FIRST KANSAS FINANCIAL CORPORATION


                       2002 ANNUAL REPORT TO STOCKHOLDERS










<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                  ANNUAL REPORT







                                TABLE OF CONTENTS

                                                                          Page

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

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

Stock Price Information......................................................2

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

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

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

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

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

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

                                        i

<PAGE>

                  First Kansas Financial Corporation





To Our Stockholders:

         On behalf of our Board of  Directors  and  employees,  I am  pleased to
enclose for your review the 2002 Annual Report to  Stockholders  of First Kansas
Financial Corporation.

         At December 31, 2002, our assets totaled $150.1 million, as compared to
$152.7 million at December 31, 2001.  Stockholders'  equity was $18.47 per share
at December 31, 2002, as compared to stockholders' equity of $16.77 per share at
December 31, 2001.

         For the fiscal year ended  December  31,  2002,  we earned  $685,000 or
$0.78 per diluted  share,  as compared to net income of  $637,000,  or $0.64 per
share, for the fiscal year ended December 31, 2001.

         As always, we remain dedicated to enhancing  stockholder value. To this
end, during 2002 we repurchased  114,358 shares of our stock at an average price
of $13.99 per share,  which was  accretive to book value and earnings per share.
We thank you for your  investment  in, and  continued  support of,  First Kansas
Financial Corporation.

                                         Sincerely,


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





                                       1

<PAGE>

Corporate Profile

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

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

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

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

Stock Price Information

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

                                        2

<PAGE>

                                           High           Low         Dividends
                                           ----           ---         ---------
2002
First Quarter........................     $14.30         $13.50       $.05/share
Second Quarter.......................     $14.36         $12.81       $.05/share
Third Quarter........................     $14.00         $12.90       $.05/share
Fourth Quarter.......................     $14.70         $13.21       $.05/share

2001
First Quarter........................     $15.00         $12.06       $.05/share
Second Quarter.......................     $14.88         $13.65       $.05/share
Third Quarter........................     $14.56         $13.25       $.05/share
Fourth Quarter.......................     $14.50         $14.00       $.05/share

         The number of  shareholders  of record of common  stock as of March 10,
2003 was  approximately  281.  This does not  reflect  the  number of persons or
entities who held stock in nominee or "street"  name through  various  brokerage
firms.  At March 10, 2003,  there were 908,245  shares of the  Company's  common
stock outstanding.

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

Selected Financial Ratios and Other Data


                                                      At or For the Years Ended
                                                              December 31,
                                                     ---------------------------
                                                        2002             2001
                                                       ------           ------
Return on average assets.........................       0.45%            0.42 %
Return on average equity.........................       4.15             3.71
Dividend payout ratio............................      25.64            31.25
Average equity to average assets ratios..........      10.84            11.36
Equity to assets at period end...................      11.22            11.27
Net interest rate spread.........................       1.79             1.82
Yield on average interest-earning assets.........       5.65             6.51
Non-performing loans to total assets.............       0.05             0.01
Allowance for loan loss to total loans...........       0.45             0.45


                                        3

<PAGE>

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


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

General

         The Company was formed in 1998. The Company's  income on a consolidated
basis is derived substantially from its investment in the Bank.

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

Market Risk Analysis

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

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

                                        4

<PAGE>

         Quantitative  Analysis.  In order to encourage savings  associations to
reduce  their  interest  rate  risk,  the OTS  adopted a rule  incorporating  an
interest rate risk ("IRR") component into the risk-based  capital rules. The IRR
component is a dollar  amount that will be deducted  from total  capital for the
purpose of calculating an institution's  risk-based  capital  requirement and is
measured  in terms of the  sensitivity  of its net  portfolio  value  ("NPV") to
changes in interest rates.  NPV is the difference  between incoming and outgoing
discounted cash flows from assets, liabilities, and off-balance sheet contracts.
An  institution's  IRR is  measured  as the  change  to its NPV as a result of a
hypothetical 200 basis point ("bp") change in market interest rates. A resulting
change in NPV of more than 2% of the  estimated  present  value of total  assets
("PV")  will  require  the  institution  to deduct  from its capital 50% of that
excess  change.  The rules provide that the OTS will calculate the IRR component
quarterly for each  institution.  Based on the Bank's asset size and  risk-based
capital, the Bank has been informed by the OTS that it is exempt from this rule.
Nevertheless,  the following table presents the Bank's NPV at December 31, 2002,
as calculated by the OTS, based on quarterly information voluntarily provided to
the OTS. The -200 bp and -300 bp scenarios  are not shown due to the current low
interest rate environment.


                                                                NPV as %
                            Net Portfolio Value             of PV of Assets
Changes               -------------------------------   ----------------------
in Market
Interest Rates        $ Amount   $ Change    % Change   NPV Ratio(1)  Change
--------------        --------   --------    --------   ------------  ------
    (basis points)   (Dollars in Thousands)
       + 300           $ 9,613    $-3,252      -25%       6.61%       -170 bp
       + 200           $11,822    $-1,043       -8%       7.91%        -40 bp
       + 100           $13,162    $   296       +2%       8.62%        +31 bp
           0           $12,865                            8.31%
       - 100           $11,393    $-1,472      -11%       7.29%       -102 bp

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

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

                                        5

<PAGE>

         The Bank's  board of directors  reviews the Bank's asset and  liability
policies on an annual basis.  The board of directors  meets  quarterly to review
interest  rate risk and trends,  as well as  liquidity  and  capital  ratios and
requirements.  Management  administers  the policies and  determinations  of the
board of  directors  with respect to the Bank's  asset and  liability  goals and
strategies.  The  Bank  expects  that  its  asset  and  liability  policies  and
strategies  will  continue as described so long as  competitive  and  regulatory
conditions  in the  financial  institution  industry and market  interest  rates
continue as they have in recent years.

Financial Condition

         Total assets  decreased  $2.6 million,  or 1.7%,  to $150.1  million at
December 31, 2002 from $152.7  million at December  31,  2001.  The decrease was
primarily  comprised of a decrease of $2.2 million,  or 3.5%, in mortgage-backed
securities  and a $1.8  million,  or 3.0%,  decrease in loans  receivable,  net,
partially  offset  by an  increase  of $2.0  million,  or 16.8%,  in  investment
securities. The decrease in mortgage-backed securities and loans arose primarily
from  the  sale  of  mortgage-backed  securities  and  increased  repayments  of
mortgage-backed securities and loans in relation to purchases of mortgage-backed
securities and loans and  origination  of loans.  Cash flows from such decreases
were invested in investment securities and bank-owned life insurance.

         Total liabilities decreased $2.2 million, or 1.6%, to $133.3 million at
December 31, 2002 from $135.5  million at December  31,  2001.  The decrease was
primarily attributable to a $2.4 million, or 2.8%, decrease in deposits.

         Total  stockholders'  equity  decreased  $368,000,  or  2.1%,  to $16.8
million at  December  31,  2002 from $17.2  million at December  31,  2001.  The
decrease  was  primarily  attributable  to a $1.6  million  increase in treasury
stock, at cost, attributable to our stock repurchases during the year, partially
offset by a $502,000  increase in retained  earnings,  reflecting  net income of
$685,000  for 2002 and  $183,000 in cash  dividends  paid on common stock during
2002.

                                        6

<PAGE>

Average Balance Sheet

         The following table sets forth a summary of average  balances of assets
and liabilities as well as average yield and rate information.  Average balances
are  based  upon  month-end  balances,  however,  we do not  believe  the use of
month-end  balances  differs  significantly  from an  average  based  upon daily
balances. There has been no tax equivalent adjustments made to yields.

<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                       ---------------------------------------------------------------------------
                                                                         2002                                 2001
                                                       -------------------------------------   -----------------------------------
                                                            Average                              Average
                                                          Outstanding  Interest                Outstanding  Interest
                                                            Balance   arned/Paid  Yield/Rate     Balance   Earned/Paid  Yield/Rate
                                                            -------   ----------  ----------     -------   -----------  ----------
                                                                                    (Dollars in thousands)
<S>                                                      <C>          <C>          <C>       <C>          <C>            <C>
Interest-earning assets:
  Loans receivable(1)................................      $ 59,157     $4,212        7.12%    $ 60,983     $4,615           7.57%
  Investment securities..............................        13,414        637        4.75%       9,061        522           5.76%
  Mortgage-backed securities.........................        62,550      3,168        5.06%      63,206      3,798           6.01%
  Interest-bearing deposits..........................         7,888         92        1.17%       9,478        343           3.62%
  FHLB stock.........................................         2,650        121        4.57%       2,650        179           6.75%
                                                           --------     ------                 --------     ------
     Total interest-earning assets(1)................       145,659      8,230        5.65%     145,378      9,457           6.51%
                                                                        ------        ----                  ------           ----
Noninterest-earning assets...........................         6,509                               5,495
                                                           --------                            --------
     Total assets....................................      $152,168                            $150,873
                                                           ========                            ========
Interest-bearing liabilities:
  NOW and investment deposits........................      $ 26,374        301        1.14%    $ 23,627        478           2.02%
  Savings and certificate accounts...................        57,970      2,163        3.73%      58,926      3,006           5.10%
  FHLB borrowings....................................        50,000      2,724        5.45%      50,000      2,724           5.45%
                                                           --------     ------                 --------     ------
     Total interest-bearing liabilities..............       134,344      5,188        3.86%     132,553      6,208           4.68%
                                                                        ------        ----                  ------           ----
Noninterest-bearing liabilities:.....................         1,332                               1,182
                                                           --------                            --------
  Total liabilities..................................       135,676                             133,735
                                                           --------                            --------
Stockholders' Equity.................................        16,492                              17,138
                                                           --------                            --------
     Total liabilities and stockholders' equity......      $152,168                            $150,873
                                                           ========                            ========
Net interest income..................................                   $3,042                              $3,249
                                                                        ======                              ======
Net interest rate spread(2)..........................                                 1.79%                                  1.82%
                                                                                    ======                                 ======
Net earning assets...................................      $ 11,315                           $  12,825
                                                           ========                           =========
Net yield on interest-earning assets(3)..............                                 2.09%                                  2.23%
                                                                                    ======                                 ======
Average interest-earning assets to average
  interest-bearing liabilities.......................                               108.42%                                109.68%
                                                                                    ======                                 ======
</TABLE>

----------------------
(1)  Includes  non-accrual  loans and  loans  held-for-sale.  Calculated  net of
     deferred loan fees, loan discounts,  loans in process and the allowance for
     loan losses.
(2)  Net interest rate spread represents the difference between the average rate
     on  interest-earning  assets  and  the  average  cost  of  interest-bearing
     liabilities.
(3)  Net  interest  margin  represents  net interest  income  divided by average
     interest-earning assets.

                                        7

<PAGE>

         The table below sets forth  certain  information  regarding  changes in
interest  income  and  interest  expense  for the  periods  indicated.  For each
category   of   interest-earning   assets  and   interest-bearing   liabilities,
information  is  provided  on  changes  attributable  to (i)  changes  in volume
(changes  in  average  volume  multiplied  by old rate);  (ii)  changes in rates
(changes in rate multiplied by old average volume); (iii) changes in rate-volume
(changes in rate multiplied by the change in average volume).

<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                          -----------------------------------------
                                                         2002 vs. 2001
                                          -----------------------------------------
                                                      Increase/(Decrease)
                                                           Due to
                                          -----------------------------------------
                                                                  Rate/
                                           Volume       Rate     Volume      Total
                                           ------       ----     ------      -----
                                                       (In thousands)
<S>                                     <C>        <C>        <C>        <C>
Interest-earning assets:
  Loans receivable(1) .................   $  (138)   $  (273)   $     8    $  (403)
  Investment securities ...............       251        (92)       (44)       115
  Mortgage-backed securities ..........       (39)      (597)         6       (630)
  Interest-bearing deposits ...........       (58)      (232)        39       (251)
  FHLB stock ..........................        --        (58)        --        (58)
                                          -------    -------    -------    -------
     Total interest-earning assets ....        16     (1,252)         9     (1,227)
                                          -------    -------    -------    -------

Interest-bearing liabilities:
  NOW and money market deposits .......        56       (208)       (24)      (177)
  Savings and certificate accounts ....       (49)      (807)        13       (843)
  FHLB borrowings .....................        --         --         --         --
                                          -------    -------    -------    -------
     Total interest-bearing liabilities         7     (1,016)       (11)    (1,020)
                                          -------    -------    =======    -------

Increase in net interest income .......   $     9    $  (236)   $    20    $  (207)
                                          =======    =======    =======    =======
</TABLE>

                                        8

<PAGE>

Results of Operations for the Years Ended December 31, 2002 and 2001

         Net  Income.  Our net  income  increased  $48,000  for the  year  ended
December  31,  2002 to  $685,000  as  compared  to  $637,000  for the year ended
December 31, 2001. This increase was primarily  attributable  to a $354,000,  or
33.3%,  increase in noninterest income,  offset by a $207,000, or 6.4%, decrease
in net interest income and a $163,000, or 4.9%, increase in noninterest expense.

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

         Our net interest income  decreased  $207,000,  or 6.4%, to $3.0 million
for the year ended  December  31,  2002  compared to $3.2  million in 2001.  The
decrease in net  interest  income was due to an 86 basis  point  decrease in the
average  interest  rate earned for 2002,  partially  offset by an 82 basis point
decrease in the average  interest paid in 2002.  The 86 basis point  decrease in
the average  rate earned for 2002 was the result of a decrease in yield for each
component  of  interest-earning  assets,  ranging  from a decrease  of 245 basis
points for interest-bearing  deposits to a decrease of 45 basis points for loans
receivable.

         Our interest expense  decreased  primarily as a result of a decrease in
cost of both components of  interest-bearing  liabilities  (177 basis points for
NOW and investment  deposits and 137 basis points for savings and certificates).
This  decrease  was  slightly  offset by an increase  in the average  balance of
interest-bearing liabilities, primarily NOW and investment accounts.

         As a result of the  matters  discussed  above,  our net  interest  rate
spread  decreased  from 1.82% for the year ended  December 31, 2001 to 1.79% for
the year ended December 31, 2002.

         Provision for Loan Losses.  No provision for loan loss was  established
in 2002 compared to $21,000 for 2001 due to a lesser amount required to maintain
an  adequate  allowance  for loan  losses.  The  allowance  for loan  losses was
$260,000,  or 0.45%,  of net loans  outstanding at December 31, 2002 compared to
$268,000, or 0.45%, of net loans outstanding at December 31, 2001.

         Historically, we have emphasized our loss experience over other factors
in establishing the provision for loan losses.  We review the allowance for loan
losses in relation to (i) our past loan loss experience, (ii) known and inherent
risks in our portfolio,  (iii) adverse situations that may affect the borrower's
ability to repay, (iv) the estimated value of any underlying collateral, and (v)
current economic  conditions.  Management believes the allowance for loan losses
is adequate to provide for estimated losses.  However, there can be no assurance
that further  additions  will not be made to the  allowance and that such losses
will not exceed the estimated amount.

                                        9

<PAGE>

         Noninterest  income.  Our noninterest  income  increased  $354,000,  or
33.3%,  from $1.0 million in 2001 to $1.4  million in 2002.  The increase in our
noninterest  income  was due to a  $165,000  net  change  in the gain on sale of
mortgage-backed  securities, an increase of $119,000 in deposit account services
fees and an $81,000 increase in income from bank-owned life insurance policies.

         Noninterest  expense.  Our noninterest expense increased  $163,000,  or
4.9%, from $3.3 million in 2001 to $3.5 million in 2002. The increase  primarily
resulted  from a $65,000  increase in  compensation  and  benefits and a $58,000
increase  in  occupancy  and  equipment  expense  reflecting  updating  cost for
computer equipment.

         Income Tax  Expense.  Our income tax  expense  decreased  $43,000  from
$326,000 in 2001 to $283,000 in 2002. Our effective tax rate was 29.2% and 33.9%
for the year ended  December  31, 2002 and 2001,  respectively,  reflecting  the
increase in nontaxable  income  generated by our  bank-owned  life  insurance in
2002.

Liquidity and Capital Resources

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

         Net cash  provided by our  operating  activities  (the cash  effects of
transactions  that enter into our  determination  of net  income  e.g.  non-cash
items,  amortization and  depreciation,  provision for loan losses) for the year
ended  December  31, 2002 was $1.6  million as compared to $1.5  million for the
year ended December 31, 2001.

         Net cash provided by our investing  activities  (i.e. cash payments and
cash  receipts,  primarily from our  investment  securities and  mortgage-backed
securities  portfolio and our loan  portfolio)  for the year ended  December 31,
2002 totaled $1.4  million,  a decrease of $1.1 million from  December 31, 2001.
The  change  was  primarily  due  to  a  decrease  in  sale  of  investment  and
mortgage-backed  securities  from $13.4 million in 2001 to $1.9 million in 2002,
and an increase in loans  purchased from $2.6 million in 2001 to $8.7 million in
2002.  The decrease was  partially  offset by an increase in loan  repayments in
relation  to loan  originations,  an  increase of  paydowns  and  maturities  of
investments and  mortgage-backed  securities from $26.9 million in 2001 to $34.0
million in 2002 and a decrease of purchases of investments  and  mortgage-backed
securities from $41.0 million in 2001 to $35.5 million in 2002.

                                       10

<PAGE>

         Net cash used by our financing activities totaled $4.1 million in 2002,
a decrease of $5.1 million from 2001. The change was primarily due to a decrease
in deposits of $2.4 million in 2002  compared to an increase of deposits of $2.8
million in 2001.

Impact of Inflation and Changing Prices

         The consolidated financial statements of the Company and notes thereto,
presented  elsewhere  herein,  have been prepared in accordance  with accounting
principles   generally  accepted  in  the  United  States,   which  require  the
measurement of financial  position and operating  results in terms of historical
dollars without  considering the change in the relative  purchasing power of the
money over time due to  inflation.  The impact of  inflation is reflected in the
increased cost of the Company's  operations.  Unlike most industrial  companies,
nearly all the assets and liabilities of the Company are financial. As a result,
interest  rates have a greater impact on the Company's  performance  than do the
effects of general levels of inflation.  Interest rates do not necessarily  move
in the same direction or to the same extent as the prices of goods and services.

                                       11

<PAGE>

                                    KPMG LLP
                                  1000 Walnut
                                   Suite 1600
                             Kansas City, MO 64106


                          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, 2002 and
2001, 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, 2002 and 2001, 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
                                                -----------------
                                                KPMG LLP
Kansas City, Missouri
January 31, 2003


                                      F-1
<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS
                           Consolidated Balance Sheets
                           December 31, 2002 and 2001
                     (In thousands, except per share data)

<TABLE>
<CAPTION>


                 Assets                                                          2002                    2001
                                                                               --------               -------
<S>                                                                        <C>                     <C>
Cash and cash equivalents                                                      $  9,558                10,694
Investment securities available-for-sale, at fair value                          14,181                12,139
Mortgage-backed securities available-for-sale, at fair value                     39,357                41,819
Mortgage-backed securities held-to-maturity, at cost (fair value of
     $22,187 and $21,152, respectively)                                          21,548                21,288
Loans receivable, net                                                            57,896                59,699
Stock in Federal Home Loan Bank (FHLB) of Topeka, at cost                         2,650                 2,650
Premises and equipment, net                                                       2,104                 2,288
Real estate held for development                                                    347                   357
Accrued interest receivable:
     Investment and mortgage-backed securities                                      468                   482
     Loans receivable                                                               273                   269
Cash surrender value of bank owned life insurance                                 1,581                   750
Prepaid expenses and other assets                                                   169                   231
                                                                               --------               -------
                 Total assets                                                  $150,132               152,666
                                                                               ========               =======
                 Liabilities and Stockholders' Equity
Liabilities:
     Deposits                                                                  $ 81,954                84,323
     Advances from borrowers for property taxes and insurance                       189                   179
     Borrowings from FHLB of Topeka                                              50,000                50,000
     Accrued interest payable and other liabilities                               1,150                   957
                                                                               --------               -------
                 Total liabilities                                              133,293               135,459
                                                                               --------               -------
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                                                  14,964                14,920
     Treasury stock, 642,335 and 527,977 shares, respectively, at cost           (7,983)               (6,382)
     Retained earnings                                                           10,067                 9,565
     Unearned compensation                                                         (913)               (1,150)
     Accumulated other comprehensive income                                         549                    99
                                                                               --------               -------
                 Total stockholders' equity                                      16,839                17,207
                                                                               --------               -------
                 Total liabilities and stockholders' equity                    $150,132               152,666
                                                                               ========               =======
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-2

<PAGE>
                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS
                       Consolidated Statements of Earnings
                     Years ended December 31, 2002 and 2001
                      (In thousands, except per share data)

<TABLE>
<CAPTION>

                                                                            2002                 2001
                                                                         ---------            ---------
<S>                                                                   <C>                     <C>
Interest income:
     Loans                                                               $   4,212                4,615
     Investment securities                                                     637                  522
     Mortgage-backed securities                                              3,168                3,798
     Interest-bearing deposits                                                  92                  343
     Dividends on FHLB stock                                                   121                  179
                                                                         ---------            ---------
                 Total interest income                                       8,230                9,457
                                                                         ---------            ---------
Interest expense:
     Deposits                                                                2,464                3,484
     Borrowings                                                              2,724                2,724
                                                                         ---------            ---------
                 Total interest expense                                      5,188                6,208
                                                                         ---------            ---------
                 Net interest income                                         3,042                3,249
Provision for loan losses                                                      --                    21
                                                                         ---------            ---------
                 Net interest income after provision for loan losses         3,042                3,228
                                                                         ---------            ---------
Noninterest income:
     Deposit account service fees                                            1,131                1,011
     Gain (loss) on sale of mortgage-backed and investment
        securities available-for-sale                                           47                 (119)
     Other                                                                     238                  170
                                                                         ---------            ---------
                  Total noninterest income                                   1,416                1,062
                                                                         ---------            ---------
Noninterest expense:
     Compensation and benefits                                               1,851                1,786
     Occupancy and equipment                                                   505                  447
     Federal deposit insurance premiums and assessments                         59                   57
     Data processing                                                           233                  222
     Deposit account processing fees                                           261                  240
     Amortization of premium on deposits assumed                                56                   61
     Supplies expense                                                           97                   98
     Advertising                                                               113                  122
     Other                                                                     315                  294
                                                                         ---------            ---------
                 Total noninterest expense                                   3,490                3,327
                                                                         ---------            ---------
                 Earnings before income tax expense                            968                  963

Income tax expense                                                             283                  326
                                                                         ---------            ---------
                 Net earnings                                            $     685                  637
                                                                         =========            =========
Net earnings per share - basic                                           $    0.81            $    0.66
Net earnings per share - diluted                                              0.78                 0.64
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-3

<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS
               Consolidated Statements of Stockholders' Equity and
                              Comprehensive Income
                     Years ended December 31, 2002 and 2001
                      (In thousands, except per share data)

<TABLE>
<CAPTION>

                                                                                                       Accumulated
                                                    Additional                                       other
                              Preferred     Common    paid-in   Treasury  Retained    Unearned    Comprehensive
                                Stock       Stock    Capital    stock     Earnings  Compensation   Income (loss)  Total
                                -----       ------   --------    -----    --------  ------------  --------------  -----
<S>                          <C>         <C>        <C>        <C>        <C>         <C>           <C>      <C>
Balance, December 31, 2000      $ --          155      14,867      (4,758)   9,139         (1,387)     (399)     17,617
Net earnings                      --           --          --          --      637             --        --         637
Change in unrealized gain (loss)
   on available-for-sale securities
   arising during the period,
   net of tax of $257             --           --          --          --       --             --       498         498
                                                                                                               --------
          Total comprehensive
            income                                                                                                1,135
                                                                                                               --------
Purchase of 111,587 shares of
   stock for the treasury         --           --          --      (1,624)      --             --        --      (1,624)
Allocation of ESOP shares         --           --          53          --       --            125        --         178
Amortization of RSP shares        --           --          --          --       --            112        --         112
Cash dividends paid
   ($0.20 per share)              --           --          --          --     (211)            --        --        (211)
                             -------      -------    --------     -------  -------     ----------   -------    --------
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 $232                    --           --          --          --       --             --       450         450
                                                                                                               --------
          Total comprehensive
            income                                                                                                1,135
                                                                                                               --------
Purchase of 114,358 shares of
   stock for the treasury         --           --          --      (1,601)      --             --        --      (1,601)
Allocation of ESOP shares         --           --          44          --       --            125        --         169
Amortization of RSP shares        --           --          --          --       --            112        --         112
Cash dividends paid
   ($.20 per share)               --           --          --          --     (183)            --        --        (183)
                            --------      -------    --------     -------  -------     ----------   -------    --------
Balance, December 31, 2002  $     --          155      14,964      (7,983)  10,067           (913)      549      16,839
                            ========      =======    ========     =======  =======     ==========   =======    ========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>


                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS
                      Consolidated Statements of Cash Flows
                     Years ended December 31, 2002 and 2001
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                  2002                2001
                                                                               ----------          -----------
<S>                                                                              <C>                   <C>
Cash flows from operating activities:
     Net earnings                                                               $    685                   637
     Adjustments to reconcile net earnings to net cash provided by
        operating activities:
           Provision for loan losses                                                  --                    21
           Depreciation                                                              267                   209
           Amortization of premium on deposits assumed                                57                    61
           Amortization of loan fees and premiums                                      2                    35
           Accretion of discounts and amortization of premiums on
              investment and mortgage-backed securities, net                         498                   202
           (Gain) loss on sale of mortgage-backed securities
              available-for-sale                                                     (47)                  119
           Allocation of ESOP shares and amortization of RSP shares                  281                   290
           Change in accrued interest receivable, prepaids,                          (58)                   12
              and other assets
           Change in accrued interest payable and other liabilities                  (36)                  (43)
                                                                                --------           -----------
                 Net cash provided by operating activities                         1,649                 1,543
                                                                                --------           -----------
Cash flows from investing activities:
     Loan repayments, net of originations                                         10,549                 6,842
     Loans purchased                                                              (8,748)               (2,596)
     Principal repayments and maturities of mortgage-backed
        securities available-for-sale                                             22,154                16,471
     Principal repayments and maturities of mortgage-backed
        securities held-to-maturity                                                7,505                 5,311
     Purchases of mortgage-backed securities available-for-sale                  (20,902)              (30,047)
     Purchases of mortgage-backed securities held to maturity                     (7,858)                   --
     Proceeds from sale of mortgage-backed securities
        available-for-sale                                                         1,355                13,434
     Purchases of investment securities available-for-sale                        (6,760)              (10,925)
     Maturities/calls of investment securities available-for-sale                  4,358                 5,068
     Proceeds from sale of investment securities available for sale                  538                    --
     Investment in cash surrender value of bank owned life insurance                (750)                 (750)
     Additions of premises and equipment, net                                        (83)                 (367)
                                                                                --------           -----------
                 Net cash provided by investing activities                      $  1,358                 2,441
                                                                                --------           -----------

</TABLE>
                                                                  (Continued)
                                      F-5
<PAGE>



                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS
                      Consolidated Statements of Cash Flows
                     Years ended December 31, 2002 and 2001
                                 (In thousands)


<TABLE>
<CAPTION>

                                                                                 2002                   2001
                                                                                 ----                   ----
Cash flows from financing activities:
<S>                                                                           <C>                    <C>
     Net (decrease) increase in deposits                                        $ (2,369)                2,839
     Net increase (decrease) in advances from borrowers for
        taxes and insurance                                                           10                   (17)
     Purchases of common stock for treasury                                       (1,601)               (1,624)
     Cash dividends paid on common stock                                            (183)                 (211)
                                                                                --------           -----------
                 Net cash (used in) provided by financing activities              (4,143)                  987
                                                                                --------           -----------
                 Net (decrease) increase in cash and cash equivalents             (1,136)                4,971
Cash and cash equivalents at beginning of year                                    10,694                 5,723
                                                                                --------           -----------
Cash and cash equivalents at end of year                                        $  9,558                10,694
                                                                                ========           ===========
Supplemental disclosure of cash flow information:
     Cash paid during the year for income taxes                                 $    345                   396
     Cash paid during the year for interest                                        5,206                 6,244
Noncash activities:
     Transfer of investment securities held-to-maturity to
        investment securities available-for-sale                                      --                 6,322
     Transfer of mortgage-backed securities held-to-maturity to
        mortgage-backed securities available-for-sale                                 --                23,093

</TABLE>
See accompanying notes to consolidated financial statements.


                                      F-6
<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001


(1)    Summary of Significant Accounting Policies

       (a)    Principles of Consolidation and Basis of Presentation

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

       (b)    Cash Equivalents

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

       (c)    Investment Securities

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

              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
              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.

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

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001

       (e)    Mortgage Banking Activities

              At December 31, 2002 and 2001, the Company was servicing loans for
              others  amounting to $340,000  and  $428,000,  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 ninety days  delinquent or sooner if
              management   believes   collectibility  of  the  interest  is  not
              probable.  Management's  assessment of collectibility is primarily
              based  on a  comparison  of  the  estimated  value  of  underlying
              collateral  to the related  loan and accrued  interest  receivable
              balances.  When  interest  accrual  is  discontinued,  all  unpaid
              accrued  interest is reversed.  Nonaccruing  loans are returned to
              accrual status when principal and interest 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.

                                        F-8                         (Continued)
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001

       (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  three  to  thirty-five  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)    Adoption of New Pronouncement

              The  Company  adopted  SFAS No.  133,  Accounting  for  Derivative
              Financial  Instruments  and  Hedging  Activities  as of January 1,
              2001.  This  adoption  resulted in the  reclassification  of $23.1
              million  in   mortgage-backed   securities  and  $6.3  million  in
              investment  securities from the Company's  held-to-maturity to its
              available-for-sale   portfolio.  Such  reclassification  increased

                                       F-9                        (Continued)
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001

              accumulated  comprehensive loss by $310,720 net of income taxes of
              $160,068.  The  adoption  of SFAS No.  133 did not have any  other
              impact on the  Company's  financial  statements as the Company did
              not hold any derivative  financial  instruments during the periods
              covered by the accompanying financial statements.

       (m)    Earnings Per Common Share

              Basic earnings per share is based upon the weighted average number
              of common shares outstanding  during the periods presented.  Basic
              earnings  per share  exclude  dilution and is computed by dividing
              income  available to common  stockholders by the weighted  average
              number of common  shares  outstanding  during the period.  Diluted
              earnings per share  include the potential  dilutive  common shares
              outstanding during 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 schedule summarizes the number of average shares and
              equivalents used in the computation of earnings per share:


                                                       2002            2001
                                                    --------        --------
Basic shares outstanding                             849,361         966,286
Dilutive effect of stock options                      28,667          31,166
                                                    --------        --------

                 Diluted shares outstanding          878,028         997,452
                                                    ========        ========


       (n)    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):

                                                           2002     2001
                                                         --------  -------
Change in unrealized holding gains (losses), net of
     income tax                                          $  480      733
Cumulative effect of change in accounting principle,
     net of tax (see notes 3 and 4)                          --     (311)
Reclassification adjustment for (gain) loss included in
     net earnings, net of tax                               (30)      76
                                                         --------  -------

                 Change in unrealized gain (losses) on
                    available-for-sale securities arising
                    during the period, net of tax        $  450      498
                                                         ========  =======


                                       F-10                     (Continued)
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001



(2)    Cash and Cash Equivalents

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

                                                 2002        2001
                                                -----      -------
Cash on hand                                  $ 1,210          882
Deposits at other financial institutions        2,648        3,812
Overnight FHLB deposits                         5,700        6,000
                                                -----      -------
                                              $ 9,558       10,694
                                                =====      =======


(3)    Investment Securities

       The  following  is a summary of  investment  securities  and  information
       relating to amortized cost, fair values, and unrealized gains (losses) at
       December 31, 2002 and 2001 is as follows (in thousands):

<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>


                                       F-11                       (Continued)
<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001

<TABLE>
<CAPTION>
                                                                                     2001
                                                         ----------------------------------------------------------
                                                          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                                          $   1,974             --             --         1,974
    U.S. government and agency obligations
      maturing after five years but within
      ten years                                               1,095              5             (1)        1,099
    U.S. government and agency obligations
      maturing after ten years                                4,575              9            (11)        4,573
    State and municipal obligations maturing
      after five years but within ten years                     200             --             (1)          199
    State and municipal obligations maturing
      after ten years                                         1,117             --            (45)        1,072
    Other debt securities maturing after one
      year but within five years                              1,863             37             --         1,900
    Other debt securities maturing after five
      years but within ten years                                519             --            (25)          494
    Other debt securities maturing after ten
      years                                                     828             --             --           828
                                                          ---------         ------         ------      --------
                                                          $  12,171             51            (83)       12,139
                                                          =========         ======         ======      ========
</TABLE>


Effective  January 1, 2001, the Company  transferred  the investment  securities
held-to-maturity  portfolio amounting to $6,322,000 to the investment securities
available-for-sale   portfolio.  This  transfer  was  in  conjunction  with  the
Company's adoption of SFAS No. 133.


                                       F-12                      (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001

(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, 2002 and 2001 is as follows (in thousands):

<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>

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

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001


<TABLE>
<CAPTION>
                                                                             2001
                                               -----------------------------------------------------
                                                 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)                   $   5,398            39            (22)      5,415
        Federal National Mortgage
          Association (FNMA)                       16,767           136            (38)     16,865
        Government National Mortgage
          Association (GNMA)                        1,792            61             --       1,853
    Collateralized mortgage obligations            17,680           183           (177)     17,686
                                                ---------       -------         ------    --------
                                                $  41,637           419           (237)     41,819
                                                =========       =======         ======    ========
Held-to-maturity:
    Government agency mortgage-backed
      securities:
        FNMA                                    $   7,959            --           (177)      7,842
        GNMA                                       13,329            --            (19)     13,310
                                                ---------       -------         ------    --------
                                                $  21,288            --           (196)     21,152
                                                =========       =======         ======    ========

</TABLE>

       The Company's portfolio of government agency  mortgage-backed  securities
       and federal  agency-backed  collateralized  mortgage obligations consists
       primarily of first and second tranche securities with expected maturities
       of three to five years.  At December  31,  2002,  the  government  agency
       mortgage-backed  securities  had a  carrying  value  of  $47,816,000  and
       consisted  of  approximately  $22,715,000  of fixed rate  securities  and
       $25,101,000  of variable rate  securities.  The  collateralized  mortgage
       obligations  had  a  carrying  value  of  $13,089,000  and  consisted  of
       approximately  $9,670,000  of fixed rate  securities  and  $3,419,000  of
       variable rate  securities.  Collateralized  mortgage  obligations  of the
       Company are generally government agency guaranteed.

       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.   Proceeds   from  the  sale  of
       available-for-sale  securities in 2001 were  $13,434,000.  Gross gains of
       $21,000  and gross  losses of  $140,000  were  realized on those sales in
       2001.

       At December 31, 2002 and 2001, mortgage-backed securities with a carrying
       value of  approximately  $1,625,000 and  $1,825,000,  respectively,  were
       pledged to secure public funds on deposit.

       Effective  January  1,  2001,  the  Company  transferred  mortgage-backed
       securities  amounting to  $23,093,000 to the  mortgage-backed  securities
       available-for-sale  portfolio.  This transfer was in conjunction with the
       Company's adoption of SFAS No. 133.


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

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001

(5)    Loans Receivable

       Loans  receivable  consist of the following at December 31, 2002 and 2001
(in thousands):

                                                          2002         2001
                                                        --------     -------
Mortgage loans:
    One-to-four-family                                  $54,604       55,683
    Commercial                                              536          543
    Land                                                    680          560
    Construction                                             --          664
                                                        -------       ------
             Total mortgage loans                        55,820       57,450
Consumer loans                                            2,391        2,642
Commercial loans                                            390          310
                                                        -------       ------

             Total                                       58,601       60,402
Less:
    Unearned premiums, discounts, and deferred fees          21           48
    Allowance for loan losses                               260          268
    Undisbursed portion of loans in process                 424          387
                                                        -------       ------
             Total (net)                                $57,896       59,699
                                                        =======       ======


The weighted average annual interest rates on mortgage loans  approximated 6.58%
and 7.24% at December  31, 2002 and 2001,  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,  2002,  the Company had  outstanding  commitments  to originate
mortgage  loans of $317,000 and  outstanding  commitments  to purchase  loans of
$141,000.  At December  31, 2001,  the Company had  outstanding  commitments  to
originate  mortgage  loans of $342,000 and  outstanding  commitments to purchase
loans of $1,719,000.

Loans made to  directors  and  executive  officers of the  Company  approximated
$804,000 and $698,000 at December  31, 2002 and 2001,  respectively.  Such loans
were made in the ordinary course of business. Changes in such loans for 2002 are
as follows (in thousands):



     Balance at January 1, 2001               $698
     Additions                                 192
     Amounts collected                         (86)
                                              ----
     Balance at December 31, 2002             $804
                                              ====

                                      F-15                     (Continued)

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

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001

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

                                        2002      2001
                                      -------   -------
Balance at beginning of year           $268       256
Provision                                --        21
Charge-offs                              (8)       (9)
Recoveries                               --        --
                                       ----       ---
Balance at end of year                 $260       268
                                       ====       ===



     Non-accrual  loans at  December  31, 2002 and 2001  aggregated  $68,000 and
     $4,000,  respectively.  Impaired loans, exclusive of delinquent loans, were
     insignificant at December 31, 2002 and 2001.

(6)  Premises and Equipment

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

                                          2002        2001
                                        -------     -------
Land                                    $  213         213
Buildings and improvements               2,220       2,185
Furniture and equipment                  1,748       1,712
                                         -----       -----
             Total                       4,181       4,110

Less accumulated depreciation            2,077       1,822
                                         -----       -----
             Total                      $2,104       2,288
                                        ======       =====


                                       F-16                     (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001


(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 2002 or 2001.

(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
       is amortizing the premium over twenty years on the straight-line  method.
       Accumulated  amortization  on such premium was $1,212,000 and $1,156,000,
       respectively, at December 31, 2002 and 2001.

(9)    Deposits

       Deposits are summarized as follows (in thousands):


                                              2002         2001
                                            --------      -------
Noninterest bearing demand                  $ 4,041        3,725
Savings and interest-bearing demand          30,680       29,394
Time                                         47,233       51,204
                                            -------       ------
                                            $81,954       84,323
                                            =======       ======


       The weighted  average interest rates on deposits  approximated  2.78% and
       4.01% at December 31, 2002 and 2001, respectively.

       Scheduled maturities of time deposits at December 31, 2002 are as follows
       (in thousands):

                                    2003               $   33,898
                                    2004                    8,459
                                    2005                    2,738
                                    2006                      668
                                    2007                    1,155
                                    Thereafter                315
                                                       ----------
                                    Total              $   47,233
                                                       ==========


                                       F-17                     (Continued)
<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001

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

                                                          2002           2001
                                                         ------         ------

                Savings and time accounts                $2,163          3,006
                Interest-bearing demand accounts            301            478
                                                         ------         ------
                                                         $2,464          3,484
                                                         ======         ======

       Certificates  of  deposit in amounts  greater  than or equal to  $100,000
       amounted to  $4,160,000  and  $4,463,000  at December  31, 2002 and 2001,
       respectively.

(10)   Borrowings From FHLB of Topeka

       Borrowings  outstanding  from the FHLB of Topeka at December 31, 2002 and
       2001 are as follows (in thousands):


                                                              2002       2001
                                                            --------   -------
4.92% interest and maturity date in January 2009, callable
    January 2004                                            $10,000     10,000
4.88% interest and maturity date in January 2009, callable
    January 2004                                             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
    September 2003                                            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.  Weighted average interest rates at December
31, 2002 and 2001 were 5.48% and 5.37%,  respectively,  on such  borrowings.  At
December 31, 2002, the Company could borrow up to $60.4 million from the FHLB of
Topeka.



                                       F-18                     (Continued)
<PAGE>
                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001

       Principal maturities, based on original maturity, of borrowings from FHLB
       of Topeka at December 31, 2002 are as follow (in thousands):


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

(11)   Income Taxes

       The  components of income tax expense from  continuing  operations are as
       follows for the years ended December 31 (in thousands):


                                2002                          2001
                    ----------------------------  -------------------------

                    Federal      State     Total  Federal    State    Total
                    -------      -----    ------  -------   -------  ------
          Current    $ 295        38       333      332       47       379
          Deferred     (43)       (7)      (50)     (49)      (4)      (53)
                     -----       ---       ---      ---      ---      ----
                     $ 252        31       283      283       43       326
                     =====       ===       ===      ===      ===      ====



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


                                                                Percent
                                                              of earnings
                                                                before
                                                              income tax
                                                                expense
                                                          -----------------
                                                           2002        2001
                                                          ------      -----
           Expected federal income tax rate               34.0%        34.0
           State taxes, net of federal tax benefit         2.0          3.0
           Bank-owned life insurance                      (2.8)          --
           Tax exempt income                              (1.8)        (1.7)
           Other, net                                     (2.2)        (1.5)
                                                          ----        -----
                        Effective income tax rate         29.2%        33.8
                                                          ====        =====



                                       F-19                     (Continued)


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

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001

       Temporary differences that give rise to a significant portion of deferred
       tax assets and  liabilities  at December 31, 2002 and 2001 are as follows
       (in thousands):


                                                           2002         2001
                                                          -------     --------
       Employee benefits                                     109          83
       Other                                                  10           6
       Allowance for loan losses                              96          35
                                                          ------      ------
                    Deferred tax asset                       215         124
                                                          ------      ------
       Unrealized gain on available for sale securities     (283)         51)
       Premises and equipment                               (128)       (118)
       FHLB Dividends                                       (176)       (162)
       Other                                                 (30)        (13)
                                                          ------      ------
                    Deferred tax liability                  (617)       (344)
                                                          ------      ------
                    Net deferred tax liability, included
                      in other liabilities                  (402)       (220)
                                                          ======      ======


       There was no  valuation  allowance  required  for  deferred tax assets at
       December  31, 2002 or 2001.  Management  believes  that it is more likely
       than not the  results  of  future  operations  will  generate  sufficient
       taxable income to realize the deferred tax assets.

       Prior to 1996,  the  Company  was  allowed  to deduct  the  greater of an
       experience  method bad debt  deduction  based on actual  charge-offs or a
       statutory bad debt deduction based on a percentage (8%) of taxable income
       before such  deduction.  For income tax  purposes,  the Company  used the
       experience  methods  in 1997 and  1998.  Under  the  Small  Business  Job
       Projection  Act (the  Act) of 1996,  the  allowable  deduction  under the
       percentage  of  taxable  income  method  was  terminated  for  tax  years
       beginning after 1995, and will not be available to the Company for future
       years.  The Act also provides  that federal  income tax bad debt reserves
       accumulated  since 1988 (the base year reserve)  must be  recaptured  and
       included in taxable  income over a six-year  inclusion  period  beginning
       1998.  Included in the deferred income tax liability at December 31, 2002
       and 2001 are $28,000 and $56,000, respectively, for this recapture.

       Retained  earnings at December  31, 2002 and 2001  include  approximately
       $718,000  for which no  provision  for Federal  income tax has been made.
       This amount  represents  allocations of income to bad debt  deductions in
       years prior to 1988 for tax purposes only. Reduction of amounts allocated
       for  purposes  other than tax bad debt losses will create  income for tax
       purposes only, which will be subject to the then current corporate income
       tax rate.

                                       F-20                     (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001


(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
              twenty-one  are  eligible  for  participation  after  one  year of
              service. Pension costs associated with the plan amounted to $3,452
              and  $2,820  for the  years  ended  December  31,  2002 and  2001,
              respectively.

              The   Company  has  a  defined   contribution   plan  that  covers
              substantially all employees. Employees may contribute up to 15% of
              their salary,  subject to limitations  under the Internal  Revenue
              Code, and the Company  matches 50% of the employee's  contribution
              up to 6% of compensation. The Company's expense under the plan for
              the  years  ended  December  31,  2002 and 2001  was  $28,000  and
              $26,000, 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 $57,000
              and  $42,000  for the  years  ended  December  31,  2002 and 2001,
              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
              twenty-one  or older who have  completed  one year of service with
              the Company are eligible to participate in the ESOP.  Participants
              become 100% vested  after five  years.  Contributions  made by the
              Company to the ESOP will be used to repay the loan, and shares are
              allocated   to   participants   by  a   formula   based  on  total
              compensation.  The cost of  unallocated  shares  is  presented  as
              unearned  compensation in the  accompanying  consolidated  balance
              sheets. The Company  recognizes  additional  compensation  expense
              equal to the fair value of shares allocated.  In connection with a
              principal  reduction on the ESOP loan, 12,432 shares were released
              and the Company recognized $169,000 of compensation expense during
              2002,  and 12,432 shares were released and the Company  recognized
              $178,000 of  compensation  expense  during 2001. The fair value of
              the  remaining  68,371  unallocated  shares at  December  31, 2002
              aggregated approximately $961,980.

       (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,
              aggregating  $660,429,  has been recorded as unearned compensation
              in the accompanying consolidated balance sheet. 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


                                       F-21                     (Continued)
<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001


              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 o f the years ended
              December 31, 2002 and 2001.

              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  2002 and 2001,
              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 2002
              and 2001 as if the fair value method  required by SFAS No. 123 has
              been used to measure compensation cost for stock options granted:


                                                     2002            2001
                                                  ------------   -----------
Net earnings - as reported                      $  685,000         637,000
Net earnings - pro forma                           642,000         594,000
Basic earnings per share - as reported                0.81            0.66
Basic earnings per share - pro forma                  0.76            0.61


              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,  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,  2001,  the  exercise  price and weighted  average
              remaining  contractual life of the outstanding  options was $10.75
              and 7.1 years, respectively.

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

              At December 31, 2001, the number of options exercisable was 52,830
              and the  weighted  average  exercise  price of those  options  was
              $10.75.

                                       F-22                     (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001


(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, 2002 and
       2001.  The Bank's  actual and required  capital  amounts and ratios as of
       December 31, 2002 and 2001 were as follows (dollars in thousands):

<TABLE>
<CAPTION>

                                      2002
---------------------------------------------------------------------------------------------------------------------

                                                                          For capital          To be well- capitalized
                                                                            adequacy           under prompt corrective
                                                Actual                     purposes              actions 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>


                                       F-23                     (Continued)
<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001


<TABLE>
<CAPTION>

                                                                      2001
-------------------------------------------------------------------------------------------------------------------------------

                                                                          For capital          To be well-capitalized
                                                                           adequacy            under prompt corrective
                                               Actual                       purposes               actions provisions
                                     --------------------------    -----------------------     ------------------------
                                        Amount          Ratio         Amount        Ratio         Amount      Ratio
                                     -------------   ----------    ----------    ---------     ---------    --------
<S>                              <C>                <C>         <C>            <C>           <C>              <C>
Tangible capital
     (to tangible assets)            $  16,046          10.54%      $  2,285         1.50%     $     --           --%
Tier 1 leverage (core) capital
     (to adjusted tangible assets)      16,046          10.54          6,092         4.00         7,615         5.00
Risk-based capital
     (to risk-weighted assets)          16,310          31.97          4,082         8.00         5,102        10.00
Tier 1 risk-based capital
     (to risk-weighted assets)          16,046          31.45             --           --         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.

                                       F-24                     (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001


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

(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, 2002
       and 2001 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.

                                       F-25                     (Continued)

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

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001


       (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.

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

                                                      December 31, 2002
                                                  ------------------------
                                                   Carrying         Fair
                                                     value          value
                                                  ---------      ---------
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


                                                      December 31, 2001
                                                  ------------------------
                                                   Carrying         Fair
                                                     value          value
                                                  ----------     ---------
Financial assets:
    Cash and cash equivalents                   $   10,694         10,694
    Investment securities (see note 3)              12,139         12,139
    Mortgage-backed securities (see note 4)         63,107         61,544
    Loans receivable                                59,699         60,708
    Stock in FHLB                                    2,650          2,650
    Accrued interest receivable                        751            751
Financial liabilities:
    Deposits                                        84,323         85,362
    FHLB borrowings                                 50,000         53,118
    Accrued interest payable                           280            282



                                       F-26                     (Continued)
<PAGE>


                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001


       (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 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, 2002 and 2001
                                                 (In thousands)


<TABLE>
<CAPTION>

                               Assets                                  2002                   2001
                                                                     ---------              --------
<S>                                                             <C>                     <C>
Cash and cash equivalents                                            $     120                    44
Loan to ESOP                                                               684                   808
Investment in and loan to subsidiary                                    15,985                16,558
Other assets                                                                52                    48
                                                                     ---------              --------
                 Total assets                                        $  16,841                17,458
                                                                     =========              ========

                Liabilities and Stockholders' Equity

Accrued interest payable and other liabilities                       $       2                   251
Stockholders' equity                                                    16,839                17,207
                                                                     ---------              --------
                 Total liabilities and stockholders' equity          $  16,841                17,458
                                                                     =========              ========

</TABLE>


                                       F-27                     (Continued)




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

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001

                         Condensed Statements of Income
                     Years ended December 31, 2002 and 2001
                                 (In thousands)


                                                   2002            2001
                                                   -----           -----
Income:
     Equity in earnings of subsidiary             $ 697             650
     Interest on loans                                3              71
     Interest on investments                         64               2
                                                  -----            ----
                 Total income                       764             723
Expense, including income tax expense                79              86
                                                  -----            ----
                 Net income                       $ 685             637
                                                  =====            ====




                                       F-28                       (Continued)

<PAGE>


                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2002 and 2001


                       Condensed Statements of Cash Flows
                     Years ended December 31, 2002 and 2001
                                 (In thousands)



<TABLE>
<CAPTION>
                                                                          2002                   2001
                                                                        --------               -------
<S>                                                                     <C>                   <C>
Operating activities:
     Net income                                                         $    685                   637
     Less equity in earnings of subsidiary                                  (697)                 (650)
     Adjustments to reconcile net income to net cash
        provided by operating activities:
           Release of unallocated ESOP shares and
              amortization of RSP                                            281                   290
           Change in other assets                                             (4)                    3
           Decrease in accrued interest payable
              and other liabilities                                          249                   246
                                                                        --------               -------
                 Net cash provided by operating activities                   514                   526
                                                                        --------               -------
Investing activities:
     Decrease in investment in and loan to subsidiary, net                 1,222                 1,109
     Decrease in loan to ESOP                                                124                   124
                                                                        --------               -------
                 Net cash provided by investing activities                 1,346                 1,233
                                                                        --------               -------
Financing activities:
     Purchases of common stock for the treasury                           (1,601)               (1,624)
     Cash dividends paid on common stock                                    (183)                 (211)
                                                                        --------               -------
                 Net cash used by financing activities                    (1,784)               (1,835)
                                                                        --------               -------
                Increase (decrease) in cash and cash equivalents              76                   (76)

Cash and cash equivalents at beginning of year                                44                   120
                                                                        --------               -------
Cash and cash equivalents at end of year                                $    120                    44
                                                                        ========               =======
</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.


                                       F-29

<PAGE>

Corporate Information

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

                        First Kansas Federal Savings Bank


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

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

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


                               Board of Directors
    Roger L. Coltrin                                  Larry V. Bailey
 Chairman of the Board                     President and Chief Executive Officer

    Donald V. Meyer                                James E. Breckenridge
        Director                                         Director

    Sherman W. Cole                                  J. Darcy Domoney
        Director                                         Director

                               Executive Officers
                                 Larry V. Bailey
                      President and Chief Executive Officer

                                Daniel G. Droste
                       Senior Vice President and Treasurer

                                 Galen E. Graham
                       Senior Vice President and Secretary

                           --------------------------

Local Counsel                                  Independent Auditor
Winkler, Domoney & Schultz                     KPMG LLP
131 South Pearl Street                         1600 Commerce Bank Building
Paola, Kansas  66071                           Kansas City, Missouri  64106

Special Counsel                                Transfer Agent and Registrar
Malizia Spidi & Fisch, PC                      Computershare Trust Company, Inc.
1100 New York Avenue, N.W.                     350 Indiana Street
Suite 340 West                                 Suite 800
Washington, D.C. 20005                         Golden, Colorado 80401

                           --------------------------

         The  Company's  Annual  Report on Form 10-KSB for the fiscal year ended
December 31, 2002 is available  without charge upon written request.  For a copy
of the Form 10-KSB,  please write or call the Company's  Corporate  Secretary at
the Company's main office.  The Annual Meeting of  Stockholders  will be held on
April 15, 2003 at 1:00 p.m. at the Company's office.