  in the
       available for sale portfolio had unrealized  losses,  or were temporarily
       impaired,  as of December 31, 2003 and 2002.  This  temporary  impairment
       represents  the amount of loss that would be realized  if the  securities
       were sold  December  31,  2003 and  occurs as a result of  changes in the
       overall bond yields between the purchase date of the bond

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

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002



and valuation date.  Securities which were temporarily  impaired at December 31,
2003 are shown  below,  along  with the  length  of the  impairment  period  (in
thousands).
<TABLE>
<CAPTION>
                                   Less than 12 months    12 months or longer         Total
                                 ---------------------  ---------------------  ---------------------
                                   Fair     Unrealized    Fair      Unrealized   Fair      Unrealized
                                   value     losses       value      losses      value      losses
                                 ---------- ----------  ----------  ---------  ----------  ---------
<S>                        <C>              <C>      <C>             <C>       <C>          <C>
Description of securities:
Debt securities:
  U.S. government and agenc$         1,251        7           860          8       2,111         15
    obligations                         --       --            --         --          --         --
  State and municipal obligations       --       --            --         --          --         --
  Other debt securities                511        2           511         --       1,022          2
                                    ------   ------        ------       ----      ------     ------
                                    $1,762        9         1,371          8       3,133         17
                                    ======   ======        ======      =====      ======     ======
</TABLE>

At December 31, 2003,  the total  available for sale  portfolio  for  investment
securities consisted of 78 individual securities, of which 31 securities were in
an unrealized loss position. Securities that had an unrealized loss for a period
greater than 12 months amounted to 7 specific securities.

                                                                     (Continued)
                                       13
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002


(4)    MORTGAGE-BACKED SECURITIES

       A summary of  mortgage-backed  securities  and  information  relating  to
       amortized  cost, fair values,  and unrealized  gains (losses) at December
       31, 2003 and 2002 is as follows (in thousands):
<TABLE>
<CAPTION>
                                                                              2003
                                              -----------------------------------------------------------------------
                                                 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)            $           8,266                44               (74)             8,236
          Federal National Mortgage
             Association (FNMA)                        23,583               121              (189)            23,515
          Government National
             Mortgage
             Association (GNMA)                         2,793                69               (19)             2,843
    Collateralized mortgage
       obligations                                      2,207                 8                --              2,215
                                              ----------------  ----------------  ----------------   ----------------
                                            $          36,849               242              (282)            36,809
                                              ================  ================  ================   ================
Held-to-maturity:
    Government agency
       mortgage-backed securities:
          FHLMC                             $           1,486                 2                (2)             1,486
          FNMA                                          4,221               157               (13)             4,365
          GNMA                                          3,669               196                --              3,865
                                              ----------------  ----------------  ----------------   ----------------
                                            $           9,376               355               (15)             9,716
                                              ================  ================  ================   ================
</TABLE>

                                                                     (Continued)
                                       13
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002
<TABLE>
<CAPTION>
                                                                               2002
                                              -----------------------------------------------------------------------
                                                 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)            $           4,949                95                (4)             5,040
          Federal National Mortgage
             Association (FNMA)                        20,237               415                --             20,652
          Government National
             Mortgage
             Association (GNMA)                         2,058                66                --              2,124
    Collateralized mortgage
       obligations                                     11,352               189                --             11,541
                                              ----------------  ----------------  ----------------   ----------------
                                            $          38,596               765                (4)            39,357
                                              ================  ================  ================   ================
Held-to-maturity:
    Government agency
       mortgage-backed securities:
          FHLMC                             $           3,646                44                (9)             3,681
          FNMA                                          7,955               228                --              8,183
          GNMA                                          8,399               378                --              8,777
          Collateralized mortgage
             obligation                                 1,548                 6                (8)             1,546
                                              ----------------  ----------------  ----------------   ----------------
                                            $          21,548               656               (17)            22,187
                                              ================  ================  ================   ================
</TABLE>

       The table above shows that some of the mortgage-backed  securities in the
       available for sale portfolio had unrealized  losses,  or were temporarily
       impaired,  as of December 31, 2003 and 2002.  This  temporary  impairment
       represents  the amount of loss that would be realized  if the  securities
       were sold  December  31,  2003 and  occurs as a result of  changes in the
       overall  bond yields  between the  purchase  date of the  mortgage-backed
       securities and the valuation date.  Mortgage-backed securities which were
       temporarily

                                                                     (Continued)
                                       15

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

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002

impaired at  December  31,  2003 are shown  below,  along with the length of the
impairment period (in thousands).
<TABLE>
<CAPTION>
                                                        Less than 12 months        12 months or longer        Total
                                         -------------------------------------------------------------------------------
                                            Fair      Unrealized       Fair      Unrealized       Fair      Unrealized
                                            value       losses         value       losses        value        losses
                                         ------------ ------------  ------------ ------------  -----------  ------------
<S>                                       <C>               <C>        <C>            <C>      <C>          <C>
Description of securities
     Mortgage-backed securites            $    20,336          246        2,051          36       22,387            282
     Collaterialized mortgage obligations          --           --           --          --           --             --
                                           ----------   ----------   ----------  ----------    ---------    -----------
                                          $    20,336          246        2,051          36       22,387            282
                                           ==========   ==========   ==========  ==========    =========    ===========
</TABLE>

       At  December  31,  2003  the  total  available  for  sale  portfolio  for
       mortgage-backed  securities  consisted of 26  individual  securities,  of
       which 4 securities were in an unrealized  loss position.  Securities that
       had an unrealized  loss for a period greater than 12 months amounted to 2
       specific securities.

       At December 31, 2003, the government  agency  mortgage-backed  securities
       had a  carrying  value of  $43,971,000  and  consisted  of  approximately
       $11,699,000  of fixed-rate  securities and  $32,272,000 of  variable-rate
       securities.  The collateralized mortgage obligations had a carrying value
       of  $2,215,000  and consisted of  approximately  $2,170,000 of fixed-rate
       securities and $45,000 of variable-rate securities.

       Proceeds  from the sale of  available-for-sale  securities  in 2003  were
       $1,055,000.  Gross gains of $55,000 were realized on those sales in 2003.
       Proceeds  from the sale of  available-for-sale  securities  in 2002  were
       $1,893,000.  Gross  gains of $83,000  and gross  losses of  $36,000  were
       realized on those sales in 2002.

       At December 31, 2003 and 2002, mortgage-backed securities with a carrying
       value of  approximately  $2,050,000 and  $1,625,000,  respectively,  were
       pledged to secure public funds on deposit.

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

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002

(5) LOANS RECEIVABLE

     Loans receivable consist of the following at December 31, 2003 and 2002 (in
     thousands):
<TABLE>
<CAPTION>
                                                                2003      2002
                                                              -------    -------
<S>                                                         <C>         <C>
Mortgage loans:
     One-to-four-family                                       $69,926     54,604
     Commercial                                                   491        536
     Land                                                         400        680
                                                              -------    -------
                 Total mortgage loans                          70,817     55,820
Consumer loans                                                  2,148      2,391
Commercial loans                                                  123        390
                                                              -------    -------
                 Total                                         73,088     58,601
Less:
     Unearned premiums, discounts, and deferred fees               92         21
     Allowance for loan losses                                    263        260
     Undisbursed portion of loans in process                      128        424
                                                              -------    -------
                 Total, net                                   $72,605     57,896
                                                              =======    =======
</TABLE>

       The weighted average annual interest rates on mortgage loans approximated
       5.43%  and  6.58%  at   December   31,   2003  and  2002,   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,  2003,  the  Company  had  outstanding  commitments  to
       originate  mortgage  loans of $186,000  and  outstanding  commitments  to
       purchase  loans of  $796,000.  At  December  31,  2002,  the  Company had
       outstanding  commitments  to  originate  mortgage  loans of $317,000  and
       outstanding commitments to purchase loans of $141,000.

       Loans  made  to  directors   and   executive   officers  of  the  Company
       approximated  $689,000  and  $804,000  at  December  31,  2003 and  2002,
       respectively.  Such loans were made in the  ordinary  course of business.
       Changes in such loans for 2003 are as follows (in thousands):

                     Balance at December 31, 2002   $ 804
                     Additions                        126
                     Amounts collected               (241)
                                                    -----
                     Balance at December 31, 2003   $ 689
                                                    =====

                                                                     (Continued)
                                       17

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

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002

     A summary of the  activity in the  allowance  for loan  losses  follows (in
     thousands):

                                                            2003           2002
                                                            ----           ----
Balance at beginning of year                                $260            268
Provision                                                     --             --
Charge-offs                                                   --             (8)
Recoveries                                                     3             --
                                                            ----           ----
Balance at end of year                                      $263            260
                                                            ====           ====


     Nonaccrual  loans at  December  31,  2003 and 2002  aggregated  $65,000 and
     $68,000, respectively.  Impaired loans, exclusive of delinquent loans, were
     insignificant at December 31, 2003 and 2002.

(6)  PREMISES AND EQUIPMENT

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

                                                           2003            2002
                                                          ------          ------
Land                                                      $  213             213
Buildings and improvements                                 2,222           2,220
Furniture and equipment                                    1,099           1,748
                                                          ------          ------
                 Total                                     3,534           4,181
Less accumulated depreciation                              1,680           2,077
                                                          ------          ------
                 Total                                    $1,854           2,104
                                                          ======          ======

(7)  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.  There were no sales  associated
     with the parcel of land during 2003 or 2002.

(8)  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
     amortized the premium over twenty years on the  straight-line  method.  The
     deposits were fully amortized at December 31, 2002.

                                                                     (Continued)
                                       18

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

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002


(9)  DEPOSITS

     Deposits  at  December  31,  2003 and 2002 are  summarized  as follows  (in
     thousands):

                                                            2003           2002
                                                          -------        -------
Non-interest bearing demand                               $ 4,405          4,041
Savings and interest-bearing demand                        34,144         30,680
Time                                                       44,975         47,233
                                                          -------        -------
                                                          $83,524         81,954
                                                          =======        =======


     The weighted  average  interest  rates on deposits  approximated  2.14% and
     2.78% at December 31, 2003 and 2002, respectively.

     Scheduled  maturities  of time deposits at December 31, 2003 are as follows
     (in thousands):

                     2004                          $33,139
                     2005                            5,846
                     2006                            3,264
                     2007                            1,120
                     2008                            1,321
                     Thereafter                        285
                                                   -------
                     Total                         $44,975
                                                   =======


     A summary of interest  expense for the years  ended  December  31, 2003 and
     2002 is as follows (in thousands):

                                                            2003           2002
                                                           ------         ------
Savings and time accounts                                  $1,453          2,163
Interest-bearing demand accounts                              128            301
                                                           ------         ------
                                                           $1,581          2,464
                                                           ======         ======

     Certificates  of  deposit  in  amounts  greater  than or equal to  $100,000
     amounted  to  $4,242,000  and  $4,160,000  at  December  31, 2003 and 2002,
     respectively.

                                                                     (Continued)
                                       19
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002

(10)   BORROWINGS FROM FHLB OF TOPEKA

     Borrowings  outstanding  from the FHLB of Topeka at  December  31, 2003 and
     2002 are as follows (in thousands):

                                                                2003      2002
                                                               -------   -------
4.92% interest and maturity date in January 2009, callable
     on a quarterly basis                                      $10,000    10,000
4.88% interest and maturity date in January 2009, callable
     on a quarterly basis                                       10,000    10,000
5.30% interest and maturity date in May 2009, callable
     April 2004                                                 10,000    10,000
5.76% interest and maturity date in 2010, callable
     on a quarterly basis                                       10,000    10,000
5.92% interest and maturity date in 2010, callable
     on a quarterly basis                                        5,000     5,000
6.10% interest and maturity date in 2010, callable
     on a quarterly basis                                        5,000     5,000
                                                               -------   -------
                                                               $50,000    50,000
                                                               =======   =======

     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.  The weighted
     average  interest  rates at  December  31,  2003 and 2002 was 5.37% on such
     borrowings.  At  December  31,  2003,  the Company  could  borrow up to $61
     million from the FHLB of Topeka.

     Principal  maturities,  based on original maturity, of borrowings from FHLB
     of Topeka at December 31, 2003 are as follow (in thousands):

                                                           Amount
                                                       --------------
                     Year:
                          2009                         $       30,000
                          2010                                 20,000
                                                      ---------------
                                                       $       50,000
                                                      ===============

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

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002

(11) INCOME TAXES

     The components of income tax expense (benefit) are as follows for the years
     ended December 31 (in thousands):
<TABLE>
<CAPTION>
                                                  2003                                       2002
                                -----------------------------------------  ---------------------------------------
                                  Federal        State          Total        Federal         State         Total
                                ------------- -------------  ------------  -------------  ------------  ----------
<S>                           <C>             <C>           <C>            <C>            <C>           <C>
Current                       $           (1)           6             5          295            38            333
Deferred                                 (66)          (7)          (73)         (43)           (7)           (50)
                                ------------  -----------    -----------    --------      --------      ---------
                              $          (67)          (1)          (68)         252            31            283
                                ============  ===========    ===========   =========      ========      =========
</TABLE>

     The reasons for the  differences  between the  effective  tax rates and the
     expected federal income tax rate of 34% are as follows:
<TABLE>
<CAPTION>
                                                              PERCENT OF EARNINGS
                                                               BEFORE INCOME TAX
                                                               EXPENSE (BENEFIT)
                                                             --------------------
                                                               2003         2002
                                                             -------       ------
<S>                                                         <C>          <C>
Expected federal income tax rate                              (34.0)%       34.0%
State taxes, net of federal tax benefit                        (0.6)         2.0
Bank-owned life insurance                                     (22.6)        (2.8)
Tax-exempt income                                             (22.4)        (1.8)
Other, net                                                     14.2         (2.2)
                                                             ------       ------
                 Effective income tax rate                    (65.4)%       29.2%
                                                             ======       ======
</TABLE>

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

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002

     Temporary  differences that give rise to a significant  portion of deferred
     tax assets and liabilities at December 31, 2003 and 2002 are as follows (in
     thousands):
<TABLE>
<CAPTION>
                                                                 2003      2002
                                                                 -----    -----
<S>                                                            <C>       <C>
Employee benefits                                                $ 137      109
Other                                                               10       10
Alternative minumum tax carryforward                                12       --
Allowance for loan losses                                           94       96
                                                                 -----    -----
                 Deferred tax asset                                253      215
                                                                 -----    -----
Unrealized gain on available-for-sale securities                   (51)    (283)
Premises and equipment                                            (106)    (128)
FHLB dividends                                                    (185)    (176)
Other                                                               (7)     (30)
                                                                 -----    -----
                 Deferred tax liability                           (349)    (617)
                                                                 -----    -----
                 Net deferred tax liability, included in other
                    liabilities                                  $ (96)    (402)
                                                                 =====    =====
</TABLE>

     There was no  valuation  allowance  required  for  deferred  tax  assets at
     December 31, 2003 or 2002.  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.

     The Company paid alternative  minimum tax in 2003. This tax payment created
     a tax credit  carryforward of approximately  $12,000,  which can be used in
     future periods to reduce the regular tax, computed to the extent it exceeds
     the alternative minimum tax calculated.  This credit can be carried forward
     indefinitely.

     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 method 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  in  1998.  Included  in the
     deferred  income tax  liability  at  December  31, 2002 is $28,000 for this
     recapture.

     Retained  earnings at  December  31,  2003 and 2002  include  approximately
     $718,000,  respectively,  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.

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

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002


(12) Benefit Plans

     (a)  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  21 are  eligible  for
          participation  after one year of service.  Effective  October 1, 2003,
          the Company terminated this plan. As a result of the termination,  the
          Company   incurred   expense  of   $307,000,   which  is  recorded  in
          compensation and benefits in the consolidated  statements of earnings.
          Subsequent to December 31, 2003,  the Company  contributed to the plan
          the final payment of $307,000.

          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 the years ended
          December 31, 2003 and 2002 was $27,000 and $28,000, respectively.

          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 $76,000 and
          $57,000 for the years ended December 31, 2003 and 2002, respectively.

     (b)  EMPLOYEE STOCK OWNERSHIP PLAN

          During 1998, 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 21 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  consolidated
          balance sheets. At December 31, 2003 and 2002, the balance of unearned
          compensation  related  to the ESOP  borrowings  totaled  $559,000  and
          $683,000, respectively. The Company recognizes additional compensation
          expense  equal to the fair value of shares  allocated.  In  connection
          with a  principal  reduction  on the ESOP  loan,  12,432  shares  were
          released and the Company recognized  $216,000 of compensation  expense
          during  2003,   and  12,432  shares  were  released  and  the  Company
          recognized  $169,000 of  compensation  expense  during 2002.  The fair
          value of the remaining 55,939  unallocated shares at December 31, 2003
          aggregated approximately $1,049,000.

     (c)  STOCK OPTION PLAN AND 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,

                                       23

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

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002

          aggregating  $660,429,  has been recorded as unearned  compensation in
          the accompanying  consolidated balance sheets.  During March 1999, the
          Company  awarded  52,826  shares of common  stock to key  officers and
          directors.  The  fair  value  of such  shares  of  $561,276  is  being
          amortized to expense over the five-year  vesting  period.  The Company
          recognized  approximately  $112,000 of compensation expense related to
          the  amortization  of the shares  awarded  for each of the years ended
          December 31, 2003 and 2002.

          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 2003 and 2002,  there were
          no options that were exercised or forfeited.

          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 earnings
          and  earnings  per-share  information  for  2003  and  2002  as if the
          fair-value  method  required  by SFAS No. 123 had been used to measure
          compensation cost for stock options granted:

                                                           2003          2002
                                                         --------      --------
Net earnings (loss) - as reported                        $(36,000)      685,000
Compensation cost, net of tax                             (43,000)      (43,000)
                                                         --------      --------
Net earnings (loss) - pro forma                          $(79,000)      642,000
                                                         ========      ========
Basic earnings (loss) per share - as reported               (0.04)         0.81
Basic earnings (loss) per share - pro forma                 (0.09)         0.76


          The fair value of options  granted in 1999 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.

          At  December  31,  2003,  the  exercise  price  and  weighted  average
          remaining  contractual life of the outstanding  options was $10.75 and
          5.1 years, respectively.  At December 31, 2002, the exercise price and
          weighted average remaining contractual life of the outstanding options
          was $10.75 and 6.1 years, respectively.

          At December 31, 2003, the number of options  exercisable  was 105,663,
          and the weighted average exercise price of those options was $10.75.

          At December 31, 2002,  the number of options  exercisable  was 79,247,
          and the weighted average exercise price of those options was $10.75.

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

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002

(13) 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.

     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, 2003 and
     2002.  The Bank's  actual and  required  capital  amounts  and ratios as of
     December 31, 2003 and 2002 were as follows (dollars in thousands):
<TABLE>
<CAPTION>
                                                                        2003
                                -------------------------------------------------------------------------------------
                                                                    For capital             To be well-capitalized
                                                                      adequacy             under prompt corrective
                                          Actual                      purposes                action provisions
                                ------------- -------------  ------------  -------------  ---------------------------
                                   Amount        Ratio         Amount         Ratio         Amount         Ratio
                                ------------- -------------  ------------  -------------  ------------  -------------
<S>                            <C>               <C>        <C>                <C>       <C>             <C>
Tangible capital
    (to tangible assets)         $   15,229         10.09%    $   2,263           1.50%    $      --             --%
Tier 1 leverage (core) capital
    (to adjusted tangible assets)    15,229         10.09         6,036           4.00         7,545           5.00
Risk-based capital
    (to risk-weighted assets)        15,445         26.77         4,615           8.00         5,769          10.00
Tier 1 risk-based capital
    (to risk-weighted assets)        15,229         26.40            --             --         3,462           6.00
</TABLE>

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

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002
<TABLE>
<CAPTION>
                                                                        2002
                                -------------------------------------------------------------------------------------
                                                                    For capital             To be well-capitalized
                                                                      adequacy             under prompt corrective
                                          Actual                      purposes                action provisions
                                ------------- -------------  ------------  -------------  ---------------------------
                                   Amount        Ratio         Amount         Ratio         Amount         Ratio
                                ------------- -------------  ------------  -------------  ------------  -------------
<S>                            <C>               <C>        <C>                <C>       <C>             <C>
Tangible capital
    (to tangible assets)          $  15,090         10.13%    $   2,235           1.50%    $      --              --%
Tier 1 leverage (core) capital
    (to adjusted tangible assets)    15,090         10.13         5,960           4.00         7,469           5.00
Risk-based capital
    (to risk-weighted assets)        15,333         29.03         4,225           8.00         5,102          10.00
Tier 1 risk-based capital
    (to risk-weighted assets)        15,090         28.57            --             --         3,061           6.00
</TABLE>

     At the time of  conversion  in 1998,  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.

(14) 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.

     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.

     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 borrowers'
     ability to honor their  contracts  is dependent  upon the general  economic
     condition of the target market.

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

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002

(15) 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, 2003 and 2002 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.

     (a)  CASH AND CASH EQUIVALENTS

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

     (b)  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.

     (c)  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.

     (d)  STOCK OF FHLB

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

     (e)  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)  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.

     (g)  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.


                                                                     (Continued)
                                       27

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

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002

          The  approximate  carrying  value  and  estimated  fair  value  of the
          Company's financial instruments are as follows (in thousands):
<TABLE>
<CAPTION>
                                                                                 December 31, 2003
                                                                      ----------------------------------------
                                                                          Carrying                Fair
                                                                            value                value
                                                                      ------------------   -------------------
<S>                                                              <C>                          <C>
Financial assets:
     Cash and cash equivalents                                     $          12,915                12,915
     Investment securities (see note 3)                                       11,954                11,954
     Mortgage-backed securities (see note 4)                                  46,185                46,525
     Loans receivable                                                         72,605                73,839
     Stock in FHLB                                                             2,673                 2,673
     Accrued interest receivable                                                 600                   600
Financial liabilities:
     Deposits                                                                 83,524                83,933
     FHLB borrowings                                                          50,000                55,537
     Accrued interest payable                                                    249                   249

<CAPTION>

                                                                                 December 31, 2002
                                                                      ----------------------------------------
                                                                          Carrying                Fair
                                                                            value                value
                                                                      ------------------   -------------------
<S>                                                              <C>                               <C>
Financial assets:
     Cash and cash equivalents                                     $           9,558                 9,558
     Investment securities (see note 3)                                       14,181                14,181
     Mortgage-backed securities (see note 4)                                  60,905                61,544
     Loans receivable                                                         57,896                59,748
     Stock in FHLB                                                             2,650                 2,650
     Accrued interest receivable                                                 741                   741
Financial liabilities:
     Deposits                                                                 81,954                82,855
     FHLB borrowings                                                          50,000                56,938
     Accrued interest payable                                                    262                   262
</TABLE>

     (h)  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.  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

                                                                     (Continued)
                                       28
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002

          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.

(16) PARENT COMPANY CONDENSED FINANCIAL STATEMENTS

                                              Condensed Balance Sheets
                                             December 31, 2003 and 2002
                                                   (In thousands)
<TABLE>
<CAPTION>
                                 ASSETS                                            2003           2002
                                                                            ---------------    --------------
<S>                                                                      <C>                  <C>
Cash and cash equivalents                                                   $           121               120
Loan to ESOP                                                                            559               684
Investment in subsidiary                                                             15,674            15,985
Other assets                                                                             94                52
                                                                            ---------------    --------------
                 Total assets                                               $        16,448            16,841
                                                                            ===============    ==============
                  Liabilities and Stockholders' Equity
Accrued interest payable and other liabilities                              $            --                 2
Stockholders' equity                                                                 16,448            16,839
                                                                            ---------------    --------------
                 Total liabilities and stockholders' equity                 $        16,448            16,841
                                                                            ===============    ==============
</TABLE>

                                           Condensed Statements of Income
                                       Years ended December 31, 2003 and 2002
                                                   (In thousands)
<TABLE>
<CAPTION>

                                                                                2003              2002
                                                                            -----------        -----------
<S>                                                                      <C>                  <C>
Income:
     Equity in earnings of subsidiary                                       $        110               697
     Interest on loans                                                                 3                 3
     Interest on investments                                                          53                64
                                                                            ------------       -----------
                 Total income                                                        166               764
Expense, including income tax expense                                                202                79
                                                                            ------------       -----------
                 Net earnings (loss)                                        $        (36)              685
                                                                            ============       ===========
</TABLE>
                                                                     (Continued)
                                       29
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002
<TABLE>
<CAPTION>
                       Condensed Statements of Cash Flows
                     Years ended December 31, 2003 and 2002
                                 (In thousands)
                                                                 2003      2002
                                                                ------    ------
<S>                                                            <C>       <C>
Operating activities:
     Net earnings (loss)                                        $  (36)      685
     Less equity in earnings of subsidiary                        (110)     (697)
     Adjustments to reconcile net earnings (loss) to net cash
        provided by operating activities:
           Release of unallocated ESOP shares and
              amortization of RSP                                  328       281
           Change in other assets                                  (42)       (4)
           Decrease (increase) in accrued interest payable
              and other liabilities                                 (2)      249
                                                                ------    ------
                 Net cash provided by operating activities         138       514
                                                                ------    ------
Investing activities:
     Decrease in investment in subsidiary, net                     (30)    1,222
     Decrease in loan to ESOP                                      125       124
                                                                ------    ------
                 Net cash provided by investing activities          95     1,346
                                                                ------    ------
Financing activities:
     Purchases of treasury stock                                   (50)   (1,601)
     Cash dividends paid on common stock                          (182)     (183)
                                                                ------    ------
                 Net cash used by financing activities            (232)   (1,784)
                                                                ------    ------
                 Increase in cash and cash equivalents               1        76
Cash and cash equivalents at beginning of year                     120        44
                                                                ------    ------
Cash and cash equivalents at end of year                        $  121       120
                                                                ======    ======
</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 the amount required for
     the  liquidation  account  established in connection with the conversion or
     the regulatory requirements imposed by the OTS.

                                       30
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2003 and 2002

(17) PENDING BUSINESS COMBINATION

     Effective  November 13, 2003, the Company announced the entering into of an
     agreement  for the purchase of all of the  outstanding  common stock of the
     Company by Landmark Bancorp,  Inc. for $19.00 per share. The acquisition of
     the  Company by Landmark  Bancorp,  Inc. is expected to close in April 2004
     pending regulatory approvals.


                                       31