SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(Mark One)
[X]  Annual report  pursuant to section 13 or 15 (d) of the Securities  Exchange
     Act of 1934 For the fiscal year ended December 31, 2003
                                      -OR-
[ ]  Transition  report  pursuant  to  section  13 or  15(d)  of the  Securities
     Exchange  Act of  1934  For  the  transition  period  from  ___________  to
     _____________.

                         Commission File Number: 0-24037
                                                 -------

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

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

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

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

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

Securities registered under Section 12(g) of the Exchange Act:

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

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

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

         State issuer's revenues for its most recent fiscal year:  $8.2 million

         The aggregate  market value of the voting stock held by  non-affiliates
of the registrant,  based on the average bid and asked price of the registrant's
Common Stock on March 16, 2004, was $14.7 million.

         As of March 16,  2004,  there were  908,245  outstanding  shares of the
registrant's Common Stock.

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

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None.
<PAGE>

                                     PART I

Forward-Looking Statements

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

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

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

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

General

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

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

                                        2

<PAGE>

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

Competition

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

Lending Activities

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

<TABLE>
<CAPTION>
                                                                At December 31,
                                                  ---------------------------------------------
                                                         2003                      2002
                                                  -------------------        ------------------
                                                  Amount      Percent        Amount     Percent
                                                  ------      -------        ------     -------
                                                             (Dollars in thousands)
<S>                                           <C>           <C>          <C>          <C>
Type of Loans:
Mortgage loans:
  One- to four-family.........................   $69,457       95.02%       $53,852      91.89%
  Commercial..................................       491        0.67            536       0.91
  Land........................................       400        0.55            680       1.16
  Construction................................       469        0.64            752       1.29
                                                 -------      ------        -------     ------
    Total mortgage loans......................    70,817       96.88         55,820      95.25
                                                 -------      ------        -------     ------
Consumer loans................................     2,148        2.95          2,391       4.08
Commercial loans..............................       123        0.17            390       0.67
                                                 -------      ------        -------     ------
    Total loan portfolio......................    73,088      100.00%        58,601     100.00%
                                                  ------      ======         ------     ======
Less:
  Loans in process............................       128                        424
  Deferred fees, premiums and discounts.......        92                         21
  Allowance for loan losses...................       263                        260
                                                 -------                    -------
    Total loans receivable, net...............   $72,605                    $57,896
                                                 =======                    =======
</TABLE>

                                        3

<PAGE>

         The  following  table sets forth the  estimated  maturity of the Bank's
loan  portfolio at December 31, 2003.  The table does not include the effects of
possible prepayments or scheduled principal  repayments.  All mortgage loans are
shown as  maturing  based on the date of the last  payment  required by the loan
agreement.  All  commercial  loans shown in the table below have fixed  interest
rates.  At December 31,  2003,  the mortgage  portfolio  was  comprised of $22.3
million in fixed rate loans and $48.3  million in variable  rate loans while the
consumer  portfolio  was composed of $1.8 million on  fixed-rate  loans and $0.3
million in variable rate loans.


                                      Mortgage    Commercial  Consumer    Total
                                      Loans(1)      Loans      Loans      Loans
                                      --------      -----      -----      -----
                                                    (In thousands)
Amounts due:
Within 1 year...................      $   185        $    5    $  302    $   492
Over 1 to 5 years...............          695           118     1,318      2,131
Over 5 years....................       69,743            --       527     70,270
                                      -------        ------    ------    -------
  Total amount due..............      $70,623        $  123    $2,147    $72,893
                                      =======        ======    ======    =======

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

         The  following  table sets forth as of December  31,  2003,  the dollar
amount of all loans due after  December  31,  2004,  based upon  fixed  rates of
interest or floating or adjustable interest rates.

                                                  Floating or
                                                   Adjustable
                                Fixed Rates          Rates              Total
                                -----------          -----              -----
                                                (In thousands)
One-to-four family.............   $21,819            $47,259           $69,078
Other mortgage loans...........       807                553             1,360
Commercial.....................       118                 --               118
Consumer.......................     1,508                337             1,845
                                  -------            -------           -------
    Total......................   $24,252            $48,149           $72,401
                                  =======            =======           =======

         Mortgage Loans:

         One- to  Four-Family  Residential  Loans.  The Bank's  primary  lending
activity consists of originating and purchasing one- to four-family  residential
mortgage  loans  secured by  property  located in the Bank's  market  areas.  At
December 31, 2003,  approximately 68% of the Bank's loan portfolio was comprised
of  adjustable-rate  mortgage  ("ARM") loans. The Bank retains ARM loans for its
portfolio.  The remainder consists of fixed-rate loans which the Bank originates
either  to  resell  in the  secondary  market  or to  retain  in its  portfolio,
depending  on the  yield  on the  loan  and  on its  asset/liability  management
objectives.   Residential  real  estate  loans  often  remain   outstanding  for
significantly shorter periods than their contractual terms because borrowers may
refinance or repay loans at their option.

         The  interest  rate on the Bank's ARM loans is based on an index plus a
stated  margin.  The Bank generally  discounts the initial  interest rate on ARM
loans.  Borrowers  qualify  for the ARM  loans  at the  initial

                                        4

<PAGE>

interest rate, however,  ARM loan borrowers are generally required to meet lower
income-to-debt  ratios for approval than those required of fixed-rate borrowers.
ARM loans provide for periodic  interest rate  adjustments  of 1% to 2% annually
and 5% to 6% over the life of the loan, depending on borrower occupancy and size
of the loans. The Banks ARM loans reprice annually after the initial rate period
which may be one  year,  three  years or five  years.  Most  terms are 30 years,
however, shorter terms are available and are utilized.

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

         ARM loans decrease the risk  associated  with changes in interest rates
by  periodically  repricing,  but involve other risks because as interest  rates
increase, the underlying payments by the borrower increase,  thus increasing the
potential for default by the borrower.  At the same time, the  marketability  of
the underlying  collateral may be adversely  affected by higher  interest rates.
Upward  adjustment  of the  contractual  interest  rate is also  limited  by the
maximum  periodic and lifetime  interest rate  adjustment  permitted by the loan
documents, and, therefore is potentially limited in effectiveness during periods
of rapidly rising interest rates.

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

         Commercial Loans. Commercial loans generally have a loan-to-value ratio
of 80% or less. These loans do not have terms greater than 30 years.  Commercial
real estate loans are secured by office buildings, churches and other commercial
properties.

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

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

         Land  Loans.  The Bank also makes land loans  which are  secured by raw
land in its market area, to be used for agriculture or residential construction.

                                        5

<PAGE>

         Consumer Loans:

         The Bank  offers  consumer  loans in order to provide a wider  range of
financial  services to its  customers.  In addition,  these loans provide higher
interest rates and shorter terms than many of the Bank's other loans. The Bank's
consumer loans consist primarily of direct automobile loans.

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

         Commercial Loans:

         The Bank's  commercial  loan  portfolio is  comprised  primarily of two
floor plan loans to a local car dealer and a loan on a local lumber yard.

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

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

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

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

         Loan  Commitments.   Written   commitments  are  given  to  prospective
borrowers on all approved real estate loans. Generally,  the commitment requires
acceptance within 60 days of the loan application. Loan commitments in excess of
this period may be issued upon payment of a non-refundable fee or upon agreement
on an interest rate float,  allowing the Bank to adjust the interest rate on the
loan. As of December 31, 2003, there were  outstanding  commitments to originate
loans of $186,000.

         Loans to One Borrower.  The maximum  amount of loans which the Bank may
make to any one  borrower  may not exceed the  greater of $500,000 or 15% of its
unimpaired capital and unimpaired  surplus.  The Bank may lend an additional 10%
of its unimpaired capital and unimpaired surplus if the loan is fully secured by
readily marketable collateral. The Bank's maximum loan to one borrower limit was
$2.5 million at December 31, 2003. At December 31, 2003, the  outstanding  loans
of the  Bank's  five  largest  borrowers  have  balances  between  $583,000  and
$828,000. All of these loans were performing in accordance with their terms.

                                       6

<PAGE>

Non-performing and Problem Assets

         Loan  Delinquencies.  If a mortgage loan becomes more than 15 days past
due, a notice of nonpayment is sent to the borrower. After the loan becomes more
than three  weeks  past due,  another  notice of  nonpayment,  accompanied  by a
personal letter, is sent to the borrower.  If the loan continues in a delinquent
status for 90 days and no repayment plan is in effect,  foreclosure  proceedings
are initiated. The borrower is notified when foreclosure is commenced.

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

         Non-performing  Assets.  The  following  table sets  forth  information
regarding nonaccrual loans and real estate owned, as of the dates indicated. For
the year ended December 31, 2003,  interest income that would have been recorded
on loans  accounted for on a nonaccrual  basis under the original  terms of such
loans was  immaterial.  The amount of interest on such loans  included in income
was $3,332.


                                                               At December 31,
                                                               ---------------
                                                               2003        2002
                                                               ----        ----
                                                                (In thousands)

Loans accounted for on a non-accrual basis:
  One- to four-family ..................................       $ 63        $ 68
  Consumer .............................................          2          --
                                                               ----        ----
    Total ..............................................         65          68
                                                               ----        ----

Accruing loans delinquent 90 days or more:
  One- to four-family ..................................         --          --
  Consumer .............................................         --          --
                                                               ----        ----
    Total ..............................................         --          --
                                                               ----        ----
      Total non-performing loans .......................         65          68
                                                               ----        ----

Foreclosed assets:
  One- to four-family ..................................        379          --
  Consumer .............................................         --          --
                                                               ----        ----
    Total ..............................................        379          --
                                                               ----        ----

Total non-performing assets ............................       $444        $ 68
                                                               ====        ====
Total non-performing loans as a
  percentage of net loans ..............................       0.09%       0.18%
                                                               ====        ====
Total non-performing assets as a
  percentage of total assets ...........................       0.29%       0.05%
                                                               ====        ====

         Classified Assets. OTS regulations provide for a classification  system
for problem  assets of savings  associations  which  covers all problem  assets.
Under this classification system, problem assets of savings institutions such as
the Bank are  classified as  "substandard,"  "doubtful,"  or "loss." An asset is
considered  substandard if it is inadequately protected by the current net worth
and paying  capacity  of the  borrower  or of the  collateral  pledged,  if any.
Substandard  assets include those  characterized  by the "distinct  possibility"
that the savings  institution  will sustain "some loss" if the  deficiencies are
not corrected. Assets classified

                                       7
<PAGE>

as doubtful have all of the weaknesses inherent in those classified substandard,
with the added  characteristic  that the weaknesses  present make "collection or
liquidation in full," on the basis of currently existing facts, conditions,  and
values,  "highly  questionable  and improbable."  Assets  classified as loss are
those considered "uncollectible" and of such little value that their continuance
as assets without the establishment of a specific loss reserve is not warranted.
Assets may be designated "special mention" because of potential weakness that do
not currently warrant classification in one of the aforementioned categories.

         When  a  savings  association   classifies  problem  assets  as  either
substandard or doubtful,  it may establish general allowances for loan losses in
an amount  deemed  prudent by  management.  General  allowances  represent  loss
allowances which have been established to recognize the inherent risk associated
with lending activities,  but which, unlike specific  allowances,  have not been
allocated to particular problem assets.  When a savings  association  classifies
problem assets as loss, it is required either to establish a specific  allowance
for losses equal to 100% of that portion of the asset so classified or to charge
off such amount. A savings association's  determination as to the classification
of its assets and the amount of its valuation allowances is subject to review by
the OTS,  which may order the  establishment  of additional  general or specific
loss  allowances.  A portion of general  loss  allowances  established  to cover
probable  losses related to assets  classified as substandard or doubtful may be
included in determining a savings  association's  regulatory  capital.  Specific
valuation  allowances  for loan losses  generally  do not qualify as  regulatory
capital.

         At December 31, 2003, the Bank had loans classified as special mention,
substandard, doubtful and loss as follows (in thousands):


       Special mention................................         $    -
       Substandard (1)................................            404
       Doubtful assets (2)............................              2
       Loss assets ...................................              -
                                                               ------
            Total.....................................         $  406
                                                               ======

---------------
(1)  Consisting  of two consumer  loans  ($13,563 and $1,468) and five  mortgage
     loans ($44,404, $27,474, $137,930, $115,809 and $63,350).
(2)  Consisting of two consumer loan ($865 and $879).

         Allowances  for Loan Losses.  A provision for loan losses is charged to
operations  based on management's  evaluation of the losses that may be incurred
in the Bank's loan portfolio. The evaluation, including a review of all loans on
which full  collectibility  of  interest  and  principal  may not be  reasonably
assured,  considers:  (i) the Bank's past loan loss  experience,  (ii) known and
inherent risks in the Bank's portfolio, (iii) adverse situations that may affect
the  borrower's  ability to repay,  (iv) the estimated  value of any  underlying
collateral, and (v) current economic conditions.

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

         The following  table  illustrates  the  allocation of the allowance for
loan losses for each category of loans.  The allocation of the allowance to each
category is not necessarily indicative of future loss in any

                                       8
<PAGE>

particular  category and does not  restrict  the Bank's use of the  allowance to
absorb losses in other loan categories.


                                               At December 31,
                              ------------------------------------------
                                   2003                   2002
                              --------------------   -------------------
                                       Percent of             Percent of
                                        Loans in               Loans in
                                          Each                   Each
                                       Category to           Category to
                              Amount   Total Loans   Amount  Total Loans
                              ------   -----------   ------  -----------
                                       (Dollars in thousands)
Mortgage loans
  One- to four-family......    $ 218       82.14%     $ 205       91.89%
  Commercial...............        5        1.98          5        0.91
  Land.....................        4        1.59          7        1.16
  Construction.............        4        1.59          3        1.29
Consumer loans.............       30       11.90         35        4.08
Commercial loans...........        2        0.80          5        0.67
                               -----      ------      -----      ------
     Total allowance.......    $ 263      100.00%     $ 260      100.00%
                               =====      ======      =====      ======

                                        9

<PAGE>

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


                                                           At December 31,
                                                     --------------------------
                                                       2003               2002
                                                     -------            -------
                                                       (Dollars in thousands)

Balance at beginning of period.....................  $   260            $   268
                                                     -------            -------
Charge-offs:
  One- to four-family..............................       --                  -
  Consumer.........................................       --                (8)
                                                     -------            -------
                                                          --                (8)
                                                     -------            -------
Recoveries:
  One- to four-family..............................        -                  -
  Consumer ........................................        3                  -
                                                     -------            -------
                                                           3                  -
                                                     -------            -------
Net charge-offs....................................        3                (8)
Provision for loan losses..........................        -                  -
                                                     -------            -------
Balance at end of period...........................  $   263            $   260
                                                     =======            =======

Allowance for loan losses to total
  non-performing loans at end of period............   387.69%            382.35%
                                                     =======            =======
Allowance for loan losses to net loans at
  end of period....................................     0.35%              0.45%
                                                     =======            =======
Ratio of net charge-offs during the period to
  average loans outstanding during period..........     0.01%              0.01%
                                                     =======            =======


Investment Activities

         Investment  Securities.  The Bank is required under federal regulations
to  maintain  liquid  assets  which  may be  invested  in  specified  short-term
securities and certain other investments. See "Regulation -- Savings Institution
Regulation -- Federal Home Loan Bank System" and  "Management's  Discussion  and
Analysis -- Liquidity and Capital  Resources." The level of liquid assets varies
depending  upon  several  factors,  including:  (i)  the  yields  on  investment
alternatives,  (ii) management's judgment as to the attractiveness of the yields
then available in relation to other  opportunities,  (iii) expectation of future
yield levels, (iv) asset/liability management, and (v) the Bank's projections as
to the  short-term  demand  for funds to be used in loan  origination  and other
activities.    The   Bank    classifies    its    investment    securities    as
"available-for-sale"  or  "held-to-maturity" in accordance with SFAS No. 115. At
December 31, 2003, the Bank's investment portfolio policy permitted  investments
in instruments such as: (i) U.S. Treasury obligations,  (ii) U.S. federal agency
or federally  sponsored agency obligations,  (iii) local municipal  obligations,
(iv) mortgage-backed securities, (v) banker's acceptances,  (vi) certificates of
deposit,  (vii) federal funds, including FHLB overnight and term deposits (up to
six months), (viii) collateralized  automobile receivables,  and (ix) investment
grade corporate bonds,  commercial paper and mortgage derivative  products.  See
"-- Mortgage-Backed Securities." The Board of Directors may authorize additional
investments.

         The   Bank's    investment    securities    "available-for-sale"    and
"held-to-maturity"  portfolios at December 31, 2003, did not contain  securities
of any  issuer  with an  aggregate  book  value in excess  of 10% of the  Bank's
equity, excluding those issued by the United States government agencies.

                                       10

<PAGE>

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

         At December 31, 2003, the Bank's  mortgage-backed  securities portfolio
classified  as  "available-  for-sale"  totaled  $36.8  million,  and the Bank's
mortgage-backed  securities  portfolio classified as "held-to- maturity" totaled
$9.4  million.  Each  security  was  issued  by GNMA,  FHLMC  or FNMA.  Expected
maturities will differ from contractual  maturities due to scheduled  repayments
and because  borrowers may have the right to call or prepay  obligations with or
without prepayment penalties.

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

         CMOs have been developed in response to investor concerns regarding the
uncertainty of cash flows  associated with prepayment  options on the underlying
mortgages. A CMO can be collateralized directly by mortgages,  but more often is
collateralized by  mortgage-backed  securities issued or guaranteed by the GNMA,
FNMA or the FHLMC and held in trust for CMO investors.  In contrast to mortgage-
backed  securities  in which the cash flow is received  pro rata by all security
holders, the cash flow from the mortgage loans underlying a CMO is segmented and
paid in accordance  with a predetermined  priority to investors  holding various
CMO tranches. Different tranches are created, each with its own stated maturity,
estimated average life, coupon rate, and prepayment characteristics. Most of the
CMOs  owned by the  Bank are  government  agency  guaranteed.  A few of the CMOs
consist of small private  issues  collateralized  by mortgage  loans and include
extra credit  enhancements  sufficient to earn the highest  credit  ratings from
independent  rating  agencies.  At December 31, 2003,  the Bank's CMO  portfolio
classified as "available-for-sale" had a carrying value of $2.2 million.

                                       12

<PAGE>

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


                                                            At December 31,
                                                          ------------------
                                                            2003       2002
                                                          -------    -------
                                                            (In thousands)

Investments:
U.S.  agency securities...............................     $6,327   $  7,306
Mortgage-backed securities held-to-maturity...........      9,376     21,548
Mortgage-backed securities available-for-sale.........     36,809     39,357
State and municipal obligations available-for-sale....      1,988      1,661
Other - available-for-sale............................      3,639      5,214
FHLB stock............................................      2,673      2,650
                                                          -------    -------
   Total investments .................................    $60,812    $77,736
                                                          =======    =======

                                       12

<PAGE>

         The following table sets forth certain information  regarding scheduled
maturities,  carrying  values,  approximate  fair values,  and weighted  average
yields for the Bank's investments at December 31, 2003 by contractual  maturity.
The following  table does not take into  consideration  the effects of scheduled
repayments  or the  effects  of  possible  prepayments.  Yields  on  tax  exempt
obligations have been computed on a tax equivalent basis.

<TABLE>
<CAPTION>
                                                                                          More than                Total
                                 One Year or Less  One to Five Years Five to Ten Years    Ten Years        Investment Securities
                                 ----------------  ----------------- ----------------- ----------------- --------------------------
                                          Weighted          Weighted         Weighted           Weighted           Weighted
                                Carrying   Average Carrying Average Carrying Average   Carrying Average   Carrying Average    Fair
                                 Value      Yield    Value   Yield   Value    Yield     Value    Yield     Value    Yield    Value
                                 -----      -----    -----   -----   -----    -----     -----    -----     -----    -----    -----
                                                        (Dollars in thousands)
<S>                             <C>        <C>     <C>      <C>     <C>      <C>      <C>       <C>      <C>       <C>    <C>
Investments:
  U.S.  agency securities......  $    -        -%   $1,251   2.46%   $2,541   3.88%    $ 2,535   2.53%    $ 6,327   3.06%  $ 6,327
  Mortgage-backed securities...       -        -        85   6.07     2,086   4.12      44,014   3.80      46,185   3.82    46,525
  FHLB stock...................       -        -         -      -         -      -       2,673   3.50       2,673   3.50     2,673
  State municipal obligations..       -        -       213   4.15       617   3.47       1,158   4.67       1,988   4.24     1,988
  Other debt securities........   1,289     3.18     2,350   5.84         -      -           -   -          3,639   4.90     3,639
                                 ------             ------           ------            -------            -------          -------
     Total investments.........  $1,289     3.18%   $3,899   4.67%   $5,244   3.93%    $50,380   3.74%    $60,812   3.81%  $61,152
                                 ======     ====    ======   ====    ======   ====     =======   ====     =======   ====   =======
</TABLE>

                                       13

<PAGE>

Sources of Funds

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

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

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

         Non-interest bearing demand,  regular savings,  money market demand and
NOW  accounts  constituted  $38.5  million,  or  46.2%,  of the  Bank's  deposit
portfolio at December 31, 2003 and the weighted  average  interest  rate paid on
such interest-bearing  accounts at that date was 0.45%.  Certificates of deposit
constituted  $45.0 million,  or 53.8%, of the deposit  portfolio,  of which $4.2
million,  or 5.1%, of the deposit  portfolio were  certificates  of deposit with
balances of $100,000 or more. Such deposits are offered at negotiated rates. The
weighted  average  interest rates paid on  certificates of deposits with deposit
balances under $100,000 and over $100,000 were 2.63% and 2.08%, respectively, at
December 31, 2003. As of December 31, 2003, the Bank had no brokered deposits.

         The following table indicates the amount of the Bank's  certificates of
deposit of $100,000 or more by time remaining  until maturity as of December 31,
2003.


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

        Within three months                           $  852
        Three through six months                         532
        Six through twelve months                      2,190
        Over twelve months                               668
                                                      ------
                                                      $4,242
                                                      ======

                                       14

<PAGE>

         Borrowings.  Advances  (borrowings)  may be  obtained  from the FHLB of
Topeka to supplement the Bank's supply of lendable funds. Advances from the FHLB
of Topeka are  typically  secured by a pledge of the Bank's stock in the FHLB of
Topeka, a portion of the Bank's first mortgage loans and other assets. Each FHLB
credit program has its own interest rate (which may be fixed or adjustable)  and
range of  maturities.  At December  31,  2003,  the Bank could  borrow up to $61
million from the FHLB of Topeka.  If the need  arises,  the Bank may also access
the Federal  Reserve Bank discount  window to supplement  its supply of lendable
funds  and to meet  deposit  withdrawal  requirements.  At  December  31,  2003,
borrowings  from the FHLB of Topeka  totaled $50 million.  The Bank had no other
borrowings outstanding.

Personnel

         At  December  31,  2003,  the Bank had 31  full-time  employees  and 12
part-time  employees.  None  of  the  Bank's  employees  are  represented  by  a
collective bargaining group.  Management believes that its relationship with the
employees is good.

Subsidiary Activity

         The Bank is  permitted  to invest up to 2% of its assets in the capital
stock of, or loans to, subsidiary  corporations.  An additional investment of 1%
of assets is permitted when the additional  investment is utilized primarily for
community  development purposes.  Pursuant to these limitations,  as of December
31, 2003, the Bank was authorized to invest up to approximately  $3.0 million in
the stock of, or loans to, service  corporations (based upon the 2% limitation).
The Bank has one  wholly-owned  service  corporation,  First  Enterprises,  Inc.
("FEI").  In recent years, FEI has been primarily  utilized as an agency for the
sale of credit life  insurance,  mortgage life  insurance and certain fixed- and
variable-rate  annuities.  However,  in  August  1995,  the Bank  purchased  for
development  through  FEI an 8.3 acre  tract of land in Paola,  Kansas  known as
Baptiste Commons.  This tract of land consists of seven commercial sites, one of
which  was used for the site of the  Bank's  new  office  building.  The  Bank's
investment in this real estate  development  project will continue to decline as
the remaining lots are sold. At December 31, 2003, the total  investment in this
real estate was $347,000.


Regulation

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

Company Regulation

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

         Federal law was amended by the Gramm Leach Bliley Act,  which went into
effect in 2000, to effectively  prohibit the Company from affiliating in any way
with a  non-financial  company  and  to  permit  it to  become  affiliated  with
securities  firms and insurance  companies.  These changes to federal law do not

                                       15

<PAGE>

impact the current  business of the  Company.  Unlike  savings and loan  holding
companies  that may be created  in the  future,  the  Company  generally  is not
restricted  in the type of business in which it may  engage,  provided  that the
Bank maintains a specified amount of its assets in housing related investments.

         Legislation to Curtail Corporate Accounting Irregularities. On July 30,
2002, President Bush signed into law the Sarbanes-Oxley Act of 2002 (the "Act").
The  Securities  and Exchange  Commission  (the "SEC") has  promulgated  certain
regulations  pursuant  to the  Act  and  will  continue  to  propose  additional
implementing  or clarifying  regulations as necessary in furtherance of the Act.
The  passage  of the Act  and the  regulations  implemented  by the SEC  subject
publicly-traded   companies  to  additional   and  more   cumbersome   reporting
regulations   and  disclosure.   Compliance  with  the  Act  and   corresponding
regulations may increase the Company's expenses.

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

Bank Regulation

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

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

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

                                       16

<PAGE>

         Insurance of Deposit Accounts.  The Bank's deposit accounts are insured
by the SAIF to a maximum of $100,000 for each insured  member (as defined by law
and  regulation).  Insurance  of deposits may be  terminated  by the FDIC upon a
finding that the institution has engaged in unsafe or unsound  practices,  is in
an unsafe or unsound  condition  to continue  operations,  or has  violated  any
applicable law, regulation,  rule, order or condition imposed by the FDIC or the
institution's  primary  regulator.   The  FDIC  may  also  prohibit  an  insured
depository institution from engaging in any activity the FDIC determines to pose
a serious  threat to the SAIF.  The FDIC  charges an annual  assessment  for the
insurance of deposits  based on the risk a particular  institution  poses to its
deposit insurance fund,  depending upon the institution's  risk  classification.
This  risk  classification  is  based  on an  institution's  capital  group  and
supervisory subgroup assignment.

         Regulatory  Capital  Requirements.   OTS  capital  regulations  require
savings institutions to meet three capital standards: (1) tangible capital equal
to 1.5% of total adjusted  assets,  (2) a leverage ratio (core capital) equal to
at least 4% of total adjusted  assets for most savings  institutions,  and (3) a
risk-based capital requirement equal to 8.0% of total risk-weighted  assets. The
Bank exceeded  these minimum  standards at December 31, 2003. The Bank's capital
ratios  are  set  forth  in  Note  13 to the  Company's  Consolidated  Financial
Statements.  Regulations  that enable the OTS to take prompt  corrective  action
against savings  institutions may effectively impose higher capital requirements
on the Bank.

         Savings  associations  with a greater than  "normal"  level of interest
rate exposure may, in the future, be subject to a deduction for an interest rate
risk ("IRR") component from capital for purposes of calculating their risk-based
capital requirement.

         Dividend and Other Capital Distribution Limitations. The Bank must give
the OTS 30 days advance notice of any proposed  distribution of capital, such as
a declaration of dividends to the Company,  and the OTS has the authority  under
its supervisory  powers to prohibit any payment of dividends to the Company that
it deems to constitute an unsafe or unsound practice. In addition,  the Bank may
not  declare or pay a dividend on its capital  stock if the  dividend  would (1)
reduce the  regulatory  capital of the Bank  below the amount  required  for the
liquidation account established in connection with the conversion from mutual to
stock form or (2)  reduce  the  amount of capital of the Bank below the  amounts
required in accordance with other OTS regulations.  In contrast, the Company has
fewer restrictions on its payment of dividends to its stockholders.

                  Qualified Thrift Lender Test. Savings institutions must meet a
QTL  test.  If the Bank  maintains  an  appropriate  level of  Qualified  Thrift
Investments (primarily residential mortgages and related investments,  including
certain mortgage-related  securities) ("QTIs") and otherwise qualifies as a QTL,
it will continue to enjoy full borrowing privileges from the FHLB of Topeka. The
required  percentage of QTIs is 65% of portfolio  assets  (defined as all assets
minus  intangible  assets,  property used by the  institution  in conducting its
business and liquid  assets equal to 20% of total  assets).  Certain  assets are
subject to a  percentage  limitation  of 20% of portfolio  assets.  In addition,
savings associations may include shares of stock of the FHLBs, FNMA and FHLMC as
qualifying  QTIs. As of December 31, 2003,  the Bank was in compliance  with its
QTL requirement.

         Federal  Home  Loan  Bank  System.  The Bank is a member of the FHLB of
Topeka,  which is one of 12 regional FHLBs that  administers  the home financing
credit  function  of  savings  associations.  Each FHLB  serves as a reserve  or
central bank for its members within its assigned region.  It is funded primarily
from  proceeds  derived from the sale of  consolidated  obligations  of the FHLB
System.  It makes loans to members  (i.e.,advances)  in accordance with policies
and procedures established by the Board of Directors of the FHLB.

                                       17

<PAGE>

         As a member, the Bank is required to purchase and maintain stock in the
FHLB of  Topeka  in an  amount  equal  to at least  1% of its  aggregate  unpaid
residential  mortgage loans, home purchase contracts,  or similar obligations at
the beginning of each year.

         Federal Reserve System. The FRB requires all depository institutions to
maintain  non-interest  bearing  reserves  at  specified  levels  against  their
transaction accounts (primarily checking,  NOW, and Super NOW checking accounts)
and  non-personal  time  deposits.  The balances  maintained to meet the reserve
requirements  imposed by the  Federal  Reserve  Board may be used to satisfy the
liquidity requirements that are imposed by the OTS.

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

(a)      Properties.

         The Bank owns 5 of its 6  offices  and  leases 1 of them.  The net book
value of this real property at December 31, 2003,  was $1.5 million.  The Bank's
total  investment  in  office  equipment  had a net book  value of  $403,000  at
December 31, 2003.

<TABLE>
<CAPTION>
                                                     Year              Year        Net Book Value of
                                    Leased or        Leased or         Lease       Real Property at
         Location                   Owned            Acquired          Expires     December 31, 2003
         --------                   -----            --------          -------     -----------------
<S>                               <C>                 <C>              <C>               <C>
MAIN OFFICE:
600 Main Street                       Owned             1974              N/A              $142,000
Osawatomie, Kansas 66064

2205 South Main                       Owned             1981              N/A              $183,000
Fort Scott, Kansas  66701

100 West Amity                        Owned             1974              N/A              $296,000
Louisburg, Kansas  66053

125 North Mill                        Owned             1999              N/A              $ 27,000
Beloit, Kansas  67420

1310 Baptiste Drive                   Owned             1998              N/A              $803,000
Paola, Kansas  66071

762 4th Street                        Leased            1984              2004             N/A
Phillipsburg, Kansas  67661
</TABLE>

b)       Investment Policies.

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

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

                                       18

<PAGE>

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

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

(c)      Description of Real Estate and Operating Data.

         Not Applicable.

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

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

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

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

                                     PART II

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

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



                                   High           Low         Dividends
                                   ----           ---         ---------
2003
First Quarter................     $16.06         $14.10       $.05/share
Second Quarter...............     $17.45         $15.95       $.05/share
Third Quarter................     $17.95         $16.52       $.05/share
Fourth Quarter...............     $20.40         $17.39       $.05/share

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

         The number of  shareholders  of record of common  stock as of March 16,
2004 was  approximately  275.  This does not  reflect  the  number of persons or
entities who held stock in nominee or "street"  name through  various  brokerage
firms.  At March 16, 2004,  there were 908,245  shares of the  Company's  common
stock outstanding.

                                       19

<PAGE>

         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.

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

Financial Condition

         Total assets  increased  $1.3 million,  or 0.8%,  to $151.4  million at
December 31, 2003 from $150.1  million at December  31,  2002.  The increase was
primarily   comprised  of  increases  of  $14.7  million,   or  25.4%,  in  loan
receivables,  net and $3.4  million,  or  35.1%,  in cash and cash  equivalents,
partially  offset by decreases of $14.7 million,  or 24.2%,  in  mortgage-backed
securities and $2.2 million, or 15.7%, in investment securities. The increase in
loan  receivables,  net was primarily  caused by an increase in loans purchased,
net of loan repayments during the year.

         Total liabilities increased $1.6 million, or 1.2%, to $134.9 million at
December 31, 2003 from $133.3  million at December  31,  2002.  The increase was
almost entirely attributable to a $1.6, or 1.9%, increase in deposits.

         Total  stockholders'  equity  decreased  $391,000,  or  2.3%,  to $16.4
million at  December  31,  2003 from $16.8  million at December  31,  2002.  The
decrease was primarily  attributable to a $451,000 decrease in accumulated other
comprehensive  income  as well  as a  $218,000  decrease  in  retained  earnings
reflecting  net loss of $36,000 and  $182,000 in cash  dividends  paid on common
stock in 2003. These decreases were partially  offset by a $236,000  decrease in
unearned compensation.

                                       20

<PAGE>

Average Balance Sheet

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

<TABLE>
<CAPTION>
                                                                                    Year Ended December 31,
                                                          -------------------------------------------------------------------------
                                                                        2003                                   2002
                                                          ---------------------------------      ----------------------------------
                                                          Average                                Average
                                                        Outstanding   Interest                 Outstanding    Interest
                                                          Balance    Earned/Paid Yield/Rate      Balance    Earned/Paid  Yield/Rate
                                                          -------    ----------- ----------      -------    -----------  ----------
                                                                                              (Dollars in thousands)
<S>                                                      <C>          <C>          <C>          <C>           <C>        <C>
Interest-earning assets:
  Loans receivable(1)................................      $65,401      $3,876       5.93%        $ 59,157      $4,212     7.12%
  Investment securities..............................       12,106         481       3.97%          13,414         637     4.75%
  Mortgage-backed securities.........................       57,211       2,175       3.80%          62,550       3,168     5.06%
  Interest-bearing deposits..........................        9,446          74       0.78%           7,888          92     1.17%
  FHLB stock.........................................        2,652          93       3.51%           2,650         121     4.57%
                                                          --------      ------                    --------      ------
     Total interest-earning assets(1)................      146,816       6,699       4.56%         145,659       8,230     5.65%
                                                                        ------     ------                       ------   ------
Noninterest-earning assets...........................        5,692                                   6,509
                                                          --------                                --------
     Total assets....................................     $152,508                                $152,168
                                                          ========                                ========
Interest-bearing liabilities:
  NOW and investment deposits........................     $ 28,075         128       0.46%       $  26,374         301     1.14%
  Savings and certificate accounts...................       56,251       1,453       2.58%          57,970       2,163     3.73%
  FHLB borrowings....................................       50,000       2,724       5.45%          50,000       2,724     5.45%
                                                          --------      ------                    --------      ------
     Total interest-bearing liabilities..............      134,326       4,305       3.20%         134,344       5,188     3.86%
                                                                        ------     ------                       ------   ------
Noninterest-bearing liabilities:.....................        2,238                                   1,332
                                                          --------                                --------
  Total liabilities..................................      136,564                                 135,676
                                                          --------                                --------
Stockholders' Equity.................................       15,944                                  16,492
                                                          --------                                --------
     Total liabilities and stockholders' equity......     $152,508                                $152,168
                                                          ========                                ========
Net interest income..................................                   $2,394                                  $3,042
                                                                        ======                                  ======
Net interest rate spread(2)..........................                                1.36%                                 1.79%
                                                                                   ======                                ======
Net earning assets...................................      $12,490                               $  11,315
                                                           =======                               =========
Net yield on interest-earning assets(3)..............                                1.63%                                 2.09%
                                                                                   ======                                ======
Average interest-earning assets to average
  interest-bearing liabilities.......................                              109.30%                               108.42%
                                                                                   ======                                ======
</TABLE>

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

                                       21

<PAGE>

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

<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                                               ---------------------------------------
                                                           2003 vs. 2002
                                               ---------------------------------------
                                                        Increase/(Decrease)
                                                               Due to
                                               ---------------------------------------
                                                                     Rate/
                                               Volume       Rate     Volume      Total
                                               ------       ----     ------      -----
                                                           (In thousands)
<S>                                         <C>        <C>        <C>        <C>
Interest-earning assets:
  Loans receivable(1) ....................    $   444    $  (704)   $   (76)   $  (336)
  Investment securities ..................        (62)      (104)        10       (156)
  Mortgage-backed securities .............       (270)      (790)        67       (993)
  Interest-bearing deposits ..............         18        (30)        (6)       (18)
  FHLB stock .............................          -        (28)         -        (28)
                                              -------    -------    -------    -------
     Total interest-earning assets .......        130     (1,656)        (4)    (1,531)
                                              -------    -------    -------    -------

Interest-bearing liabilities:
  NOW and money market deposits ..........         19       (181)       (12)      (173)
  Savings and certificate accounts .......        (64)      (666)        20       (710)
  FHLB borrowings ........................          -          -          -          -
                                              -------    -------    -------    -------
     Total interest-bearing liabilities...        (45)      (846)         8       (883)
                                              -------    -------    -------    -------
Increase in net interest income ..........    $   174    $  (810)   $   (12)   $  (648)
                                              =======    =======    =======    =======
</TABLE>

Results of Operations for the Years Ended December 31, 2003 and 2002

         Net  Income.  The Bank  sustained  a  $36,000  loss for the year  ended
December 31, 2003 compared to net income of $685,000 for the year ended December
31, 2002,  resulting in a loss of $721,000 in profitability  for the two periods
involved.  This  decrease was  primarily  attributable  to a 647,000,  or 21.3%,
decrease in net interest income.

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

         Our net interest income decreased  $647,000,  or 21.3%, to $2.4 million
for the year ended  December  31,  2003  compared to $3.0  million in 2002.  The
decrease in net  interest  income was due to a 109 basis  point  decrease in the
average  interest  rate  earned for 2003,  partially  offset by a 66 basis point
decrease in the average  interest paid in 2003.  The 109 basis point decrease in
the average rate earned for 2003 was the result

                                       22

<PAGE>

of a decrease in yield for each component of  interest-earning  assets,  ranging
from a decrease  of 119 basis  points for loans  receivable  to a decrease of 39
basis points for interest-bearing deposits.

         Our interest expense  decreased  primarily as a result of a decrease in
cost of both components of  interest-bearing  liabilities  (115 basis points for
savings and certificates  and 68 basis points for NOW and investment  deposits).
This   decrease  was  slightly   offset  by  an  increase  in   interest-bearing
liabilities, primarily NOW and investment accounts.

         As a result of the  matters  discussed  above,  our net  interest  rate
spread  decreased  from 1.79% for the year ended  December 31, 2002 to 1.36% for
the year ended December 31, 2003.

         Provision for Loan Losses.  The allowance for loan losses was $263,000,
or 0.35%, of net loans outstanding at December 31, 2003 compared to $260,000, or
0.45%,  of net loans  outstanding  at December  31,  2002.  The  decrease in the
percentage  is a result  of the  growth  in net  loans  receivable  as well as a
$10,000 reserve established for a delinquent loan.

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

         Noninterest  income. Our noninterest income increased $41,000, or 2.9%,
from  $1.4  million  in  2002 to $1.5  million  in  2003.  The  increase  in our
noninterest  income was almost  entirely  due to a $37,000  increase  in deposit
account service fees.

         Noninterest  expense.  Our noninterest expense increased  $465,000,  or
13.3%, from $3.5 million in 2002 to $4.0 million in 2003. The increase primarily
resulted  from a  $361,000  increase  in  compensation  and  benefits  ($307,000
resulting from the  termination of our defined  benefit  program) and a $174,000
increase in other expense,  primarily due to legal and professional  services in
anticipation of our pending merger.

         Income Tax Expense.  Our income tax expense  decreased  $351,000 from a
tax  expense of  $283,000  in 2002 to a tax  benefit  of  $68,000  in 2003.  Our
effective tax rate was -65.4% and 29.2% for the year ended December 31, 2003 and
2002,  respectively.  The effective tax rate for 2003 differs from the statutory
tax rate of 34% due to non-taxable income from our investment in bank-owned life
insurance as well as non- deductable merger related expenses.

Liquidity and Capital Resources

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

                                       23

<PAGE>

         Net cash  provided by our  operating  activities  (the cash  effects of
transactions  that enter into our  determination  of net  income  e.g.  non-cash
items,  amortization and  depreciation,  provision for loan losses) for the year
ended  December  31, 2003 was $1.5  million as compared to $1.6  million for the
year ended December 31, 2002.

         Net cash provided by our investing  activities  (i.e. cash payments and
cash  receipts,  primarily from our  investment  securities and  mortgage-backed
securities  portfolio and our loan  portfolio)  for the year ended  December 31,
2003 totaled $483,000, a decrease of $875,000 from December 31, 2002. The change
was primarily due to an increase in loans purchased from $8.7 million in 2002 to
$20.1 million in 2003, an increase in mortgage-backed  securities purchased from
$20.9  million  in 2002  to  $26.9  million  in  2003,  and a  decrease  in loan
repayments in relation to loan  originations.  The decrease was partially offset
by an increase of paydowns and  maturities of  mortgage-backed  securities  from
$29.7  million on 2002 to $40.4  million in 2003 and a decrease in  purchases of
investment securities from $6.8 million in 2002 to $3.3 million in 2003.

         Net cash provided by our financing  activities  totaled $1.4 million in
2003, an increase of $5.5 million from 2002.  The change was primarily due to an
increase in deposits of $1.6 million  compared to a decrease in deposits of $2.4
million in 2002 as well as a reduction of purchases of treasury  stock from $1.6
million in 2002 to $50,000 in 2003.

Impact of Inflation and Changing Prices

         The consolidated financial statements of the Company and notes thereto,
presented  elsewhere  herein,  have been prepared in accordance  with accounting
principles   generally  accepted  in  the  United  States,   which  require  the
measurement of financial  position and operating  results in terms of historical
dollars without  considering the change in the relative  purchasing power of the
money over time due to  inflation.  The impact of  inflation is reflected in the
increase cost of the Company's  operations.  Unlike most  industrial  companies,
nearly all the assets and liabilities of the Company are financial. As a result,
interest  rates have a greater impact on the Company's  performance  than do the
effects of general levels of inflation. Interest rates do no necessarily move in
the same direction or to the same extent as the prices of goods and services.

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

         The Company's financial  statements are contained in this Annual Report
on Form 10-KSB immediately following Item 13.

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

    Not applicable.

                                       24

<PAGE>

Item 8A.  Controls and Procedures.
--------  ------------------------

         (a) Evaluation of disclosure  controls and  procedures.  Based on their
             --------------------------------------------------
evaluation as of December 31, 2003, the Registrant's principal executive officer
and principal financial officer have concluded that the Registrant's  disclosure
controls and procedures (as defined in Rules  13a-14(e) and 15d-14(e)  under the
Securities  Exchange Act of 1934 (the  "Exchange  Act")) are effective to ensure
that  information  required to be  disclosed  by the Company in reports  that it
files or submits under the Exchange Act is recorded,  processed,  summarized and
reported within the time periods specified in SEC rules and forms.

         (b) Changes in internal controls.  There were no significant changes in
             ----------------------------
the Registrant's  internal controls or in other factors that could significantly
affect  these  controls  during the fourth  quarter,  including  any  corrective
actions with regard to significant deficiencies and material weaknesses.


                                    PART III

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

         Set forth  below is  information  about  the  directors  and  executive
officers and  significant  employees  of the Company.  The Board of Directors is
divided into three classes.  Directors serve for three-year terms with one class
of directors  standing for election each year. Each current  director has served
as a director of this Bank since 1998 and became a director of the Company  upon
its incorporation in 1998. Unless indicated otherwise,  the positions stated for
each  individual  are positions  held in the Bank and the  positions  stated are
positions  which are  currently  held and which  have been held for at least the
past five years.

<TABLE>
<CAPTION>
                                                                                     Current Term
Name                      Age         Positions with Company                          to Expire
----                      ---         ----------------------                          ---------
<S>                     <C>         <C>                                              <C>
Roger L. Coltrin          64          Chairman of the Board, Director of the            2006
                                      Company and Bank
Larry V. Bailey           61          President and Chief Executive Officer,            2005
                                      Director of the Company and Bank
James E. Breckenridge     56          Director of the Company and the Bank              2006
Sherman W. Cole           60          Director of the Company and the Bank              2004
J. Darcy Domoney          50          Director of the Company and the Bank              2004
Donald V. Meyer           58          Director of the Company and the Bank              2005
Daniel G. Droste          47          Senior Vice President of the Company and           na
                                      the Bank
Galen E. Graham           64          Senior Vice President and Secretary of the         na
                                      Company and the Bank

</TABLE>

                                       25

<PAGE>

         The principal occupation of, and other information about, each director
and executive  officer is set forth below as of December 31, 2003. All directors
and executive  officers have held their present  positions for five years unless
otherwise stated.

         Roger L.  Coltrin  has served the Bank as an  advisory  director  since
1989. In January 1996 he became a voting director. He was elected as Chairman of
the Board in 2000. Mr. Coltrin was a majority  stockholder of the Runyan Funeral
Home until 1997, and during 2000 he retired as the manager of such business.  He
is a member of the Past Mayors  Council,  the High School Site Committee and the
local  Lions  Club.  Mr.  Coltrin is also a member of the  Louisburg  Chamber of
Commerce.

         Larry V. Bailey has served the Bank since 1989 as  President  and Chief
Executive Officer. He is also a member of the Board of Directors. Mr. Bailey has
served as a  director  of the  Osawatomie  Chamber  of  Commerce  and was also a
director of the Miami County Economic Development Corporation.  Currently, he is
the Treasurer of the local Lions Club, a director of Osawatomie's  "Christmas in
October," a director of Greater Osawatomie,  Inc. and a director of Miami County
Community Foundation, Inc.

         James E. Breckenridge has been a director of the Bank since 1977. Since
January  1997,  Mr.  Breckenridge  has been  employed  by Thorn  Industries,  an
appliance, electronics and furniture store. Until January 1996, Mr. Breckenridge
was President and majority stockholder of Breck's Inc., a men's clothing store.

         Sherman W. Cole became a voting director of the Bank in 2000 and, prior
to that,  served as an advisory  director since 1992. Mr. Cole presently assists
on special  projects at the  Osawatomie  State  Hospital  where he retired  from
full-time  employment  after 33 years of  service.  Mr.  Cole is a past mayor of
Osawatomie and is active in many civic roles throughout Miami County.

         J. Darcy  Domoney has served the Bank as a director  since 1995 and was
Chairman of the Board for three years.  Mr. Domoney is a partner in the law firm
of Winkler, Domoney & Schultz. He is a member of the Paola Rotary Club and is on
the Rotary District Youth Exchange Committee.

         Donald V.  Meyer has been a  director  of the Bank  since  1989 and was
Chairman of the Board for four years.  He is a dentist  with a solo  practice in
Paola.

         Daniel G. Droste is a Senior Vice  President  and the  Treasurer of the
Bank.  He has been  employed  with the Bank since 1979.  Mr.  Droste is also the
Treasurer  and Scout  Master  for Boy Scout  Troop 100 and a member of the Paola
Sunrise Lions Club. He is also currently the Chairman of the Holy Trinity Church
Building  Committee and Co-Chairman of the Holy Trinity Church Development Team.
He has also  over the past  several  years  been an  active  participant  in the
"Christmas in October" program.

         Galen E.  Graham has served as an  executive  officer of the Bank since
1970. He is a Senior Vice President and the Secretary of the Bank.

Audit Committee

         The Audit Committee,  a standing committee of the Company,  consists of
Directors Breckenridge  (Chairman),  Coltrin and Meyer. All members of the Audit
Committee  have been  determined by the Board of Directors to be  independent as
such term is defined by the rules of the Nasdaq Stock  Market.  No member of the
Audit Committee is a financial expert.

                                       26

<PAGE>

Section 16(a) Beneficial Ownership Reporting Compliance

         Section  16(a) of the 1934 Act  requires  the  Company's  officers  and
directors,  and persons who own more than ten  percent of the Common  Stock,  to
file reports of ownership and changes in ownership of the Common Stock, on Forms
3, 4 and 5, with the Securities and Exchange  Commission  ("SEC") and to provide
copies of those Forms 3, 4 and 5 to the Company. The Company is not aware of any
beneficial  owner,  as defined under Section 16(a),  of more than ten percent of
its Common Stock.

         Based  upon a  review  of the  copies  of the  forms  furnished  to the
Company, or written representations from certain reporting persons that no Forms
5 were required, the Company believes that all Section 16(a) filing requirements
applicable  to its officers and  directors  were  complied  with during the 2003
fiscal year.

         The Company  has not yet  adopted a code of ethics that  applies to its
principal executive officers,  principal financial officer, principal accounting
officer or controller,  or persons performing  similar  functions,  since it has
been  focusing  its  efforts on  completing  the  pending  merger.  In the event
stockholders do not approve the pending merger,  the Company anticipate it would
adopt a code by the end of the current fiscal year.

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

         Summary Compensation Table. The following table sets forth the cash and
non-cash  compensation  awarded  to or earned by Larry V.  Bailey  for the three
years ended  December 31, 2003. No other  employee  earned in excess of $100,000
for the year ended December 31, 2003.

<TABLE>
<CAPTION>
                                                        Long Term Compensation
                                Annual Compensation            Awards
                                -------------------   -------------------------
                                                                    Securities
                                                       Restricted   Underlying
Name and                 Fiscal                        Stock         Options/      All Other
Principal Position        Year     Salary    Bonus     Award($)(1)   SARs(#)      Compensation(2)
------------------        ----     ------    -----     -----------   -------      ---------------
<S>                     <C>     <C>       <C>       <C>            <C>           <C>
Larry V. Bailey           2003    $158,100  $    --     $58,275        --             $117,420
  Director, President,    2002     155,000  $21,000        --          --               78,124
  and CEO                 2001     149,100   20,000        --          --               72,203
</TABLE>

--------------
(1)  Mr. Bailey was awarded 15,539 shares of restricted Common Stock in 1999. At
     December 31, 2003, Mr. Bailey held 3,108 shares of restricted  Common Stock
     with a market  value of $58,275  based on the closing  market  price of the
     Common  Stock  on  December  31,  2003 of  $18.75.  Dividends  are  paid on
     restricted  stock awarded under the RSP. Awards are earned at a rate of 20%
     per year beginning one year after the date of the award.
(2)  Includes  matching  contributions  of $4,648,  $3,667 and $3,500  under the
     401(k) Plan for 2003, 2002 and 2001, respectively. For 2003, 2002 and 2001,
     Mr. Bailey accrued $77,000, $50,581 and $42,400,  respectively, in benefits
     under the Supplemental  Executive  Retirement Plan. Also includes the award
     of 2,050, 1,864 and 1,814 shares under the ESOP during 2003, 2002 and 2001,
     respectively,  based upon the closing  market  price of the Common Stock on
     the date of the award.

         Employment Agreement. The Bank has entered into an employment agreement
with its President,  Larry V. Bailey. Mr. Bailey's current base salary under the
employment  agreement is $158,100 which includes fees paid to him as a director.
The employment  agreement has a term of three years. The agreement is terminable
by the Bank for "just cause" as defined in the agreement. If the Bank terminates
Mr.  Bailey  without just cause,  he will be entitled to a  continuation  of his
salary from the date of termination  through the remaining term of the agreement
but in no event for a period of less than  twenty-four  months.  The  employment
agreement  contains a provision  stating that in the event of the termination of
employment in connection  with any change in control of the Company,  Mr. Bailey
will be paid a lump sum amount equal

                                       27

<PAGE>

to 2.99 times his five year average  annual taxable cash  compensation.  If such
payment were to be made under the  agreement  as of December 31, 2003,  it would
equal  approximately  $572,136.  The  agreement  may be renewed  annually by the
Bank's Board of  Directors  upon a  determination  of  satisfactory  performance
within the Board's sole  discretion.  If Mr. Bailey shall become disabled during
the term of the agreement,  he shall continue to receive  payment of 100% of the
base  salary  for a period of 12  months  and 65% of such  base  salary  for the
remaining  term of such  agreement.  Such payments shall be reduced by any other
benefit payments made under other  disability  programs in effect for the Bank's
employees.

         Supplemental  Executive  Retirement  Plan.  The Bank has a supplemental
executive retirement plan ("SERP") for the benefit of its President, Mr. Bailey.
The SERP will  provide Mr.  Bailey  with a  supplemental  retirement  benefit in
addition to benefits  under the Pension Plan and the ESOP.  Under the SERP,  Mr.
Bailey's  retirement  pension  will  be  supplemented  by  the  crediting  of an
additional 15 years of service. The SERP will provide a retirement benefit equal
to 30% of final average  earnings at retirement after age 65, in addition to the
projected  benefit  of 36% of final  average  earnings  under the  Pension  Plan
(Pension Plan benefits are calculated based upon 2% times years of service times
Final Average Earnings). Benefits payable under the Pension Plan will be reduced
for retirement prior to age 65 based upon fewer years of service.  Additionally,
the SERP will reduce the Pension Plan reduction for  retirement  prior to age 65
from 3% per  year to 2% per  year.  Payments  under  the SERP  are  accrued  for
financial  reporting  purposes  during  the  period of  employment.  The SERP is
unfunded.  All  benefits  payable  under the SERP  would be paid from the Bank's
current assets.  There are no tax  consequences to either the participant or the
Bank related to the SERP prior to payment of  benefits.  Upon receipt of payment
of benefits,  the  participant  will recognize  taxable  ordinary  income in the
amount of such payments  received,  and the Bank will be entitled to recognize a
tax-deductible compensation expense at that time.

                                       28

<PAGE>

         The following table set forth  information  concerning  options granted
under the Option Plan.

<TABLE>
<CAPTION>

                                  AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                                            AND FY-END OPTION/SAR VALUES (1)
                                                               Number of
                                                              Securities          Value of
                                                              Underlying      Unexercised In-
                                                              Unexercised        The-Money
                                                            Options/SARs at   Options/SARs at
                                                           FY-End (#)(1)(2)   FY-End ($)(1)(3)
                    Shares Acquired                          Exercisable/       Exercisable/
         Name       on Exercise (#)   Value Realized ($)     Unexercisable     Unexercisable
         ----       ---------------   ------------------     -------------     -------------
<S>                   <C>                <C>              <C>              <C>
Larry V. Bailey           --                  --             31,077/7,770     $256,385/$64,103
</TABLE>

------------------
(1)  No Stock Appreciation Rights (SARs) are authorized under the Option Plan.
(2)  Includes options that are exercisable within 60 days of December 31, 2003.
(3)  Based upon an  exercise  price of $10.75  per share and the Common  Stock's
     closing  market price of $18.75 as of December 31, 2003.  Such options,  by
     their terms, are first  exercisable at a rate of 20% one year following the
     date of the award of the option and 20% per year on the anniversary date of
     the date of the award  thereafter,  but in no event  shall  such  option be
     exercisable more than ten years after the effective date of award.

Director Compensation

         Each director  (including the Chairman of the Board) receives a monthly
fee of $1,000.  Total  aggregate  fees paid to the  directors for the year ended
December 31, 2003 were $60,000.

         Stock  Awards.  On February 2, 1999,  each  non-employee  director  was
awarded options to purchase 7,769 shares of Common Stock at an exercise price of
$10.75.  In  addition,  on February 2, 1999,  each non-  employee  director  was
awarded 3,107 shares of restricted Common Stock under the RSP. These awards vest
at the rate of 20% a year, starting one year after the date of the award.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

         (a) Security  Ownership of Certain  Beneficial  Owners.  The  following
table sets forth,  as of December 31, 2003,  persons or groups who own more than
5% of the Common Stock and the ownership of all executive officers and directors
of the Company as a group.  Other than as noted  below,  management  knows of no
person or group that owns more than 5% of the outstanding shares of Common Stock
at December  31,  2003.  Unless  otherwise  indicated,  the address of each such
beneficial owner is 600 Main Street, Osawatomie, Kansas 66064.

                                       29

<PAGE>

<TABLE>
<CAPTION>
                                                                         Percent of Shares
                                             Amount and Nature of         of Common Stock
Name and Address of Beneficial Owner         Beneficial Ownership           Outstanding
------------------------------------         --------------------           -----------

<S>                                             <C>                         <C>
First Kansas Federal Savings Bank                  122,466                     13.5%
Employee Stock Ownership Plan (the "ESOP")
600 Main Street
Osawatomie, Kansas 66064 (1)

Sandler O'Neill Asset Management, LLC               90,000                      9.9%
712 Fifth Avenue
New York, New York 10019 (2)

Larry V. Bailey                                     86,029(3)                   9.5%

First Manhattan Co.                                 68,900(4)                   7.6%
437 Madison Avenue
New York, NY  10022
</TABLE>

----------------
(1)  The  ESOP  purchased  such  shares  for  the  exclusive   benefit  of  plan
     participants  with funds borrowed from First Kansas.  These shares are held
     in a suspense account and are allocated among ESOP participants annually on
     the basis of  compensation  as the ESOP debt is repaid.  The ESOP Committee
     consisting  of certain  non-employee  directors of the board  instructs the
     ESOP Trustee  regarding  investment  of ESOP plan assets.  The ESOP Trustee
     must vote all shares  allocated to  participant  accounts under the ESOP as
     directed  by  participants.  Unallocated  shares,  and  shares for which no
     timely  voting  direction  is  received,  are voted by the ESOP  Trustee as
     directed by the ESOP Committee.
(2)  Number of shares is based  upon the  named  entity's  confirmation  of such
     amount, and such information  supercedes the ownership information reported
     in an amended  Schedule 13D filed with the SEC, on July 7, 2000,  on behalf
     of itself, Malta Partners, L.P., Malta Hedge Fund, L.P., Malta Partners II,
     L.P., Malta Hedge Fund II, L.P., Malta Offshore,  Ltd, SOAM Holdings,  LLC,
     and Mr. Terry Maltese.
(3)  Includes  38,848  shares of common stock which may be acquired  pursuant to
     the exercise of options within 60 days of December 31, 2003.
(4)  Number of shares is based upon an amended  Schedule  13G filed with the SEC
     on February  13, 2003,  on behalf of the named  entity by Neal K.  Stearns,
     General Partner.

                                       30

<PAGE>

         (b) Security  Ownership of  Management.  The following  table  provides
information as of December 31, 2003 concerning ownership of the Company's Common
Stock  (which  constitutes  its only  class of  equity  securities)  each of its
directors, the Named Executive Officers and all executive officers and directors
as a group. Each person listed has sole voting and investment power with respect
to the shares listed across from his name except as noted otherwise.


                                                   Beneficial Ownership
                                          --------------------------------------
                                                              Percent of Shares
Name                                       Number of Shares      Outstanding
----                                       ----------------      -----------

James E. Breckenridge                          10,876(1)             1.2%
Roger L. Coltrin                               40,156(1)             4.4%
J. Darcy Domoney                               14,896(1)             1.6%
Sherman W. Cole                                12,876(1)             1.4%
Donald V. Meyer                                18,876(1)             2.1%
Larry V. Bailey                                86,029(2)             9.5%
All directors and officers of the Company     251,577               27.7%
       as a group (8 persons) (3)

---------------
(1)  Includes 7,769 shares of common stock which may be acquired pursuant to the
     exercise of options within 60 days of December 31, 2003.
(2)  Includes  38,848  shares of common stock which may be acquired  pursuant to
     the exercise of options within 60 days of December 31, 2003.
(3)  Includes  shares of common  stock  held  directly  as well as by spouses or
     minor children,  in trust and other indirect  ownership,  over which shares
     the  individuals  effectively  exercise sole voting and  investment  power,
     unless  otherwise  indicated.  Includes 116,541 shares of common stock that
     may be  acquired  pursuant  to the  exercise  of options  within 60 days of
     December 31, 2003.  Excludes 103,107 shares held by the ESOP 122,466 shares
     less 18,789  shares  allocated to executive  officers)  over which  certain
     non-employee  directors,  as trustees to the ESOP,  exercise  shared voting
     power.  Excludes 9,332 unvested or unawarded shares of common stock held by
     the Restricted Stock Plan ("RSP") over which certain directors,  as members
     of the RSP  Committee  and as RSP Trustees,  exercise  voting  power.  Such
     individuals  disclaim beneficial ownership with respect to such shares held
     by the ESOP and the RSP.


         (c) Changes in Control.  On November 13, 2003, the Company entered into
an Agreement and Plan of Merger with Landmark  Bancorp,  Inc. which provides for
the  acquisition  of the Company by Landmark.  The  acquisition  is subject to a
number of  conditions  including  approval  of  shareholders  and receipt of all
required regulatory approvals.

                                       31

<PAGE>

         (d) Securities Authorized for Issuance Under Equity Compensation Plans

                 Set forth below is  information  as of  December  31, 2003 with
respect to  compensation  plans under which equity  securities of the Registrant
are authorized for issuance.

<TABLE>
<CAPTION>
                                                  EQUITY COMPENSATION PLAN INFORMATION
                                                    (a)                     (b)                   (c)
                                                                                           Number of securities
                                                                                           remaining available
                                            Number of securities       Weighted-average     for future issuance
                                             to be issued upon         exercise price of       under equity
                                                exercise of               outstanding       compensation plans
                                            outstanding options,       options, warrants  (excluding securities
                                            warrants and rights           and rights       reflected in column (a))
                                            -------------------           ----------       ------------------------
<S>                                            <C>                       <C>                    <C>
Equity compensation plans
  approved by shareholders
First Kansas Financial Corporation
    1999 Stock Option Plan..............          132,079                   10.75                  23,314
First Kansas Federal Savings Bank
    1999 Restricted Stock Plan..........              N/A                     N/A                     N/A
Equity compensation plans
  not approved by shareholders                        N/A                     N/A                     N/A
                                                  -------                  ------                  ------
     TOTAL.............................           132,079                  $10.75                  23,314
                                                  =======                  ======                  ======
</TABLE>


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

         The Bank,  like many financial  institutions,  has followed a policy of
granting various types of loans to officers,  directors,  and employees. As part
of the employee and director benefit package,  full-time and qualified part-time
employees  and directors of the Company are eligible for  preferential  interest
rates on  certain  adjustable-rate  residential  mortgage  loans and  fixed-rate
consumer  loans made by the Bank.  While  such loans are made with a  discounted
interest rate based on the greater of the Bank's cost of funds or the Applicable
Federal Rate, they are  underwritten  in accordance with the Bank's  established
underwriting  guidelines.  All other  loans  made by the Bank to  employees  and
directors are on the same terms and conditions as those available to the general
public.

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

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

         1.      The  consolidated  balance  sheets  of First  Kansas  Financial
                 Corporation  as of  December  31, 2003 and 2002 and the related
                 consolidated  statements of earnings,  stockholders' equity and
                 comprehensive  income, and cash flows for the years then ended,
                 together with the related notes and the  independent  auditors'
                 report of KPMG LLP, independent certified public accountants.

         2.      Schedules omitted as they are not applicable.

                                       32

<PAGE>

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

                 (a) List of Exhibits:
<TABLE>
<CAPTION>
                <S>        <C>
                     3(i)     Articles of Incorporation of First Kansas Financial Corporation *
                     3(ii)    Bylaws of First Kansas Financial Corporation *
                     10.1     Employment Agreement with Larry V. Bailey **
                     10.2     First Kansas Financial Corporation 1999 Stock Option Plan***
                     10.3     First Kansas Financial Corporation 1999 Restricted Stock Plan***
                     21       Subsidiaries of the Registrant (See "Item 1. Description of Business)
                     23       Consent of KPMG LLP
                     31.1     Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
                     31.2     Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
                     32       Rule 13a-14(b) Certification of Chief Executive Officer and Chief
                              Financial Officer
</TABLE>
               ---------------
               *    Incorporated  by  reference  to the  Company's  Registration
                    Statement  on Form  SB-2  (File  No.  333-  48093)  declared
                    effective by the SEC on May 8, 1998.
               **   Incorporated  by reference to the Company's  Form 10-KSB for
                    the fiscal year ended December 31, 1998.
               ***  Incorporated  by reference to the Company's  proxy statement
                    dated December 30, 1998 (File No. 000-24037).


               (b) Reports on Form 8-K:

                    The Company  filed a Form 8-K with the SEC on  November  14,
                    2003 (Date of Report: November 13, 2003) to announce signing
                    an agreement and plan of merger with Landmark Bancorp,  Inc.
                    (Items 5 and 7)

Item 14.  Principal Accountant Fees and Services
--------  --------------------------------------

         Audit  Fees.  The  aggregate  fees  billed  for  professional  services
rendered  by the  independent  auditors  for the audit of the  Company's  annual
financial  statements  and for the  review of the  financial  statements  in the
Company's  Form 10-QSB  filings for the years ended  December  31, 2003 and 2002
were $44,250 and $37,935, respectively.

         Audit-Related  Fees.  No other  audit-related  fees were  billed to the
Company other than those identified under Audit Fees.

         Tax Fees. The aggregate fees billed for professional  services rendered
by the independent auditors for tax compliance,  tax advice and tax planning for
the  years  ended   December  31,  2003  and  2002  were  $21,370  and  $16,280,
respectively.  Such tax-related  services  consisted in both years of tax return
preparation and consultation regarding minimizing the Company's income taxes.

         All Other Fees.  For the years ended  December  31, 2003 and 2002,  the
Company's  independent  auditor did not provide any  services or products  other
than those listed under the captions  "Audit Fees,"  "Audit-Related  Fees",  and
"Tax Fees."

         It is the  policy of the  Audit  Committee  to have all audit  services
pre-approved by the Audit  Committee.  All of the services listed above for 2003
and 2002  were  approved  by the  audit  committee  prior to the  service  being
rendered.

                                       33

<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended,  the registrant has duly caused this report to
be signed on its behalf by the  undersigned,  thereunto  duly  authorized  as of
March 26, 2004.

                                      FIRST KANSAS FINANCIAL CORPORATION


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


         Pursuant to the requirement of the Securities  Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated as of March 26, 2004.



/s/Roger L. Coltrin                              /s/James E. Breckenridge
-------------------------------                  -------------------------------
Roger L. Coltrin                                 James E. Breckenridge
Chairman                                         Director

/s/Sherman W. Cole                               /s/J. Darcy Domoney
-------------------------------                  -------------------------------
Sherman W. Cole                                  J. Darcy Domoney
Director                                         Director

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

/s/James J. Casaert
-------------------------------
James J. Casaert
Vice President and Treasurer
(Principal Accounting Officer)