EXHIBIT 13

<PAGE>


                       FIRST KANSAS FINANCIAL CORPORATION


                       1998 ANNUAL REPORT TO STOCKHOLDERS

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                  ANNUAL REPORT


                                TABLE OF CONTENTS

                                                                         Page
                                                                         ----

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

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

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

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

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

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

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

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

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

                                        i

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[LOGO]  FIRST KANSAS                                   600 Main Street
        FINANCIAL CORPORATION                          P.O.Box 9
                                                       Osawatomie, KS 66064-0009
                                                       (913) 755-3033
                                                       FAX (913) 755-2795


To Our Stockholders:

         On behalf of our Board of Directors  and  employees,  we are pleased to
present  the first  Annual  Report to  Stockholders  of First  Kansas  Financial
Corporation (the "Company"). As you will see from the Annual Report, 1998 was an
eventful  year for the Company and its  wholly-owned  subsidiary,  First  Kansas
Federal Savings Bank (the "Bank").

         On June 25, 1998, the Bank  successfully  completed its conversion from
the mutual to stock form of organization  and the concurrent  public offering of
1,553,938 shares of the Company's common stock (the "Conversion").  Net proceeds
to the Company and the Bank from the Conversion were  approximately $14 million.
While the Company is in the early stages of investing  the net proceeds from the
Conversion,  we expect  that the  investment  of these  proceeds  will  generate
increased core earnings in future periods.

         For the  fiscal  year ended  December  31,  1998,  the  Company  earned
$720,000 or $.50 per share,  as compared to net income of $672,000,  or $.47 per
share,  for the fiscal year ended December 31, 1997.  Earnings per share for the
twelve  months  ended  December  31,  1998  and  1997  are pro  forma  as if the
Conversion occurred on January 1, 1997.

         At December 31, 1998, the Company's assets totalled $107.2 million,  as
compared to $95.6 million at December 31, 1997.  Stockholders'  equity was $21.4
million or $13.80 per share at  December  31,  1998,  as  compared  to  retained
earnings  of $6.6  million at  December  31,  1997.  The  increase in assets and
stockholders'  equity was primarily  attributable  to the net proceeds  received
from the Conversion.

         We sincerely appreciate the confidence shown by our customers and local
community  during  the  Conversion.  The  goal of your  Board of  Directors  and
Management is to continuously strive to enhance your investment in the Company.

                                          Sincerely,

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

                                        1

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Corporate Profile

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

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

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

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



                                        2

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Stock Price Information

         The  Company's  common  stock has been  traded on the  Nasdaq  National
Market under the trading symbol of "FKAN" since it commenced trading on June 25,
1998. The following table reflects high and low sale closing prices as published
by the Nasdaq National Market for the calendar  quarters  indicated.  The prices
reflect inter-dealer prices,  without retail mark-up,  markdown,  or commission,
and may not represent actual transactions.

                                                      High        Low
                                                      ----        ---
1998
Second quarter (from June 25, 1998)...............     $13        $10
Third quarter.....................................     $13        $10
Fourth quarter....................................     $11        $ 9



         The  number of  shareholders  of record of common  stock as of March 8,
1999,  was  approximately  325.  This does not  reflect the number of persons or
entities who held stock in nominee or "street"  name through  various  brokerage
firms.  At March 8, 1999,  there were 1,553,938  shares of the Company's  common
stock outstanding.

         There were no  dividends  paid by the  Company  during the fiscal  year
ended December 31, 1998. 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,
                                              -------------------------

                                                1998           1997
                                              ----------     ----------

Return on average assets.....................    0.71%          0.67%

Return on average equity.....................    4.93          10.78

Average equity to average assets ratios......   14.33           6.21

Equity to assets at period end...............   20.00           6.91

Net interest rate spread.....................    2.55           2.53

Net yield on average interest-earning
assets.......................................    7.00           7.15

Non-performing loans to total assets.........     .01            .08

Allowance for loan loss to total loans.......     .50            .38



                                        3

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                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  recently  formed and,  therefore,  its results  from
operations consist primarily of interest income from the investing of funds from
the proceeds  generated by the sale of common stock and expense  incurred in the
maintaining of the investment portfolio.

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

Market Risk Analysis

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

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

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

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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,  1998,  as  calculated  by the OTS,  based on
quarterly information voluntarily provided to the OTS.

       Changes
      in Market            Net Portfolio Value
                     -----------------------------------
    Interest Rates   $ Amount       $ Change    % Change  NPV Ratio(1)
    --------------   --------       --------    --------  ------------

    (basis points)    (Dollars in Thousands)
        +400        $ 9,894,000   $(5,749,000)    -37%       9.80%

        +300        $11,921,000   $(3,722,000)    -24%      11.51%

        +200        $13,498,000   $(2,145,000)    -14%      12.76%

        +100        $14,766,000   $(  877,000)    - 6%      13.70%

           0        $15,643,000   $         -       -       14.31%

        -100        $16,062,000   $   419,000       3%      14.54%

        -200        $16,514,000   $   871,000       6%      14.79%

        -300        $17,255,000   $ 1,612,000      10%      15.25%

        -400        $17,908,000   $ 2,265,000      14%      15.62%
 


(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

                                        5

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result as many  borrowers may be unable to service their debt in the event of an
interest rate increase.

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

Financial Condition

         Total  assets  increased  $11.5  million or 12.1% to $107.2  million at
December  31, 1998 from $95.7  million at December  31,  1997.  The increase was
primarily  attributable  to an  increase  of  $3.5  million  in  cash  and  cash
equivalents,  a $10.5 million increase in the Bank's mortgage-backed  securities
available-for-sale  and a $1.6  million  increase in the Bank's  mortgage-backed
securities held-to-maturity,  partially offset by a $5.5 million decrease in the
Bank's loan portfolio. Total liabilities decreased $3.2 million or 3.7% to $85.8
million at  December  31,  1998 from $89.0  million at December  31,  1997.  The
decrease was primarily attributable to a $1.2 million decrease in deposits and a
decrease  of  $1.9  million  in  borrowings   from  the  FHLB.   The  growth  in
mortgage-backed  securities  resulted from the  investment of proceeds  received
from the Bank's conversion from a mutual savings  association to a federal stock
savings  bank.  The  decrease  in the Bank's  loan  portfolio  occurred  despite
management's  efforts  to grow the  portfolio  and was  primarily  the result of
market competition and the declining interest rate environment.


                                        6

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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>

                                              At December 31,                            Year Ended December 31,
                                           -------------------   -------------------------------------------------------------------
                                                   1998                          1998                            1997
                                           -------------------   ---------------------------------   -------------------------------
                                                                     Average                             Average
                                           Outstanding             Outstanding  Interest               Outstanding Interest
                                            Balance Yield/Rate   Balance   Earned/Paid  Yield/Rate   Balance  Earned/Paid Yield/Rate
                                            ------- ----------   -------   -----------  ----------   -------  ----------- ----------
                                                                                    (Dollars in thousands)
<S>                                          <C>      <C>        <C>         <C>          <C>    <C>          <C>           <C>  
Interest-earning assets:
  Loans receivable(1).......................                      $ 43,978    $3,528       8.02%   $ 45,491     $3,604         7.92%
  Investment securities.....................                         3,979       259       6.51%      3,147        163         5.19
  Mortgage-backed securities................                        42,240     2,570       6.08%     43,554      2,866         6.58
  Interest-bearing deposits.................                         6,200       389       6.27%      3,586        216         6.01
  FHLB stock................................                           650        48       7.38%        635         46         7.25
                                                                   -------    ------      -----     -------     ------        -----
     Total interest-earning assets(1).......                        97,047     6,794       7.00%     96,413      6,895         7.15
Noninterest-earning assets..................                         4,513    ------      -----       4,024     ------        -----
                                                                   -------                          -------    
     Total assets...........................                      $101,560                         $100,437
Interest-bearing liabilities:                                      =======                          =======
  NOW and investment deposits...............                      $ 23,593       561       2.38%   $ 22,324        564         2.53
  Savings and certificate accounts..........                        60,901     3,185       5.23%     61,589      3,214         5.22
                                                                                          -----    
  FHLB borrowings...........................                           808        52       6.44%      7,748        461         5.95
                                                                  --------    ------      ------    -------     ------        -----
     Total interest-bearing liabilities.....                        85,302     3,798       4.45%     91,660      4,239         4.62
Noninterest-bearing liabilities:............                         1,708    ------      -----       2,542     ------        -----
                                                                  --------                          -------
  Total liabilities.........................                        87,010                           94,202
                                                                  --------                          -------
Equity......................................                        14,550                            6,235
                                                                  --------                          -------
     Total liabilities and equity...........                      $101,560                         $100,437
                                                                   =======                          =======
Net interest income.........................                                  $2,996                            $2,656
                                                                               =====                             =====
Net interest rate spread(2).................                                               2.55%                               2.53%
                                                                                          =====                               =====
Net earning assets..........................                      $ 11,745                         $  4,752
                                                                   =======                          =======
Net yield on interest-earning assets(3).....                                               3.09%                               2.75%
                                                                                          =====                               =====
Average interest-earning assets to average                                                         
  interest-bearing liabilities..............                                             113.77%                             105.18%
                                                                                         ======                              ======
</TABLE>                                                       
------------------------------                                     
(1)  Includes  non-accrual  loans and  loans  held-for-sale.  Calculated  net of
     deferred  loan  fees,  loan  discounts,  loans in  process  and  loan  loss
     reserves.
(2)  Net interest rate spread represents the difference between the average rate
     on  interest-earning  assets  and  the  average  cost  of  interest-bearing
     liabilities.
(3)  Net  interest  margin  represents  net interest  income  divided by average
     interest-earning assets.

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         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).


                                                 Year Ended December 31,
                                             --------------------------------
                                                     1998 vs. 1997
                                             --------------------------------
                                                   Increase/(Decrease)
                                                         Due to
                                             --------------------------------
                                                               Rate/
                                             Volume     Rate   Volume   Total
                                             ------     ----   ------   -----
                                                   (Dollars in thousands)
Interest-earning assets:
  Loans receivable(1)....................... $(119)   $   45     $(2)    $(76)
  Investment securities.....................    43        42      11       96
  Mortgage-backed securities................   (87)     (216)      7     (296)
  Interest-bearing deposits.................   157         9       7      173
  FHLB stock................................     1         1       0        2
                                              ----      ----    ----     ----
     Total interest-earning assets..........    (5)     (119)     23     (101)
                                              ----      ----    ----     ----
                                                                        
Interest-bearing liabilities:                                           
  NOW and money market deposits.............    32       (33)     (2)      (3)
  Savings and certificate accounts..........   (36)        7      (0)     (29)
  FHLB borrowings...........................  (413)       38     (34)    (409)
                                              ----      ----    ----     ----
     Total interest-bearing liabilities.....  (417)       11     (36)    (441)
                                              ----      ----    ----     ----
                                                                        
Increase (decrease) in net interest income..  $412     $(130)    $58     $340
                                              ====      ====    ====     ====  



                                        8

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Results of Operations for the Years Ended December 31, 1998 and 1997

         Net Income.  Net income  increased  $48,000 for the year ended December
31, 1998,  to $720,000 as compared to $672,000  for the year ended  December 31,
1997.  This increase was primarily  attributable  to a $340,000  increase in net
interest income,  partially  offset by a $41,000 decrease in noninterest  income
and a $233,000 increase in noninterest expense.

         Net  Interest  Income.  Net  interest  income  is the most  significant
component  of the Bank's  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. 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.

         The  Bank's  net  interest  income  increased   $340,000  or  12.8%  to
$2,996,000  for the year ended  December 31, 1998, as compared to $2,656,000 for
the same  period in 1997.  The  increase  was  primarily  due to the  decline in
average interest-bearing liabilities to $85.3 million in 1998 from $91.7 million
in 1997 and a growth in  interest  rate  spread  of 2.55% in 1998 from  2.53% in
1997.

         The decrease in average  interest-bearing  liabilities  of $6.4 million
primarily  reflects  the  decrease  of $6.9  million in balance of average  FHLB
borrowings.

         The Bank's net  interest  rate spread  increased  slightly for the year
ended  December 31, 1998 compared to the same period in 1997  primarily due to a
decrease  in  average  cost on  interest-bearing  liabilities  of  4.45% in 1998
compared to 4.62% in 1997,  partially  offset by a decrease in average  yield on
interest-earning assets of 7.00% in 1998 compared to 7.15% in 1997.

         Provision  for Loan Losses.  The  provision for loan losses was $30,000
for the year ended  December 31, 1998 compared to $35,000 for the same period in
1997.  The  allowance  for  loan  losses  was  $206,000  or  .50%  of net  loans
outstanding  at December  31,  1998  compared to $179,000 or .38% of gross loans
outstanding at December 31, 1997.

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

         Noninterest income.  Noninterest income decreased $41,000 or 4.81% from
$852,000 in 1997 to $811,000 in 1998.  This decrease in  noninterest  income was
due to decreases  of $54,000 in gain on sale of loans,  $52,000 in gain on sales
of mortgage-backed  securities and $19,000 in other noninterest income accounts,
partially offset by an increase of $84,000 in deposit account service fees. Gain
on the sale of loans decreased as the result of less  originations in the Bank's
mortgage  banking  operation.  Deposit  account  service fees increased due to a
higher  number of accounts and the continued  growth of fee income  generated by
the totally free checking program.

         Noninterest  expense.  Noninterest  expense increased $233,000 or 9.91%
from  $2,352,000  in 1997 to  $2,585,000  in 1998.  The increase in  noninterest
expense was due primarily to a $111,000  increase in  compensation  and benefits
and $49,000 increase in occupancy and equipment. Costs

                                        9

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associated  with the Company's  employee stock  ownership plan was the primarily
component of the increase in compensation and benefits.  Occupancy and equipment
increased due to expenses associated with the addition of a new branch facility.

         Income Tax Expense.  Income tax expense increased $23,000 from $449,000
in 1997 to $472,000 in 1998.  Income tax  expense  increased  due to the $71,000
increase in pretax  income to  $1,192,000  for the year ended  December 31, 1998
compared to $1,121,000 for the same period in 1997. The Company's  effective tax
rate was  39.60%  and 40.50% for the years  ended  December  31,  1998 and 1997,
respectively.

Liquidity and Capital Resources

         The Bank is  required to maintain  minimum  levels of liquid  assets as
defined by OTS  regulations.  This  requirement,  which varies from time to time
depending upon economic conditions and deposit flows, is based upon a percentage
of deposits and short-term  borrowings.  The required ratio  currently is 4% and
the Bank's  regulatory  liquidity ratio average was 26.67% and 5.68% at December
31, 1998 and 1997, respectively.

         The Bank's  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.  The Bank uses 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  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, 1998 was  $757,000 as compared to $1.1 million for the year
ended December 31, 1997.

         Net cash used in investing  activities  (i.e.,  cash  payments and cash
receipts,  primarily from investment  securities and mortgage-backed  securities
portfolios and loan portfolio) for the year ended December 31, 1998 totaled $7.9
million,  a change of $14.0  million  from  December  31,  1997.  The change was
primarily attributable to purchases of investment and mortgage-backed securities
of $28.7  million in 1998 as  compared  to $1 million in 1997 and a decrease  in
proceeds from sales of  mortgage-backed  securities from $4.7 million in 1997 to
$1.4  million in 1998.  The change was  partially  offset by a $5.7  million net
decrease in loans as compared to a $900,000 net  increase in 1997.  In addition,
paydowns,  maturities,  and calls of investment  securities and  mortgage-backed
securities  were $14.6  million in 1998 as compared to $6.4  million in 1997 and
loans purchased  decreased $2.7 million from $2.9 million in 1997 to $200,000 in
1998. The large amount of investment purchases during 1998 was the result of the
deployment of proceeds  received from the stock  conversion and the reinvestment
of paydowns from the Bank's loan and investment portfolio.

         Net cash  provided  by  financing  activities  for 1998  totaled  $10.7
million,  an increase of $17.6 million from December 31, 1997.  The increase was
primarily  attributable to $13.8 million in proceeds  received from the issuance
of common stock in the conversion,  net of costs and a $6.9 million  decrease in
the  repayment of  borrowings  from the FHLB from $8.8 million of  repayments in
1997 to $1.9  million  in 1998.  The  increase  in cash  provided  by  financing
activities was partially offset by a $1.2 million net

                                       10

<PAGE>


decrease in deposits for the year ended  December 31, 1998 as compared to a $1.9
million net increase for the same period in 1997.

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

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


                                       11

<PAGE>

                          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,  1998 and 1997 and the related  consolidated  statements  of  earnings,
     stockholders'  equity,  and cash  flows for the  years  then  ended.  These
     consolidated  financial  statements are the responsibility of the Company's
     management.   Our   responsibility  is  to  express  an  opinion  on  these
     consolidated financial statements based on our audits.

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

     In our opinion,  the consolidated  financial  statements  referred to above
     present fairly, in all material  respects,  the financial position of First
     Kansas  Financial  Corporation  and  subsidiary as of December 31, 1998 and
     1997 and the results of their operations and their cash flows for the years
     then ended, in conformity with generally accepted accounting principles.


     /s/ KPMG LLP
     -------------------------------
     Kansas City, Missouri
     March 5, 1999



                                      F-1
<PAGE>



                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                           Consolidated Balance Sheets

                           December 31, 1998 and 1997
                                 (In thousands)

<TABLE>
<CAPTION>



                Assets                                             1998         1997
                                                                -----------   --------- 

<S>                                                            <C>             <C>   
Cash and cash equivalents (note 3)                              $     8,143      4,600
Investment securities held-to-maturity (note 4)                       4,712      3,852
Mortgage-backed securities available-for-sale (note 5)               27,282     16,833
Mortgage-backed securities held-to-maturity (note 5)                 22,521     20,937
Loans receivable, net (note 6)                                       41,069     46,563
Stock in Federal Home Loan Bank (FHLB) of Topeka, at cost               509        661
Premises and equipment, net (note 7)                                  1,775        990
Real estate held for development (note 8)                               361        355
Accrued interest receivable:
    Investment and mortgage-backed securities                           295        244
    Loans receivable                                                    190        246
Prepaid expenses and other assets                                       359        374
                                                                  ----------  ---------

            Total assets                                        $   107,216     95,655
                                                                  ==========  =========

                Liabilities and Stockholders' Equity

Liabilities:
    Deposits (note 10)                                          $    84,436     85,651
    Advances from borrowers for property taxes and insurance            134        128
    Borrowings from FHLB of Topeka (note 11)                            650      2,550
    Accrued interest payable and other liabilities (note 12)            556        716
                                                                  ----------  ---------

            Total liabilities                                        85,776     89,045
                                                                  ----------  ---------

Stockholders' equity (note 13):
    Common stock, $.10 par value; 8,000,000 shares 
      authorized, 1,553,938 shares issued and outstanding                             
      at December 31, 1998                                              155         --
    Additional paid-in capital                                       14,834         --
    Retained earnings                                                 7,655      6,935
    Unearned compensation                                            (1,181)        --
    Accumulated other comprehensive income                              (23)      (325)
                                                                  ----------  ---------

            Total stockholders' equity                               21,440      6,610

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

            Total liabilities and stockholders' equity          $   107,216     95,655
                                                                  ==========  =========
</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, 1998 and 1997
                      (In thousands, except per share data)
<TABLE>
<CAPTION>

                                                                  1998      1997
                                                                 -------  -------
<S>                                                                <C>      <C>  
Interest income:
   Loans                                                           $ 3,528    3,604
   Investment securities                                               259      163
   Mortgage-backed securities                                        2,570    2,866
   Interest-bearing deposits                                           389      216
   Dividends on FHLB stock                                              48       46
                                                                    -------  -------

           Total interest income                                     6,794    6,895
                                                                    -------  -------

Interest expense:
   Deposits (note 10)                                                3,746    3,778
   Borrowings                                                           52      461
                                                                    -------  -------

           Total interest expense                                    3,798    4,239
                                                                    -------  -------

           Net interest income                                       2,996    2,656

Provision for loan losses (note 6)                                      30       35
                                                                    -------  -------

           Net interest income after provision for loan losses       2,966    2,621
                                                                    -------  -------

Noninterest income:
   Deposit account service fees                                        671      587
   Gain on sales of loans                                               13       67
   Gain on sales of available-for-sale mortgage-backed securities       55
   Other                                                               124      143
                                                                    -------  -------
(note 5)  
           Total noninterest income                                    811      852
                                                                    -------  -------

Noninterest expense:
   Compensation and benefits (note 13)                               1,304    1,193
   Occupancy and equipment                                             301      252
   Federal deposit insurance premiums and assessments                   85       75
   Data processing                                                     188      167
   Deposit account processing fees                                     196      175
   Amortization of premium on deposits assumed                          61       61
   Supplies expense                                                     76       82
   Advertising                                                         160      154
   Other                                                               214      193
                                                                    -------  -------

           Total noninterest expense                                 2,585    2,352
                                                                    -------  -------

           Earnings before income tax expense                        1,192    1,121

Income tax expense (note 12)                                           472      449
                                                                    -------  -------

           Net earnings                                             $   720      672
                                                                    =======  =======

Net earnings per share - basic and diluted                          $  0.50     0.47
                                                                    =======  =======
</TABLE>


See accompanying notes to consolidated financial statements.

                                      F-3

<PAGE>



                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                 Consolidated Statements of Stockholders' Equity

                     Years ended December 31, 1998 and 1997
                                 (In thousands)

<TABLE>
<CAPTION>



                                                                                                         Accumu-
                                                                                                          lated
                                                                                                          other
                                                              Additional                   Unearned      compre-
                                                  Common        paid-in        Retained     compen-      hensive
                                                   stock        capital        earnings     sation        income        Total
                                                -----------   ------------   -------------------------  -----------   ----------

<S>                                         <C>              <C>            <C>          <C>             <C>       <C>   
Balance, December 31, 1996                    $         --             --         6,263            --         (468)       5,795
                                                -----------   ------------   -----------  ------------  -----------   ----------

Net earnings                                                                        672                                     672
Change in unrealized gain on available-
    for-sale securities, net of taxes                                                                          143          143
                                                                                                                      ----------

             Total comprehensive income                                                                                     815
                                                                                                                      ----------

Balance, December 31, 1997                              --             --         6,935            --         (325)       6,610
                                                -----------   ------------   -----------  ------------  -----------   ----------

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

Net earnings                                                                        720                                     720
Change in unrealized gain on available-
    for-sale securities, net of tax                                                                            302          302
                                                                                                                      ----------

             Total comprehensive income                                                                                   1,022
                                                                                                                      ----------

Reduction of unearned compensation                                      1                          62                        63
                                                -----------   ------------   -----------  ------------  -----------   ----------

Balance, December 31, 1998                    $        155         14,834         7,655        (1,181)         (23)      21,440
                                                ===========   ============   ===========  ============  ===========   ==========

</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, 1998 and 1997
                                 (In thousands)
<TABLE>
<CAPTION>

                                                                                    1998        1997
                                                                                  ----------  ----------

<S>                                                                            <C>           <C>  
Cash flows from operating activities:
    Net earnings                                                                $       720         672
    Adjustments to reconcile net earnings to net cash provided by operating
      activities:
        Provision for loan losses                                                        30          35
        Depreciation                                                                    139         110
        Amortization of premium on deposits assumed                                      61          61
        FHLB stock dividends                                                            (48)        (46)
        Amortization of loan fees                                                       (56)        (35)
        Accretion of discounts and amortization of premiums on
          investment and mortgage-backed securities, net                                207         (37)
        Gain on sales of loans, net                                                     (13)        (67)
        Gain on sales of mortgage-backed securities available-for-sale                   (3)        (55)
        Release of unallocated of ESOP shares                                            63          --
        Proceeds from sales of loans                                                    798       3,451
        Origination of loans for sale                                                  (785)     (3,384)
        Change in accrued interest receivable, prepaids,
          and other assets                                                              (41)         31
        Change in accrued interest payable and
          other liabilities                                                            (315)        371
                                                                                  ----------  ----------

              Net cash provided by operating activities                                 757       1,107
                                                                                  ----------  ----------

Cash flows from investing activities:
    Decrease (increase) in loans, net                                                 5,733        (858)
    Loans purchased                                                                    (213)     (2,878)
    Maturities/calls of investment securities held-to-maturity                        3,800          --
    Paydowns and maturities of mortgage-backed securities available-for-sale          3,991       2,503
    Paydowns and maturities of mortgage-backed securities held-to-maturity            6,817       3,933
    Proceeds from sales of mortgage-backed securities available-for-sale              1,430       4,668
    Purchases of investment securities held-to-maturity                              (4,587)     (1,031)
    Purchases of mortgage-backed securities available-for-sale                      (15,571)         --
    Purchases of mortgage-backed securities held-to-maturity                         (8,519)         --
    Redemption of FHLB stock                                                            200          --
    Increase in real estate held for development                                         (6)        (99)
    Proceeds from sale of real estate held for development                               --         214
    Additions of premises and equipment, net                                           (925)       (295)
                                                                                  ----------  ----------

              Net cash (used in) provided by investing activities               $    (7,850)      6,157
                                                                                  ----------  ----------
</TABLE>

                                                                     (Continued)


                                      F-5
<PAGE>


                                                                    


                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDARY
                               OSAWATOMIE, KANSAS

                Consolidated Statements of Cash Flows, Continued

                     Years ended December 31, 1998 and 1997
                                 (In thousands)


<TABLE>
<CAPTION>


                                                                                    1998        1997
                                                                                  ----------  ----------

<S>                                                                            <C>           <C>  
Cash flows from financing activities:
    Net (decrease) increase in deposits                                         $    (1,215)      1,928
    Repayment of borrowings from FHLB                                                (1,900)     (8,800)
    Proceeds from issuance of common stock, net of costs                             13,745          --
    Net decrease (increase) in advances from borrowers
      for taxes and insurance                                                             6         (14)
                                                                                  ----------  ----------

              Net cash provided by (used in) financing activities                    10,636      (6,886)
                                                                                  ----------  ----------

              Net increase in cash and cash equivalents                               3,543         378

Cash and cash equivalents at beginning of year                                        4,600       4,222
                                                                                  ----------  ----------

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

Supplemental disclosure of cash flow information:
    Cash paid during the year for income taxes                                  $       854         116
                                                                                  ==========  ==========

    Cash paid during the year for interest                                      $     3,846       4,218
                                                                                  ==========  ==========

</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, 1998 and 1997



  (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   (the  Company)  and  its
              wholly-owned  subsidiary,  First Kansas Federal  Savings Bank (the
              Bank).   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
              stockholders' equity, net of related income taxes.

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

        (d)   Loans

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

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

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


                                                                     (Continued)

                                      F-7
<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997


        (e)   Mortgage Banking Activities

              At December 31, 1998 and 1997, the Company was servicing loans for
              others  amounting to $663,000 and $1,435,000,  respectively.  Loan
              servicing  fees include  servicing fees from investors and certain
              charges collected from borrowers, such as late payment fees, which
              are recorded when received. The amount of escrow balances held for
              borrowers at December 31, 1998 and 1997 was insignificant.

              Originated  servicing  rights  are not  recorded  as assets of the
              Company.  Statement of Financial  Accounting  Standards (SFAS) No.
              122,  Accounting for Mortgage Servicing Rights, as amended by SFAS
              No. 125,  Accounting  for  Transfers  and  Servicing  of Financial
              Assets  and   Extinguishments   of   Liabilities,   requires  that
              originated  servicing rights be valued and recorded as assets when
              the loan is originated,  and subsequently amortized as a component
              of servicing cost over the expected life of the loan.  Because the
              Company did not retain any  servicing  rights on loans  originated
              and sold during  1998 and 1997,  SFAS No. 122 and SFAS No. 125 had
              no effect on the Company's consolidated financial statements.

        (f)   Provisions for Losses on Loans and Interest Receivable

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

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


                                                                     (Continued)

                                      F-8
<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997


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

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

        (g)   Real Estate Owned and Held for Development

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

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

        (h)   Stock in FHLB of Topeka

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

        (i)   Premises and Equipment

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


                                                                 (Continued)

                                      F-9
<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997


        (j)   Income Taxes

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

        (k)   Use of Estimates

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

        (l)   Accounting Changes

              The Company adopted  Financial  Accounting  Standards Board (FASB)
              No. 130, Reporting  Comprehensive Income, (SFAS No. 130) effective
              January 1, 1998. SFAS No. 130 establishes  standards for reporting
              comprehensive  income  and  its  components  (revenues,  expenses,
              gains,  and losses).  Components of  comprehensive  income are net
              income and all other  nonowner  changes in equity.  The  statement
              requires   that  an  enterprise   (a)  classify   items  of  other
              comprehensive income by their nature in a financial statement, and
              (b) display the accumulated balance of other comprehensive  income
              separately from retained  earnings and additional  paid-in capital
              in the  equity  section  of a  statement  of  financial  position.
              Reclassification  of  financial  statements  for  earlier  periods
              provided for comparative purposes is required.  The only component
              of comprehensive  income consists of unrealized  holding gains and
              losses on available-for-sale investment securities.

              The Company  adopted FASB  Statement  No. 131,  Disclosures  About
              Segments of an Enterprise and Related Information,  (SFAS No. 131)
              effective  January 1, 1998. This statement  establishes  standards
              for  reporting  information  about  segments in annual and interim
              financial  statements.  SFAS No.  131  introduces  a new model for
              segment reporting called the "management approach." The management
              approach  is based on the way the chief  operating  decision-maker
              organizes   segments  within  the  company  for  making  operating
              decisions and assessing performance. Reportable segments are based
              on products and services,  geography, legal structure,  management
              structure,  and any  other in  which  management  disaggregates  a
              company. Based on the "management approach" model, the Company has
              determined  that its business is  comprised of a single  operating
              segment  and that SFAS No.  131,  therefore,  has no impact on its
              consolidated financial statements.

                                                                 (Continued)

                                      F-10
<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997


        (m)   New Accounting Pronouncements

              The FASB issued SFAS No. 133, Accounting for Derivative  Financial
              Instruments and Hedging  Activities,  in June 1998. This statement
              establishes  accounting  and reporting  standards  for  derivative
              instruments,  including certain derivative instruments embedded in
              other  contracts  and for  hedging  activities.  SFAS  No.  133 is
              effective for all fiscal  quarters of fiscal years  beginning June
              15,  1999,  may be  adopted  early  for  periods  beginning  after
              issuance of the statement,  and may not be applied  retroactively.
              The Company does not expect to adopt SFAS No. 133 early.  The FASB
              issued SFAS No. 134,  Accounting  for  Mortgage-backed  Securities
              Retained After the  Securitization of Mortgage Loans Held for Sale
              by a Mortgage Banking Enterprise,  in October 1998. This statement
              amends SFAS No. 65 and requires that after the  securitization  of
              mortgage  loans  held for sale,  an  entity  engaged  in  mortgage
              banking   activities   classify  the   resulting   mortgage-backed
              securities or other  retained  interests  based on its ability and
              intent  to  sell  or  hold  those  investments.  SFAS  No.  134 is
              effective for the first fiscal  quarter  beginning  after December
              15,  1998.  The  adoption  of SFAS No. 133 and SFAS No. 134 is not
              expected to have a material  impact on the Company's  consolidated
              financial statements.

        (n)   Earnings Per Common Share

              Basic earnings per share is based upon the weighted average number
              of  common  shares   outstanding  during  the  periods  presented.
              Earnings per share for the twelve  months ended  December 31, 1998
              and  1997  are pro  forma  as if the  conversion  and  acquisition
              occurred on January 1, 1997.  Unallocated  shares of common  stock
              held by the employee stock  ownership plan are not included in the
              weighted  average shares  outstanding  computation.  For the years
              ended December 31, 1998 and 1997, there were no dilutive potential
              common shares outstanding.  Average shares outstanding used in the
              computation of earnings per share for 1998 and 1997 were 1,429,640
              and 1,429,623, respectively.

  (2)   Initial Public Offering

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

  (3)   Cash and Cash Equivalents

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

                                                             1998       1997    
                                                            --------  ---------
             
             Cash on hand                                $      644        651
             Deposits at other financial institutions           499        549
             Overnight FHLB deposits                          7,000      3,400
                                                            --------  ---------
             
                                                         $    8,143      4,600
                                                            ========  =========

                                                                     (Continued)


                                      F-11
<PAGE>


                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997

  (4)   Investment Securities

        A summary of  investment  securities  held-to-maturity  and  information
        relating to amortized  cost,  approximate  fair values,  and  unrealized
        gains  (losses)  at  December  31,  1998  and  1997  is as  follows  (in
        thousands):
<TABLE>
<CAPTION>

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

                                                   $      4,712           17            --      4,729
                                                     ===========  ===========  ============  =========

                  1997
------------------------------------------------

U.S. government and agency obligations
     maturing within one year                      $        800           --            (1)       799
U.S. government and agency obligations
    maturing after one year but within five years         2,000           --            (4)     1,996
U.S. government and agency obligations
    maturing after ten years                              1,052          105            --      1,157
                                                     -----------  -----------  ------------  ---------

                                                   $      3,852          105            (5)     3,952
                                                     ===========  ===========  ============  =========

</TABLE>


                                                                     (Continued)
                                      F-12
<PAGE>


                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997

  (5)   Mortgage-backed Securities

        A summary of  mortgage-backed  securities  and  information  relating to
        amortized cost,  approximate fair values,  and unrealized gains (losses)
        at December 31, 1998 and 1997 is as follows (in thousands):
<TABLE>
<CAPTION>


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

                                            $    27,317             92          (127)      27,282
                                              ==========   ============  ============  ===========

Held-to-maturity:
    Government agency mortgage-
      backed securities:
        FHLMC                               $        90              2            --           92
        FNMA                                      3,092             43            (1)       3,134
        GNMA                                        339             25            --          364
    Collateralized mortgage obligations          19,000             95           (41)      19,054
                                              ----------   ------------  ------------  -----------

                                            $    22,521            165           (42)      22,644
                                              ==========   ============  ============  ===========
</TABLE>

                                                                     (Continued)

                                      F-13
<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997
<TABLE>
<CAPTION>


                                              Amortized    Unrealized    Unrealized       Fair
                 1997                           cost          gains        losses        value
----------------------------------------      ----------   ------------  ------------  -----------
<S>                                        <C>            <C>           <C>           <C>   
Available-for-sale:
    Government agency mortgage-
      backed securities:
        FHLMC                               $       331             --            --          331
        FNMA                                        552             23            --          575
        GNMA                                      1,927             60            --        1,987
    Collateralized mortgage obligations          14,515             35          (610)      13,940
                                              ----------   ------------  ------------  -----------

                                            $    17,325            118          (610)      16,833
                                              ==========   ============  ============  ===========

Held-to-maturity:
    Government agency mortgage-
      backed securities:
        FHLMC                               $       162              5            --          167
        FNMA                                      2,543             39            (2)       2,580
        GNMA                                        500             43            --          543
    Collateralized mortgage obligations          17,732             23          (150)      17,605
                                              ----------   ------------  ------------  -----------

                                            $    20,937            110          (152)      20,895
                                              ==========   ============  ============  ===========

</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, 1998, the government
        agency  mortgage-backed  securities  had a carrying value of $14,115,000
        and consisted of  approximately  $2,410,000 of fixed rate securities and
        $11,705,000 of variable rate  securities.  The  collateralized  mortgage
        obligations  had a  carrying  value  of  $35,688,000  and  consisted  of
        approximately  $21,458,000 of fixed rate  securities and  $14,230,000 of
        variable rate  securities.  Collateralized  mortgage  obligations of the
        Company are generally government agency guaranteed.

        The proceeds from sales of government agency mortgage-backed  securities
        during 1998 were  $1,430,000.  Gross  gains of $3,000  were  realized on
        those sales.  The proceeds  from sales of investment  securities  during
        1997 were  $4,668,000.  Gross  gains of $55,000  were  realized on those
        sales.

        At  December  31,  1998  and  1997,  government  agency  mortgage-backed
        securities  with  a  carrying  value  of  approximately  $1,850,000  and
        $2,550,000,  respectively,  were  pledged  to  secure  public  funds  on
        deposit.


                                                                     (Continued)

                                      F-14
<PAGE>


                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997

  (6)   Loans Receivable

        Loans receivable  consist of the following at December 31, 1998 and 1997
(in thousands):

                                                       1998       1997
                                                    ---------  ----------
Mortgage loans:
    One-to-four-family                           $    37,884      42,853
    Multifamily                                           --       1,045
    Commercial                                           471         535
    Land                                                 264         141
    Construction                                         151         126
                                                    ---------  ----------

             Total mortgage loans                     38,770      44,700

Consumer loans                                         2,115       1,728
Commercial loans                                         537         513
                                                    ---------  ----------

             Total                                    41,422      46,941

Less:
    Unearned discounts and deferred fees                 116         118
    Allowance for loan losses                            206         179
    Undisbursed portion of loans in process               31          81
                                                    ---------  ----------

             Total, net                          $    41,069      46,563
                                                    =========  ==========


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

        The  weighted   average   annual   interest   rates  on  mortgage  loans
        approximated  7.51% and 7.69% at December 31, 1998 and 1997.  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,  1998,  the  Company  did  not  have  any  outstanding
        commitments to originate mortgage loans or to purchase loans.

                                                                     (Continued)

                                      F-15
<PAGE>


                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997

        Loans  made  to  directors  and   executive   officers  of  the  Company
        approximated  $579,000  and  $375,000  at  December  31,  1998 and 1997,
        respectively.  Such loans were made in the ordinary  course of business.
        Changes in such loans for 1998 are as follows (in thousands):

                   Balance at January 1, 1998                        $     375  
                   Additions                                               391
                   Amounts collected                                      (187)
                                                                      --------
               
                   Balance at December 31, 1998                      $     579
                                                                      ========

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

                                                            1998      1997
                                                          --------  --------

               Balance at beginning of year             $     179       146
               Provision                                       30        35
               Charge-offs                                     (5)       (5)
               Recoveries                                       2         3
                                                          --------  --------
               
               Balance at end of year                   $     206       179
                                                          ========  ========

        Loans  delinquent  ninety  days or more at  December  31,  1998 and 1997
        aggregated $5,000 and $80,000,  respectively.  Impaired loans, exclusive
        of delinquent loans, were insignificant at December 31, 1998 and 1997.

  (7)   Premises and Equipment

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

                                                           1998       1997
                                                         --------   --------

               Land                                    $     217        217
               Buildings and improvements                  1,688      1,077
               Construction in progress                       38        241
               Furniture and equipment                     1,114        766
                                                         --------   --------
               
                            Total                          3,057      2,301

               Less accumulated depreciation               1,282      1,311
                                                         --------   --------
               
                            Total                      $   1,775        990
                                                         ========   ========
               
                                                                     (Continued)

                                      F-16
<PAGE>


                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997

  (8)   Real Estate Held for Development

        The  Company's  subsidiary  acquired  a parcel of land in 1996 in Paola,
        Kansas for the  purpose of  development  and sale.  Total cost  incurred
        through December 31, 1998,  including  capitalized  interest of $37,000,
        aggregated  $658,000.  There were no sales or transfers  associated with
        the parcel of land during 1998.  During 1997,  one lot with an allocated
        cost of  $118,000  was  transferred  to the  Company  for the purpose of
        building a new branch  facility.  Additionally,  two lots with allocated
        cost aggregating  $179,000 were sold during 1997,  resulting in gains on
        those sales totaling $35,000.

  (9)   Premium on Deposits Assumed

        In accordance with the FSLIC Transfer Agreement dated November 19, 1982,
        the Company assumed certain  deposits of the former North Kansas Savings
        Company, paying a premium on deposits assumed of $1,212,000. The Company
        is amortizing the premium over twenty years on the straight-line method.
        Accumulated  depreciation  on such premium was  $973,000  and  $912,000,
        respectively, at December 31, 1998 and 1997.

 (10)   Deposits

        Deposits are summarized as follows (dollars in thousands):


                                                          1998        1997
                                                       ----------  ----------
               
               Noninterest bearing demand            $     2,477       1,927
               Savings and interest-bearing demand        28,312      27,461
               Time                                       53,647      56,263
                                                       ----------  ----------

                                                     $    84,436      85,651
                                                       ==========  ==========


        The weighted average interest rates on deposits  approximated  4.68% and
4.66% at December 31, 1998 and 1997, respectively.

        Scheduled  maturities  of time  deposits  at  December  31,  1998 are as
follows (in thousands):

                    1999           $     36,631
                    2000                  9,159
                    2001                  4,903
                    2002                  1,090
                    2003                  1,338
                 Thereafter                 526
                                      ----------

                   Total           $     53,647
                                      ==========
                                                                 (Continued)

                                      F-17
<PAGE>


                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997

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

                                                             1998       1997
                                                         --------  ---------
               
               Passbook and certificate accounts      $    3,185      3,214
               NOW                                           561        564
                                                         --------  ---------
               
                                                      $    3,746      3,778
                                                         ========  =========

        Certificates  of deposit in amounts  greater  than or equal to  $100,000
        amounted to  $3,300,000  and  $3,100,000  at December 31, 1998 and 1997,
        respectively.  Individual  deposit amounts in excess of $100,000 are not
        federally insured.

 (11)   Borrowings from FHLB of Topeka

        Borrowings  outstanding  from the FHLB of Topeka at  December  31,  1998
        totaled  $650,000,  with  an  adjustable  interest  rate  based  on  the
        one-month  LIBOR rate and maturing in 2002.  Borrowings  at December 31,
        1997 totaled  $2,550,000,  including  individual advances and $1,900,000
        borrowed under an $8,000,000 line of credit with an adjustable  interest
        rate based on the fed funds rate and maturing in 1999.  Weighted average
        interest rates for the years ended December 31, 1998 and 1997 were 5.73%
        and 6.71%, respectively, on such borrowings.

        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.

        In January 1999, the Company  purchased  $20,000,000 of  mortgage-backed
        securities with proceeds received from two $10,000,000 advances from the
        FHLB. The assets  purchased and their  underlying  liabilities are fixed
        rated through five years.

 (12)   Income Taxes

        The components of income tax expense from  operations are as follows (in
thousands):
                                            Federal       State        Total
                                           -----------  -----------  -----------
          
          Year ended December 31, 1998:
              Current                   $         452           67          519
              Deferred                            (34)         (13)         (47)
                                           -----------  -----------  -----------
          
                                        $         418           54          472
                                           ===========  ===========  ===========
          
          Year ended December 31, 1997:
              Current                   $         385           65          450
              Deferred                             (1)          --           (1)
                                           -----------  -----------  -----------
          
                                        $         384           65          449
                                           ===========  ===========  ===========
          

                                                                 (Continued)

                                      F-18
<PAGE>


                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997

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

                                                             Percentage         
                                                             of earnings
                                                               before
                                                            income taxes
                                                       ------------------------
                                                        1998            1997
                                                       --------        --------
           
           Expected federal income tax rate               34.0 %          34.0
           State taxes, net of federal tax benefit         3.0             3.8
           Other, net                                      2.6             2.3
                                                       --------        --------
           
           Effective income tax rate                      39.6 %          40.1
                                                       ========        ========

        Temporary  differences  which  give  rise to a  significant  portion  of
        deferred tax assets and liabilities at December 31, 1998 and 1997 are as
        follows (in thousands):

                                                            1998      1997
                                                          --------  -------

Unrealized loss on available-for-sale securities        $      12      167
Loan origination fees                                           7       12
Other, net                                                     14       --
                                                          --------  -------

             Deferred tax asset                                33      179
                                                          --------  -------

Premises and equipment                                        (85)     (88)
FHLB dividends                                               (125)    (109)
                                                                              
Allowance for loan losses                                     (70)    (108)
State taxes                                                   (21)     (34)
                                                          --------  -------

             Deferred tax liability                          (301)    (339)
                                                          --------  -------   

             Net deferred tax liability, included
               in other liabilities                     $    (268)    (160)
                                                          ========  =======   

        There was no  valuation  allowance  required  for deferred tax assets at
        December 31, 1998 or 1997.  Management  believes  that it is more likely
        than not that the results of future operations will generate  sufficient
        taxable income to realize the deferred tax assets.


                                                                   (Continued) 

                                      F-19
<PAGE>


                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997

        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, 1998
        and 1997 is $140,000 and $168,000, respectively, for this recapture.

        Retained  earnings at December 31, 1998 and 1997 includes  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.

 (13)   Benefit Plans

        The Company  participates in a  multiemployer,  noncontributory  defined
        benefit pension plan which covers all employees who have met eligibility
        requirements. Because of the multiemployer plan status, 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 $2,000  and $3,000 for the years
        ended December 31, 1998 and 1997, 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  1998 and 1997 was  $22,000  and
        $23,000,  respectively.  In  addition,  the Company  made  discretionary
        contributions  to the plan of $21,000  and  $55,000  for the years ended
        December 31, 1998 and 1997, respectively.

        In December  1997,  the Company  implemented  a  supplemental  executive
        retirement  plan  ("SERP")  for the benefit of the  Company's  president
        which will provide enhanced  benefits at retirement.  Accruals under the
        SERP commenced  during 1998,  resulting in an expense of $29,000 for the
        year ended December 31, 1998.

        In  connection  with  the  offering  described  in note 2,  the  Company
        established an employee stock ownership plan (ESOP). Through a loan from
        the Company,  the ESOP acquired  124,315 shares of the Company's  common
        stock.  Employees age twenty-one or older who have completed one year of
        service  with the  Company  are  eligible  to  participate  in the ESOP.
        Participants become 100% vested after five years.  Contributions made by
        the  Company to the ESOP will be used to repay the loan,  and shares are
        allocated to participants by a formula based on total compensation.  The
        cost of unallocated shares is presented as unearned  compensation in the
        accompanying  December 31, 1998 consolidated  balance sheet. The Company
        recognizes  additional  compensation  expense equal to the fair value of
        shares allocated.  During 1998, in connection with a principal reduction
        on the ESOP loan, 6,200 shares were released and the Company  recognized
        $63,000 of compensation expense.


                                                                 (Continued)

                                      F-20
<PAGE>


                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997

        In February  1999,  the  Company  instituted  a stock  option plan and a
        restricted  stock plan.  Pursuant to the stock option plan,  the Company
        granted options to acquire 132,079 shares of common stock to certain key
        officers and directors. The options are exercisable at $10.75 per share,
        vest over five years, and expire 2008.  Pursuant to the restricted stock
        plan,  52,826  shares  will be  awarded  to  certain  key  officers  and
        directors.  The fair value of such  shares  will be recorded as unearned
        compensation  and  subsequently  expensed  over  the  five-year  vesting
        period.

 (14)   Regulatory Capital Requirements

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

        The  Federal  Deposit  Insurance  Corporation  Improvement  Act of  1991
        (FDICIA)  established  additional  capital  requirements  which  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, 1998
        and 1997. The Bank's actual and required  capital  amounts and ratios as
        of December 31, 1998 were as follows (dollars in thousands):
<TABLE>
<CAPTION>

                                                                                          To be well
                                                                                          capitalized
                                                                                          under prompt
                                                                  For capital              corrective
                                                                   adequacy                 actions
                                           Actual                  purposes                provisions
                                      ------------------       ------------------       -----------------
                                       Amount    Ratio          Amount    Ratio          Amount    Ratio
                                      ---------- -------       ---------  -------       ---------  ------
<S>                                 <C>          <C>         <C>         <C>         <C>          <C> 
Tangible capital
    (to tangible assets)            $    13,268   12.44 %    $    1,600     1.50 %    $       --      -- %
Tier 1 leverage (core) capital
    (to adjusted tangible assets)        13,268   12.44           4,266     4.00           5,333    5.00
Risk-based capital
    (to risk-weighted assets)            13,470   37.53           2,872     8.00           3,590   10.00
Tier 1 leverage risk-based capital
    (to risk-weighted assets)            13,268   36.96              --       --           2,154    6.00
                                      ========== =======       =========  =======       =========  ======

</TABLE>

                                                                 (Continued)

                                      F-21
<PAGE>


                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997

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

 (15)   Comprehensive Income

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

                                                      For the twelve months     
                                                        ended December 31,
                                                     --------------------------
                                                       1998             1997
                                                     ---------        ---------
                                                          (In thousands)
      
      Unrealized holding gains                     $      460              272
      Less reclassification adjustment for
          gains included in net income                      3               55
                                                     ---------        ---------
      
             Net unrealized gains on securities           457              217
      
      
      Income taxes                                       (155)             (74)
                                                     ---------        ---------
      
             Other comprehensive income            $      302              143
                                                     =========        =========
      
(16) Financial  Instruments With Off-balance  Sheet Risk and  Concentrations  of
     Credit Risk

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


                                                                   (Continued) 

                                      F-22
<PAGE>


                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997

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

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

 (17)   Fair Value of Financial Instruments

        SFAS No. 107, Disclosures About Fair Value of Financial Instruments, and
        SFAS No. 119, Disclosure About Derivative Financial Instruments and Fair
        Value  of  Financial  Instruments,  require  that the  Company  disclose
        estimated  fair values for its  financial  instruments,  both assets and
        liabilities  recognized and not recognized in the consolidated financial
        statements.  Fair value estimates have been made as of December 31, 1997
        based on then current economic  conditions,  risk characteristics of the
        various financial instruments, and other subjective factors.

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

        Cash and Cash Equivalents

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

        Investment and Mortgage-backed Securities

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

        Loans Receivable

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

        Accrued Interest

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

        Stock of FHLB

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


                                                                 (Continued)

                                      F-23
<PAGE>


                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997

        Deposits

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

        Borrowings From FHLB of Topeka

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

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


                                                             December 31, 1998
                                                    ---------------------------
                                                      Carrying        Fair
                                                       value          value
                                                    -------------  ------------

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

Financial liabilities:
    Deposits                                              84,436        84,858
    FHLB borrowings                                          650           650
                                                    =============  ============

                                                        December 31, 1997
                                                    ---------------------------
                                                      Carrying        Fair
                                                       value          value
                                                    -------------  ------------

Financial assets:
    Cash and interest-bearing deposits
      in other financial institutions             $        4,600         4,600
    Investment securities (see note 4)                     3,852         3,952
    Mortgage-backed securities (see note 5)               37,770        37,728
    Loans receivable                                      46,563        47,171
    Stock in FHLB                                            661           661

Financial liabilities:
    Deposits                                              85,651        85,628
    FHLB borrowings                                        2,550         2,550
                                                    =============  ============
                                                                     (Continued)


                                      F-24
<PAGE>


                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997

        Limitations

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

 (18)   Parent Company Condensed Financial Statements

                             Condensed Balance Sheet
                                December 31, 1998
                                 (In thousands)

                                     Assets

Cash and cash equivalents                                    $        279
Loan to ESOP                                                        1,181
Investment in and loan to subsidiary                               20,044
                                                               -----------

             Total assets                                    $     21,504
                                                               ===========

                       Liabilities and Stockholders' Equity

Accrued interest payable and other liabilities               $         65
Stockholders' equity                                               21,439
                                                               -----------

             Total liabilities and stockholders' equity      $     21,504
                                                               ===========
                                                                 (Continued)


                                      F-25
<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997



                          Condensed Statement of Income
                          Year ended December 31, 1998
                                 (In thousands)

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

             Total income                                          821

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

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

                        Condensed Statement of Cash Flows
                           Year ended December 31, 1998
                                  (In thousands)

Operating activities:
    Net income                                                $        720
    Less equity in earnings of subsidiary                             (619)
    Adjustments to reconcile net income to net cash provided
      by operating activities - increase in payables                    65
                                                                -----------

             Net cash provided by operating activities                 166
                                                                -----------

Investing activities:
    Investment in and loan to subsidiary                           (13,695)
    Loan to ESOP, net of repayment                                  (1,181)
                                                                -----------

             Net cash used in investing activities                 (14,876)
                                                                -----------

Financing activities - proceeds from issuance
    of common stock                                                 14,989
                                                                -----------

             Increase in cash                                          279

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

Cash at end of year                                           $        279
                                                                ===========





                                      F-26
<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                               29 West Wea
           Osawatomie, Kansas                             Paola, Kansas

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

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


                               Board of Directors

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

        Donald V. Meyer                         James E. Breckendridge
            Director                                   Director

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

                               Executive Officers
                                 Larry V. Bailey
                      President and Chief Executive Officer


                                Daniel G. Droste
                       Senior Vice President and Treasurer

                                 Galen E. Graham
                       Senior Vice President and Secretary

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

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

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

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

         The  Company's  Annual  Report on Form 10-KSB for the fiscal year ended
December 31, 1998 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 20, 1999 at 1:00 p.m. at the Company's office.