FIRST KANSAS FINANCIAL CORPORATION


                       2001 ANNUAL REPORT TO STOCKHOLDERS









<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                  ANNUAL REPORT







                                TABLE OF CONTENTS

                                                                    Page
                                                                    ----

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

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

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

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

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

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

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

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

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

                                        i

<PAGE>


                 [First Kansas Financial Corporation letterhead]





To Our Stockholders:

         On behalf of our Board of  Directors  and  employees,  I am  pleased to
enclose for your review the 2001 Annual Report to  Stockholders  of First Kansas
Financial Corporation.

         At December 31, 2001, our assets totaled $152.7 million, as compared to
$150.0 million at December 31, 2000.  Stockholders'  equity was $16.77 per share
at December 31, 2001, as compared to stockholders' equity of $15.49 per share at
December 31, 2000.

         For the fiscal year ended December 31, 2001, we earned $637,000 or $.64
per diluted share, as compared to net income of $1.1 million, or $.96 per share,
for the fiscal year ended December 31, 2000.

         As always, we remain dedicated to enhancing  stockholder value. To this
end, during 2001 we repurchased  111,587 shares of our stock at an average price
of $14.56 per share,  which was  accretive to book value and earnings per share.
We thank you for your  investment  in, and  continued  support of,  First Kansas
Financial Corporation.

                                       Sincerely,


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

                                        1

<PAGE>



Corporate Profile

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

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

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

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

Stock Price Information

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


                                       2
<PAGE>


                                       High           Low         Dividends
                                       ----           ---         ---------
2000
First Quarter....................     $10.78          $8.50       $.05/share
Second Quarter...................     $10.75          $9.50       $.05/share
Third Quarter....................     $12.56         $11.25       $.05/share
Fourth Quarter...................     $12.50         $11.31       $.05/share

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

         The number of  shareholders  of record of common  stock as of March 11,
2002 was  approximately  287.  This does not  reflect  the  number of persons or
entities who held stock in nominee or "street"  name through  various  brokerage
firms.  At March 11, 2002,  there were 922,568  shares of the  Company's  common
stock outstanding.

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

Selected Financial Ratios and Other Data


                                           At or For the Years Ended
                                                  December 31,
                                          -------------------------

                                                 2001      2000
                                                 ----      ----
Return on average assets..................       0.42%     0.74%
Return on average equity..................       3.72      6.04
Average equity to average assets ratios...      11.36     12.27
Equity to assets at period end............      11.27     11.74
Net interest rate spread..................       1.82      2.28
Yield on average interest-earning assets..       6.51      7.02
Non-performing loans to total assets......        .01       .01
Allowance for loan loss to total loans....        .45       .40

                                       3
<PAGE>

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


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

General

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

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

Market Risk Analysis

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

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

                                        4
<PAGE>

         Quantitative  Analysis.  In order to encourage savings  associations to
reduce  their  interest  rate  risk,  the OTS  adopted a rule  incorporating  an
interest rate risk ("IRR") component into the risk- based capital rules. The IRR
component is a dollar  amount that will be deducted  from total  capital for the
purpose of calculating an institution's  risk-based  capital  requirement and is
measured  in terms of the  sensitivity  of its net  portfolio  value  ("NPV") to
changes in interest rates.  NPV is the difference  between incoming and outgoing
discounted  cash  flows  from  assets,  liabilities,   and  off-  balance  sheet
contracts. An institution's IRR is measured as the change to its NPV as a result
of a  hypothetical  200 basis point ("bp") change in market  interest  rates.  A
resulting change in NPV of more than 2% of the estimated  present value of total
assets  ("PV") will  require the  institution  to deduct from its capital 50% of
that  excess  change.  The rules  provide  that the OTS will  calculate  the IRR
component  quarterly  for each  institution.  Based on the Bank's asset size and
risk-based capital, the Bank has been informed by the OTS that it is exempt from
this rule. Nevertheless, the following table presents the Bank's NPV at December
31, 2001, as calculated by the OTS, based on quarterly  information  voluntarily
provided  to the OTS.  The -300bp  scenario  is not shown due to the current low
interest rate environment.

<TABLE>
<CAPTION>
       Changes                    Net Portfolio Value
      in Market           ----------------------------------
    Interest Rates         $ Amount   $ Change      % Change    NPV Ratio(1)
    --------------         --------   --------      --------    ------------
    (basis points)       (Dollars in Thousands)
<S>   <C>              <C>         <C>               <C>        <C>
        + 300             $  9,075    $-8,013          -47%        6.28%
        + 200              $11,998    $-5,091          -30%        8.06%
        + 100              $14,714    $-2,375          -14%        9.61%
            0              $17,088                                10.85%
        - 100              $17,588    $   500            3%       10.96%
        - 200              $16,598    $  -490           -3%       10.21%
</TABLE>


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

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

                                        5
<PAGE>

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

Financial Condition

         Total assets  increased  $2.6 million,  or 1.8%,  to $152.7  million at
December 31, 2001 from $150.0  million at December  31,  2000.  The increase was
primarily  comprised of an increase of $5.8  million,  or 92.0%,  in  investment
securities and a $5.0 million, or 86.9%,  increase in cash and cash equivalents,
partially  offset by  decreases of $4.7  million,  or 7.4%,  in  mortgage-backed
securities and $4.3 million, or 6.7%, in loans receivable, net. The decreases in
mortgage-back   securities   and  loans   arose   primarily   due  to  sales  of
mortgage-backed  securities,  increased repayments of mortgage-backed securities
and loans in relation to purchases of  mortgage-backed  securities and loans and
origination of loans. Cash flows from such decreases were invested in investment
securities and cash and cash equivalents.

         Total liabilities increased $3.0 million, or 2.3%, to $135.5 million at
December 31, 2001 from $132.4  million at December  31,  2000.  The increase was
primarily attributable to a $2.8 million, or 3.5%, increase in deposits.

         Total  stockholders'  equity  decreased  $410,000,  or  2.3%,  to $17.2
million at  December  31,  2001 from $17.6  million at December  31,  2000.  The
decrease  was  primarily  attributable  to a $1.6  million  increase in treasury
stock, at cost, attributable to our stock repurchases during the year, partially
offset by a $426,000  increase in retained  earnings,  reflecting  net income of
$637,000  for 2001 and  $211,000 in cash  dividends  paid on common stock during
2001.

                                        6
<PAGE>

Average Balance Sheet

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

<TABLE>
<CAPTION>
                                                                                  Year Ended December 31,
                                                     -------------------------------------------------------------------------------
                                                                      2001                                      2000
                                                     --------------------------------------     ------------------------------------
                                                       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)............................      $ 60,983      $4,615        7.57 %        $  60,375   $    4,529      7.50%
  Investment securities..........................         9,061         522        5.76 %            6,298          401      6.37%
  Mortgage-backed securities.....................        63,206       3,798         6.01%           72,624        4,832      6.65%
  Interest-bearing deposits......................         9,478         343         3.62%            1,060           69      6.51%
  FHLB stock.....................................         2,650         179         6.75%            2,467          198      8.03%
                                                       --------      ------                      ---------   ----------
     Total interest-earning assets(1)............       145,378       9,457         6.51%          142,824       10,029      7.02%
                                                                     ------       ------                     ----------    ------
Noninterest-earning assets.......................         5,495                                      6,365
                                                       --------                                   --------
     Total assets................................      $150,873                                   $149,189
                                                       ========                                   ========
Interest-bearing liabilities:
  NOW and investment deposits....................      $ 23,627         478         2.02%         $ 24,142          559      2.32%
  Savings and certificate accounts...............        58,926       3,006         5.10%           57,748        2,936      5.08%
  FHLB borrowings................................        50,000       2,724         5.45%           47,966        2,657      5.54%
                                                       --------      ------                      ---------   ----------
     Total interest-bearing liabilities..........       132,553       6,208         4.68%          129,856        6,152      4.74%
                                                                     ------       ------                     ----------    ------
Noninterest-bearing liabilities:.................         1,182                                      1,028
                                                       --------                                   --------
  Total liabilities..............................       133,735                                    130,884
                                                       --------                                   --------
Stockholders' Equity.............................        17,138                                     18,305
                                                       --------                                   --------
     Total liabilities and stockholders' equity..      $150,873                                   $149,189
                                                       ========                                   ========
Net interest income..............................                    $3,249                                   $   3,877
                                                                     ======                                   =========
Net interest rate spread(2)......................                                   1.82%                                    2.28%
                                                                                  ======                                   ======
Net earning assets...............................      $ 12,825                                   $ 12,968
                                                       ========                                   ========
Net yield on interest-earning assets(3)..........                                   2.23%                                    2.71%
                                                                                  ======                                   ======
Average interest-earning assets to average
  interest-bearing liabilities...................                                 109.68%                                  109.99%
                                                                                  ======                                   ======
</TABLE>

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

                                        7

<PAGE>

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


<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                          ----------------------------------------
                                                     2001 vs. 2000
                                          ----------------------------------------
                                                   Increase/(Decrease)
                                                          Due to
                                          ----------------------------------------
                                                                Rate/
                                          Volume      Rate      Volume      Total
                                          -------    -------    -------    -------
                                                       (In thousands)
<S>                                     <C>        <C>        <C>        <C>
Interest-earning assets:
  Loans receivable(1)...............      $    46    $    40    $     0    $    86
  Investment securities.............          176        (38)       (17)       121
  Mortgage-backed securities........         (627)      (468)        61     (1,034)
  Interest-bearing deposits.........          548        (31)      (243)       274
  FHLB stock                                   15        (31)        (3)       (19)
                                          -------    -------    -------    -------
     Total interest-earning assets..          158       (528)      (202)      (572)
                                          -------    -------    -------    -------
Interest-bearing liabilities:
  NOW and money market deposits.....          (12)       (71)         2        (81)
  Savings and certificate accounts..           60         10          0         70
  FHLB borrowings...................          113        (44)        (2)        67
                                          -------    -------    -------    -------
     Total interest-bearing
       liabilities..................          161       (105)        (0)        56
                                          -------    -------    -------    -------
Increase in net interest income.....      $    (3)   $  (423)   $  (202)   $  (628)
                                          =======    =======    =======    =======
</TABLE>

                                        8

<PAGE>

Results of Operations for the Years Ended December 31, 2001 and 2000

         Net  Income.  Our net  income  decreased  $465,000  for the year  ended
December  31, 2001 to  $637,000  as compared to $1.1  million for the year ended
December 31, 2000. This decrease was primarily  attributable  to a $628,000,  or
16.2%,  decrease in net  interest  income and a $161,000,  or 5.1%,  increase in
noninterest  expense,  offset by a  $288,000,  or 46.9%,  decrease in income tax
expense.

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

         Our net interest income decreased  $628,000,  or 16.2%, to $3.3 million
for the year ended  December  31,  2001  compared to $3.9  million in 2000.  The
decrease  in net  interest  income was due to a 51 basis  point  decrease in the
average  interest  rate  earned for 2001,  partially  offset by a 6 basis  point
decrease in the average interest rate paid for 2001. The 51 basis point decrease
in the average  interest  rate earned for 2001 was primarily due to the decrease
in the  average  rate earned on  investment  securities  of 61 basis  points and
mortgage-backed  securities of 64 basis points,  as well as the  reinvestment of
cash into  interest-earning  deposits.  The average balance of  interest-earning
deposits increased from $1.1 million in 2000 to $9.5 million in 2001,  resulting
in a larger portion of  interest-earning  assets being invested in such deposits
in 2001.  Such deposits  generally  earn a lower yield than other  categories of
interest-earning assets.

         Our interest expense  increased  primarily as the result of an increase
in the average  balance of FHLB  borrowings  from $48.0 million in 2000 to $50.0
million in 2001 as well as an increase in the average  balance of deposits  from
$81.9  million  in 2000 to  $82.6  million  in  2001,  partially  offset  by the
aforementioned   decrease   in  the  average   rate  paid  on   interest-bearing
liabilities.

         As a result of the  matters  discussed  above,  our net  interest  rate
spread  decreased  from 2.28% for the year ended  December 31, 2000 to 1.82% for
the year ended December 31, 2001.  Given a continuation in the present  interest
rate environment,  management does not expect any significant  change in its net
interest rate spread from the results  experienced  for the year ended  December
31, 2001.

         Provision  for Loan  Losses.  Our  provision  for loan  loss  decreased
$15,000 from $36,000 in 2000 to $21,000 in 2001 due to a lesser amount  required
to maintain an adequate allowance for loan losses. The allowance for loan losses
was $268,000,  or 0.45%, of net loans  outstanding at December 31, 2001 compared
to $256,000, or 0.40%, of net loans outstanding at December 31, 2000.

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

                                        9
<PAGE>

economic  conditions.  Management  believes  the  allowance  for loan  losses is
adequate to provide for probable 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 $21,000, or 2.0%,
from  $1,041,000 in 2000 to $1,062,000 in 2001. This increase in our noninterest
income was due to a $147,000  increase  in our  deposit  account  service  fees,
offset  by our loss on sale of  mortgage-backed  securities  of  $119,000  which
occurred in the second quarter of 2001.

         Noninterest  expense.  Our noninterest expense increased  $161,000,  or
5.1%, from $3,166,000 in 2000 to $3,327,000 in 2001. The increase in noninterest
expense was primarily due to an increase of $53,000 in ESOP share value, $36,000
in compensation and $8,000 in employee medical insurance. Occupancy expense also
increased  by $45,000  reflecting  updating  cost for  facilities  and  computer
equipment.  These increases were partially  offset by an $18,000 decrease in ATM
expense.

         Income Tax  Expense.  Our income tax expense  decreased  $288,000  from
$614,000 in 2000 to $326,000 in 2001. Our effective tax rate was 33.9% and 35.8%
for the years ended December 31, 2001 and 2000, respectively.

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.  We are  required  by federal  regulations  to
maintain adequate liquidity for our safe and sound operation.

         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, 2001 was  $1,543,000 as compared to $1,590,000  for the year
ended December 31, 2000.

         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,
2001 totaled $2.4  million,  an increase of $8.6 million from December 31, 2000.
The change was primarily due to the sale of  mortgage-backed  securities in 2001
of $13.4  million  compared to no sales in 2000,  a decrease in loans  purchased
from  $14.3  million  in 2000 to $2.6  million  in  2001,  an  increase  in loan
repayments  in relation  to loan  originations,  and an  increase  of  principal
repayments  on  mortgage-backed  securities  from $10.8 million in 2000 to $21.8
million

                                       10

<PAGE>

in 2001. This was partially offset by the purchase of investment  securities and
mortgage-backed  securities  of  $41.0  million  in  2001  compared  to no  such
purchases in 2000.

         Net cash provided by our financing activities totaled $987,000 in 2001,
a decrease of $5.2 million from 2000.  The change was  primarily  due to the net
FHLB borrowings $9.5 million in 2000 compared to no borrowing  activity in 2001.
This was offset by a $3.7  million  increase in deposit  cash flows from 2000 to
2001 and a decrease in treasury stock purchased of $639,000 from 2000 to 2001.

Impact of Inflation and Changing Prices

The  consolidated  financial  statements  of  the  Company  and  notes  thereto,
presented  elsewhere  herein,  have been prepared in accordance  with accounting
principles   generally  accepted  in  the  United  States,   which  require  the
measurement of financial  position and operating  results in terms of historical
dollars without  considering the change in the relative  purchasing power of the
money over time due to  inflation.  The impact of  inflation is reflected in the
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.

                                       11

<PAGE>


KPMG

        1000 Walnut, Suite 1600
        P.O. Box 13127
        Kansas City, MO  64199





                          Independent Auditors' Report



The Board of Directors
First Kansas Financial Corporation:



We have audited the  accompanying  consolidated  balance  sheets of First Kansas
Financial  Corporation  and subsidiary (the Company) as of December 31, 2001 and
2000, and the related consolidated statements of earnings,  stockholders' equity
and  comprehensive  income,  and cash  flows for the  years  then  ended.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position  of First  Kansas
Financial  Corporation  and subsidiary as of December 31, 2001 and 2000, and the
results of their  operations  and their cash flows for the years then ended,  in
conformity with accounting principles generally accepted in the United States of
America.


                                        /s/KPMG LLP


January 25, 2002



                                      F-1
<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                           Consolidated Balance Sheets

                           December 31, 2001 and 2000
                      (In thousands, except per share data)

<TABLE>
<CAPTION>

                                               Assets                                                      2001          2000
                                                                                                        -----------   -----------
<S>                             <C>                                                                 <C>               <C>
Cash and cash equivalents (note 2)                                                                    $     10,694         5,723
Investment securities available-for-sale, at fair value (note 3)                                            12,139             -
Investment securities held-to-maturity, at cost (fair value
    of $6,194 (note 3)                                                                                           -         6,322
Mortgage-backed securities available-for-sale, at fair value (note 4)                                       41,819        18,051
Mortgage-backed securities held-to-maturity, at cost (fair
    (value of $21,152 and $48,897, respectively) (note 4)                                                   21,288        49,751
Loans receivable, net (note 5)                                                                              59,699        64,001
Stock in Federal Home Loan Bank (FHLB) of Topeka, at cost                                                    2,650         2,650
Premises and equipment, net (note 6)                                                                         2,288         2,130
Real estate held for development (note 7)                                                                      357           357
Accrued interest receivable:
    Investment and mortgage-backed securities                                                                  482           456
    Loans receivable                                                                                           269           316
Cash surrender value of bank owned life insurance                                                              750             -
Prepaid expenses and other assets                                                                              231           283
                                                                                                        -----------   -----------
             Total assets                                                                             $    152,666       150,040
                                                                                                        ===========   ===========
                      Liabilities and Stockholders' Equity

Liabilities:
    Deposits (note 9)                                                                                 $     84,323        81,484
    Advances from borrowers for property taxes and insurance                                                   179           196
    Borrowings from FHLB of Topeka (note 10)                                                                50,000        50,000
    Accrued interest payable and other liabilities (note 11)                                                   957           743
                                                                                                        -----------   -----------
             Total liabilities                                                                             135,459       132,423
                                                                                                        -----------   -----------
Stockholders' equity (note 12):
    Preferred stock, $.10 par value; 2,000,000 shares authorized, none issued                                    -             -
    Common stock, $.10 par value; 8,000,000 shares authorized, 1,553,938
      shares issued                                                                                            155           155
    Additional paid-in capital                                                                              14,920        14,867
    Treasury stock, 527,977 and 416,390 shares, respectively, at cost                                       (6,382)       (4,758)
    Retained earnings                                                                                        9,565         9,139
    Unearned compensation                                                                                   (1,150)       (1,387)
    Accumulated other comprehensive income (loss)                                                               99          (399)
                                                                                                        -----------   -----------
             Total stockholders' equity                                                                     17,207        17,617

Commitments (note 5)
                                                                                                        -----------   -----------
             Total liabilities and stockholders' equity                                               $    152,666       150,040
                                                                                                        ===========   ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-2

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

                       Consolidated Statements of Earnings

                     Years ended December 31, 2001 and 2000
                      (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                      2001       2000
                                                                    -------    -------
<S>                                                               <C>       <C>
Interest income:
    Loans                                                           $ 4,615      4,529
    Investment securities                                               522        401
    Mortgage-backed securities                                        3,798      4,832
    Interest-bearing deposits                                           343         69
    Dividends on FHLB stock                                             179        198
                                                                    -------    -------
             Total interest income                                    9,457     10,029
                                                                    -------    -------
Interest expense:
    Deposits (note 9)                                                 3,484      3,495
    Borrowings                                                        2,724      2,657
                                                                    -------    -------
             Total interest expense                                   6,208      6,152
                                                                    -------    -------
             Net interest income                                      3,249      3,877

Provision for loan losses (note 5)                                       21         36
                                                                    -------    -------
             Net interest income after provision for loan losses      3,228      3,841
                                                                    -------    -------
Noninterest income:
    Deposit account service fees                                      1,011        864
    Loss on sale of mortgage-backed securities available-for-sale      (119)         -
    Other                                                               170        177
                                                                    -------    -------
             Total noninterest income                                 1,062      1,041
                                                                    -------    -------
Noninterest expense:
    Compensation and benefits (note 12)                               1,786      1,678
    Occupancy and equipment                                             447        402
    Federal deposit insurance premiums and assessments                   57         56
    Data processing                                                     222        205
    Deposit account processing fees                                     240        213
    Amortization of premium on deposits assumed                          61         61
    Supplies expense                                                     98         87
    Advertising                                                         122        128
    Other                                                               294        336
                                                                    -------    -------
             Total noninterest expense                                3,327      3,166
                                                                    -------    -------
             Earnings before income tax expense                         963      1,716

Income tax expense (note 11)                                            326        614
                                                                    -------    -------

             Net earnings                                           $   637      1,102
                                                                    =======    =======

Net earnings per share - basic                                      $  0.66       0.96
Net earnings per share - diluted                                       0.64       0.96
</TABLE>


See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>

<TABLE>
<CAPTION>

                                                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                                                               OSAWATOMIE, KANSAS

                                    Consolidated Statements of Stockholders' Equity and Comprehensive Income

                                                     Years ended December 31, 2001 and 2000
                                                      (In thousands, except per share data)

                                                                                                                  Accumu-
                                                                                                                  lated
                                                                                                                  other
                                                              Addi-                                               compre-
                                                              tional                                Unearned      hensive
                                      Preferred   Common      paid-in    Treasury     Retained       compen-      income
                                        stock     stock       capital     stock       earnings       sation       (loss)     Total
                                      ---------   -------     ---------  --------     --------      ---------    --------  --------
<S>                                 <C>             <C>      <C>         <C>          <C>          <C>           <C>       <C>
Balance, December 31, 1999            $       -       155      14,842      (2,495)       8,289         (1,623)       (295)   18,873

Net earnings                                                                             1,102                                1,102
Change in unrealized loss
    on available-for-sale
    securities, net of tax of $55                                                                                    (104)     (104)
                                                                                                                           ---------
             Total comprehensive
               income                                                                                                           998
                                                                                                                           ---------
Purchase of 194,761 shares of
    stock for the treasury                    -        -              -    (2,263)           -              -           -    (2,263)
Allocation of ESOP shares                     -        -             25         -            -            124           -       149
Amortization of RSP shares                    -        -              -         -            -            112           -       112
Cash dividends paid
    ($0.20 per share)                         -        -              -         -         (252)             -           -      (252)
                                      ---------   -------     ---------  --------     --------      ---------    --------  --------
Balance, December 31, 2000                    -       155        14,867    (4,758)       9,139         (1,387)       (399)   17,617

Net earnings                                                                               637                                  637
Change in unrealized gain (loss)
    on available-for-sale
    securities arising during
    the period, net of tax of $257                                                                                    498       498
                                                                                                                           ---------
             Total comprehensive
               income                                                                                                         1,135
                                                                                                                           ---------
Purchase of 111,587 shares of
    stock for the treasury                    -        -              -    (1,624)           -              -           -    (1,624)
Allocation of ESOP shares                     -        -             53         -            -            125           -       178
Amortization of RSP shares                    -        -              -         -            -            112           -       112
Cash dividends paid
    ($0.20 per share)                         -        -              -         -         (211)             -           -      (211)
                                      ---------   -------     ---------  --------     --------      ---------    --------  --------
Balance, December 31, 2001            $       -       155        14,920    (6,382)       9,565         (1,150)         99    17,207
                                      =========   =======     =========  ========     ========      =========    ========  ========
</TABLE>


See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                      Consolidated Statements of Cash Flows

                     Years ended December 31, 2001 and 2000
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                 2001        2000
                                                                              --------    --------
<S>                                                                         <C>          <C>
Cash flows from operating activities:
    Net earnings                                                              $    637       1,102
    Adjustments to reconcile net earnings to net cash provided by operating
      activities:
        Provision for loan losses                                                   21          36
        Depreciation                                                               209         185
        Amortization of premium on deposits assumed                                 61          61
        Amortization of loan fees and premiums                                      35          29
        Accretion of discounts and amortization of premiums on
           investment and mortgage-backed securities, net                          202         (69)
        Loss on sale of mortgage-backed securities available-for-sale              119           -
        Allocation of ESOP shares and amortization of RSP shares                   290         261
        Change in accrued interest receivable, prepaids, and other assets           12         (98)
        Change in accrued interest payable and other liabilities                   (43)         83
                                                                              --------    --------
             Net cash provided by operating activities                           1,543       1,590
                                                                              --------    --------
Cash flows from investing activities:
    Loan repayments net of originations                                          6,842      (1,986)
    Loans purchased                                                             (2,596)    (14,347)
    Maturities/calls of investment securities held-to-maturity                       -          40
    Principal repayments and maturities of mortgage-backed securities
      available-for-sale                                                        16,471       2,576
    Principal repayments and maturities of mortgage-backed securities
      held-to-maturity                                                           5,311       8,192
    Purchases of investment securities available-for-sale                      (10,925)          -
    Purchases of mortgage-backed securities available-for-sale                 (30,047)          -
    Proceeds from sale of mortgage-backed securities available-for-sale         13,434           -
    Maturities/calls of investment securities available-for-sale                 5,068           -
    Purchase of FHLB stock                                                           -        (536)
    Investment in cash surrender value of bank owned life insurance               (750)          -
    Additions of premises and equipment, net                                      (367)       (102)
                                                                              --------    --------
             Net cash provided by (used in) investing activities              $  2,441      (6,163)
                                                                              --------    --------
</TABLE>

                                       F-5
<PAGE>

                FIRST KANSAS FINANCIAL CORPORATION AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                      Consolidated Statements of Cash Flows

                     Years ended December 31, 2001 and 2000
                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                                  2001          2000
                                                                                               -----------   -----------
<S>                                                                                        <C>              <C>
Cash flows from financing activities:
    Net increase (decrease) in deposits                                                      $      2,839          (833)
    Net increase (decrease) in advances from borrowers for taxes and insurance                        (17)           54
    Repayment of borrowings from FHLB                                                                   -       (10,500)
    Proceeds from borrowings from FHLB                                                                  -        20,000
    Purchases of common stock for treasury                                                         (1,624)       (2,263)
    Cash dividends paid on common stock                                                              (211)         (252)
                                                                                               -----------   -----------
             Net cash provided by financing activities                                                987         6,206
                                                                                               -----------   -----------
             Net increase in cash and cash equivalents                                              4,971         1,633

Cash and cash equivalents at beginning of year                                                      5,723         4,090
                                                                                               -----------   -----------
Cash and cash equivalents at end of year                                                     $     10,694         5,723
                                                                                               ===========   ===========
Supplemental disclosure of cash flow information:
    Cash paid during the year for income taxes                                               $        396           601
    Cash paid during the year for interest                                                          6,244         6,071

Noncash activities:
    Loans transferred to real estate owned                                                   $          -            18
    Transfer of investment securities held-to-maturity to investment
      securities available-for-sale                                                                 6,322             -
    Transfer of mortgage-backed securities held-to-maturity to mortgage-
      backed securities available-for-sale                                                         23,093             -
</TABLE>


See accompanying notes to consolidated financial statements.

                                      F-6
<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000



(1)    Summary of Significant Accounting Policies


     (a)  Principles of Consolidation and Basis of Presentation


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

     (b) Cash Equivalents

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

     (c) Investment Securities

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

          A  decline  in  the  market   value  of  any   available-for-sale   or
          held-to-maturity  security  below cost that is deemed to be other than
          temporary results in a reduction in carrying amount to fair value. The
          impairment  is  charged  to  earnings  and a new  cost  basis  for the
          security is  established.  Amortization  and accretion of premiums and
          discounts  are computed  using the interest  method over the estimated
          life of the related  security  and are  recorded as an  adjustment  of
          interest  income.  Gains and losses on sales are calculated  using the
          specific identification method.

     (d) Loans

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

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

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

                                       F-7                           (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


     (e) Mortgage Banking Activities

     At December 31, 2001 and 2000,  the Company was servicing  loans for others
     amounting to $428,000  and  $283,000,  respectively.  Loan  servicing  fees
     include  servicing fees from investors and certain  charges  collected from
     borrowers, such as late payment fees, which are recorded when received.

     (f) Provisions for Losses on Loans and Interest Receivable

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

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

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

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

                                       F-8                           (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


     (g)  Real Estate Owned and Held for Development

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

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

     (h)  Stock in FHLB of Topeka

          The Company is a member of the FHLB system.  As a member,  the Company
          is  required  to  purchase  and hold stock in the FHLB of Topeka in an
          amount equal to the greater of 1% of unpaid residential loans or 5% of
          outstanding FHLB advances. FHLB stock is carried at cost.

     (i)  Premises and Equipment

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

     (j)  Income Taxes

          Deferred tax assets and  liabilities are recognized for the future tax
          consequences  attributable  to  differences  between the  consolidated
          financial   statement   carrying   amounts  of  existing   assets  and
          liabilities and their respective income tax bases.

     (k)  Use of Estimates

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

                                       F-9                           (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


     (l)  Adoption of New Pronouncement

          The Company adopted SFAS No. 133, Accounting for Derivative  Financial
          Instruments  and  Hedging  Activities  as of  January  1,  2001.  This
          adoption  resulted  in  the   reclassification  of  $23.1  million  in
          mortgage-backed  securities and $6.3 million in investment  securities
          from  the  Company's   held-to-maturity   to  its   available-for-sale
          portfolio.  Such reclassification  increased accumulated comprehensive
          loss by $310,720 net of income taxes of $160,068. The adoption of SFAS
          No.  133 did not have any  other  impact  on the  Company's  financial
          statements  as the  Company  did not  hold  any  derivative  financial
          instruments  during the periods covered by the accompanying  financial
          statements.

     (m)  Earnings Per Common Share

          Basic earnings per share is based upon the weighted  average number of
          common shares outstanding during the periods presented. Basic earnings
          per  share  exclude  dilution  and  is  computed  by  dividing  income
          available to common  stockholders  by the weighted  average  number of
          common  shares  outstanding  during the period.  Diluted  earnings per
          share include the potential  dilutive common shares outstanding during
          the period.  Unallocated  shares of common  stock held by the employee
          stock  ownership plan are not included in the weighted  average shares
          outstanding computation.

          The following  schedule  summarizes  the number of average  shares and
          equivalents used in the computation of earnings per share:

                                                         2001             2000
                                                      ---------        ---------

Basic shares outstanding                                966,286        1,152,383
Dilutive effect of stock options                         31,166                -
                                                      ---------        ---------
Diluted shares outstanding                              997,452        1,152,383
                                                      =========        =========

                                       F-10                          (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


     (n)  Comprehensive Income

          The  Company's  only  component  of the  comprehensive  income  is the
          unrealized holding gains and losses on available-for-sale  securities.
          Other  comprehensive  income (loss) for the years ended December 31 is
          as follows (in thousands):

                                                          2001       2000
                                                          ----       ----
Change in unrealized holdling gains (losses), net of
   income tax                                           $  733       (104)
Cumulative effect of change in accounting principle,
   net of tax (see notes 3 and 4)                         (311)         -
Reclassification adjustment for loss included in
   net earnings, net of tax                                 76          -
                                                        ------      -----
        Change in unrealized gain (losses) on
           available-for-sale securities arising
           during the period, net of tax                $  498       (104)
                                                        ======      =====

(2)      Cash and Cash Equivalents

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

                                                            2001          2000
                                                           -------       -------

Cash on hand                                               $   882           838
Deposits at other financial institutions                     3,812         2,785
Overnight FHLB deposits                                      6,000         2,100
                                                           -------       -------

                                                           $10,694         5,723
                                                           =======       =======

                                       F-11                          (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


(3)    Investment Securities

       The  following  is a summary of  investment  securities  and  information
       relating to amortized cost, approximate fair values, and unrealized gains
       (losses) at December 31, 2001 and 2000 is as follows (in thousands):

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

<TABLE>
<CAPTION>
                                                                            2000
                                                      ---------------------------------------------
                                                      Amortized   Unrealized   Unrealized    Fair
                                                        cost         gains       losses      value
                                                        ----         -----       ------      -----
<S>                                                   <C>         <C>          <C>        <C>
Held-to-maturity:
U.S. government and agency obligations
    maturing after one year but within five years       $1,000           -           (1)       999
U.S. government and agency obligations
    maturing after five years but within ten years       2,000           -          (43)     1,957
U.S. government and agency obligations
    maturing after ten years                             1,333           -          (45)     1,288
State and municipal obligations maturing
    after ten years                                      1,116           -          (39)     1,077
Other debt securities maturing after
    ten years                                              873           -            -        873
                                                        ------      ------       ------     ------
                                                        $6,322           -         (128)     6,194
                                                        ======      ======       ======     ======
</TABLE>



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

                                       F-12                          (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


(4)    Mortgage-Backed Securities

          A summary of  mortgage-backed  securities and information  relating to
          amortized cost, fair values, and unrealized gains (losses) at December
          31, 2001 and 2000 is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                             2001
                                                     -------------------------------------------------------
                                                     Amortized    Unrealized      Unrealized        Fair
                                                       cost         gains           losses          value
                                                     ---------  ----------        ----------      ----------
<S>                                                 <C>             <C>            <C>             <C>
Available-for-sale:
  Government agency mortgage-backed securities:
    Federal Home Loan Mortgage Corporation (FHLMC)    $ 5,398             39             (22)          5,415
    Federal National Mortgage Association (FNMA)       16,767            136             (38)         16,865
    Government National Mortgage Association (GNMA)     1,792             61               -           1,853
  Collateralized mortgage obligations                  17,680            183            (177)         17,686
                                                      -------        -------         -------         -------

                                                      $41,637            419            (237)         41,819
                                                      =======        =======         =======         =======
Held-to-maturity:
  Government agency mortgage-backed securities:
    FNMA                                              $ 7,959              -            (117)          7,842
    GNMA                                               13,329              -             (19)         13,310
                                                      -------        -------         -------         -------

                                                      $21,288              -            (136)         21,152
                                                      =======        =======         =======         =======
</TABLE>

                                        F-13                         (Continued)
<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


<TABLE>
<CAPTION>
                                                                        2000
                                                     ---------------------------------------
                                                     Amortized Unrealized  Unrealized  Fair
                                                       cost      gains       losses    value
                                                     --------- ----------  ---------- ------
<S>                                                <C>        <C>        <C>        <C>
 Available-for-sale:
   Government agency mortgage-backed securities:
     FHLMC                                           $ 1,290         -        (34)     1,256
     FNMA                                              1,732        10         (6)     1,736
     GNMA                                              2,790        25          -      2,815
   Collateralized mortgage obligations                12,844         -       (600)    12,244
                                                     -------   -------    -------    -------

                                                     $18,656        35       (640)    18,051
                                                     =======   =======    =======    =======

 Held-to-maturity:
   Government agency mortgage-backed securities:
     FHLMC                                           $    35         1          -         36
     GNMA                                             14,194        16       (274)    13,936
     GNMA                                             17,784        12       (267)    17,529
   Collateralized mortgage obligations                17,738        12       (354)    17,396
                                                     -------   -------    -------    -------

                                                     $49,751        41       (895)    48,897
                                                     =======   =======    =======    =======
</TABLE>

       The Company's portfolio of government agency  mortgage-backed  securities
       and federal  agency-backed  collateralized  mortgage obligations consists
       primarily of first and second tranche securities with expected maturities
       of three to five years.  At December  31,  2001,  the  government  agency
       mortgage-backed  securities  had a  carrying  value  of  $45,421,000  and
       consisted  of  approximately  $31,911,000  of fixed rate  securities  and
       $13,510,000  of variable rate  securities.  The  collateralized  mortgage
       obligations  had  a  carrying  value  of  $17,686,000  and  consisted  of
       approximately  $12,110,000  of fixed rate  securities  and  $5,576,000 of
       variable rate  securities.  Collateralized  mortgage  obligations  of the
       Company are generally government agency guaranteed.

       Proceeds  from the sale of  available-for-sale  securities  in 2001  were
       $13,434,000.  Gross  gains of $21,247 and gross  losses of $140,477  were
       realized   on   those   sales   in   2001.   There   were  no   sales  of
       available-for-sale securities in 2000.

       At December 31, 2001 and 2000, mortgage-backed securities with a carrying
       value of  approximately  $1,825,000 and  $1,125,000,  respectively,  were
       pledged to secure public funds on deposit.

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

                                      F-14                           (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


(5)    Loans Receivable

       Loans  receivable  consist of the following at December 31, 2001 and 2000
(in thousands):

                                                      2001      2000
                                                    --------  --------
Mortgage loans:
  One-to-four family                                $55,683    59,144
  Commercial                                            543       848
  Land                                                  560       775
  Construction                                          664       275
                                                    -------   -------

    Total mortgage loans                             57,450    61,042

Consumer loans                                        2,642     2,711
Commercial loans                                        310       674
                                                    -------   -------

    Total                                            60,402    64,427

Less:
  Unearned premiums, discounts, and deferred fees        48       (44)
  Allowance for loan losses                             268       256
  Undisbursed portion of loans in process               387       214
                                                    -------   -------

Total, net                                          $59,699    64,001
                                                    =======   =======

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

       The weighted average annual interest rates on mortgage loans approximated
       7.24% and 7.48% at December 31, 2001 and 2000,  respectively.  Adjustable
       rate loans have interest rate  adjustment  limitations  and are generally
       indexed to the national average cost of funds.  Future market factors may
       affect the correlation of the interest rate adjustment with the rates the
       Company pays on the short-term deposits that have been primarily utilized
       to fund these loans.

       At  December  31,  2001,  the  Company  had  outstanding  commitments  to
       originate  mortgage  loans of $342,000  and  outstanding  commitments  to
       purchase  loans of  $1,719,000.  At December  31,  2000,  the Company had
       outstanding  commitments to originate  mortgage loans of $11,000,  and no
       outstanding commitments to purchase loans.

                                      F-15                           (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


       Loans  made  to  directors   and   executive   officers  of  the  Company
       approximated  $698,000  and  $752,000  at  December  31,  2001 and  2000,
       respectively.  Such loans were made in the  ordinary  course of business.
       Changes in such loans for 2001 are as follows (in thousands):

                 Balance at January 1, 2001     $ 752
                 Additions                         84
                 Amounts collected               (138)
                                                -----

                 Balance at December 31, 2001   $ 698
                                                =====

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

                                                2001     2000
                                               -----    -----

                Balance at beginning of year   $ 256      241
                Provision                         21       36
                Charge-offs                       (9)     (27)
                Recoveries                         -        6
                                               -----    -----

                Balance at end of year         $ 268      256
                                               =====    =====

       Loans  delinquent  ninety  days or more at  December  31,  2001  and 2000
       aggregated $4,000 and $21,000, respectively. Impaired loans, exclusive of
       delinquent loans, were insignificant at December 31, 2001 and 2000.

(6)    Premises and Equipment

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

                                                  2001     2000
                                                ------   ------

                Land                            $  213      213
                Buildings and improvements       2,185    2,094
                Construction in progress             -       24
                Furniture and equipment          1,712    1,413
                                                ------   ------

                Total                            4,110    3,744

                Less accumulated depreciation    1,822    1,614
                                                ------   ------

                Total                           $2,288    2,130
                                                ======   ======

(7)    Real Estate Held for Development

       The  Company's  subsidiary  acquired  a parcel  of land in 1996 in Paola,
       Kansas for the purpose of  development  and sale.  There were no sales or
       transfers associated with the parcel of land during 2001 or 2000.

                                      F-16                           (Continued)
<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


(8)    Premium on Deposits Assumed

       In accordance with the FSLIC Transfer  Agreement dated November 19, 1982,
       the Company assumed  certain  deposits of the former North Kansas Savings
       Company, paying a premium on deposits assumed of $1,212,000.  The Company
       is amortizing the premium over twenty years on the straight-line  method.
       Accumulated  amortization  on such premium was $1,156,000 and $1,095,000,
       respectively,  at December 31, 2001 and 2000. The unamortized  balance of
       $56,000 at December 31, 2001 will be fully amortized in 2002.

(9)    Deposits

       Deposits are summarized as follows (in thousands):

                                                 2001      2000
                                                -------   -------

          Noninterest bearing demand            $ 3,725     3,392
          Savings and interest-bearing demand    29,394    27,732
          Time                                   51,204    50,360
                                                -------   -------

                                                $84,323    81,484
                                                =======   =======

       The weighted  average interest rates on deposits  approximated  4.01% and
       4.94% at December 31, 2001 and 2000, respectively.

       Scheduled maturities of time deposits at December 31, 2001 are as follows
(in thousands):

                          2002        $    36,976
                          2003              8,508
                          2004              3,802
                          2005                802
                          2006                667
                       Thereafter             449
                                         --------

                          Total          $ 51,204
                                         ========

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

                                                 2001     2000
                                               ------   ------

            Savings and time accounts          $3,006    2,936
            Interest-bearing demand accounts      478      559
                                               ------   ------

                                               $3,484    3,495
                                               ======   ======

       Certificates  of  deposit in amounts  greater  than or equal to  $100,000
       amounted to  $4,463,000  and  $2,683,000  at December  31, 2001 and 2000,
       respectively.

                                      F-17                           (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


(10)   Borrowings From FHLB of Topeka

       Borrowings  outstanding  from the FHLB of Topeka at December 31, 2001 and
2000 are as follows (in thousands):

                                                          2001           2000
                                                       ----------      ---------

 4.92% interest and maturity date in January 2009,       $ 10,000         10,000
   callable January 2004
 4.88% interest and maturity date in January 2009,         10,000         10,000
   callable January 2004
 5.30% interest and maturity date in May 2009,             10,000         10,000
   callable April, 2004
 5.76% interest and maturity date in 2010,                 10,000         10,000
   callable September, 2001
 5.92% interest and maturity date in 2010,                  5,000          5,000
   callable September, 2002
 6.10% interest and maturity date in 2010,                  5,000          5,000
    callable September, 2003
                                                         --------        -------

                                                         $ 50,000         50,000
                                                         ========         ======


       FHLB borrowings are secured by all unpledged single and multifamily first
       mortgage loans, mortgage-backed securities,  United States government and
       agency   obligations,   interest-bearing   deposits  in  other  financial
       institutions,  stock  in  FHLB,  and FHLB  overnight  deposits.  Weighted
       average  interest  rates at December 31, 2001 and 2000 were 5.37% on such
       borrowings.  At December 31, 2001,  the Company  could borrow up to $59.8
       million from the FHLB of Topeka.

       Principal maturities, based on original maturity, of borrowings from FHLB
       of Topeka at December 31, 2001 are as follow (in thousands):

                            Year            Amount
                          ----------      --------

                            2009          $ 30,000
                            2010            20,000
                                          --------

                                          $ 50,000
                                          ========


                                      F-18                           (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


(11)   Income Taxes

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

                           2001                       2000
                -------------------------    ------------------------
                  Federal  State    Total    Federal  State    Total
                ---------  -----    -----    -------  -----   -------

       Current    $ 332       47      379      599       75      674

       Deferred     (49)      (4)     (53)     (56)      (4)     (60)
                  -----    -----    -----    -----    -----    -----

                  $ 283       43      326      543       71      614
                  =====    =====    =====    =====    =====    =====

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


                                                Percentage
                                                of earnings
                                                  before
                                                income tax
                                                 expense
                                               -------------

                                               2001     2002
                                               ----     ----

       Expected federal income tax rate         34.0%   34.0%
       State taxes, net of feeral tax benefit    3.0     3.0
       Other, net                               (3.2)   (1.2)
                                               -----   -----
                Effective income tax rate       33.8%   35.8
                                               =====   =====

                                      F-19                           (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


       Temporary differences that give rise to a significant portion of deferred
       tax assets and  liabilities  at December 31, 2001 and 2000 are as follows
       (in thousands):

                                                   2001     2000
                                                   -----    -----

Unrealized loss on available-for-sale securities   $   -      206
Employee benefits                                     83       69
Other, net                                             6        4
Allowance for loan losses                             35        3
                                                   -----    -----
Deferred tax asset                                   124      282
                                                   -----    -----

Unrealized gain on available-for-sale securities     (51)       -
Premises and equipment                              (118)    (119)
FHLB dividends                                      (162)    (162)
State taxes                                          (13)     (17)
                                                   -----    -----

Deferred tax liability                              (344)    (298)
                                                   -----    -----

Net deferred tax liability, included in other
liabilities                                        $(220)     (16)
                                                   =====    =====


       There was no  valuation  allowance  required  for  deferred tax assets at
       December  31, 2001 or 2000.  Management  believes  that it is more likely
       than not the  results  of  future  operations  will  generate  sufficient
       taxable income to realize the deferred tax assets.

       Prior to 1996,  the  Company  was  allowed  to deduct  the  greater of an
       experience  method bad debt  deduction  based on actual  charge-offs or a
       statutory bad debt deduction based on a percentage (8%) of taxable income
       before such  deduction.  For income tax  purposes,  the Company  used the
       experience  methods  in 1997 and  1998.  Under  the  Small  Business  Job
       Projection  Act (the  Act) of 1996,  the  allowable  deduction  under the
       percentage  of  taxable  income  method  was  terminated  for  tax  years
       beginning after 1995, and will not be available to the Company for future
       years.  The Act also provides  that federal  income tax bad debt reserves
       accumulated  since 1988 (the base year reserve)  must be  recaptured  and
       included in taxable  income over a six-year  inclusion  period  beginning
       1998.  Included in the deferred income tax liability at December 31, 2001
       and 2000 are $56,000 and $84,000, respectively, for this recapture.

       Retained  earnings at December  31, 2001 and 2000  include  approximately
       $718,000  for which no  provision  for federal  income tax has been made.
       This amount  represents  allocations of income to bad debt  deductions in
       years prior to 1988 for tax purposes only. Reduction of amounts allocated
       for  purposes  other than tax bad debt losses will create  income for tax
       purposes only, which will be subject to the then current corporate income
       tax rate.

                                      F-20                           (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


(12)   Benefit Plans

     (a)  Pension and Retirement

          The Company participates in a multiemployer,  noncontributory  defined
          benefit   pension  plan  which  covers  all  employees  who  have  met
          eligibility  requirements.  The  multiemployer  plan does not  provide
          information at the single employer level and the Company does not make
          disclosures  similar  to those of  single  employer  plans.  Qualified
          part-time and full-time employees over age twenty-one are eligible for
          participation after one year of service. Pension costs associated with
          the plan  amounted to $2,820 and $1,500 for the years  ended  December
          31, 2001 and 2000.

          The Company has a defined  contribution plan that covers substantially
          all  employees.  Employees  may  contribute up to 15% of their salary,
          subject  to  limitations  under the  Internal  Revenue  Code,  and the
          Company  matches  50%  of  the  employee's  contribution  up  to 6% of
          compensation. The Company's expense under the plan for the years ended
          December 31, 2001 and 2000 was $26,000 and $25,000, respectively.

          In December  1997, the Company  implemented a  supplemental  executive
          retirement plan (SERP) for the benefit of the Company's president that
          will provide enhanced benefits at retirement.  Accruals under the SERP
          commenced during 1998,  resulting in expenses of $42,000 for the years
          ended December 31, 2001 and 2000.

     (b)  Employee Stock Ownership Plan

          During 1998, the Company  established an employee stock ownership plan
          (ESOP).  Through a loan from the Company,  the ESOP  acquired  124,315
          shares of the  Company's  common stock.  Employees  age  twenty-one or
          older who have  completed  one year of service  with the  Company  are
          eligible to participate in the ESOP.  Participants  become 100% vested
          after five years.  Contributions  made by the Company to the ESOP will
          be used to repay the loan, and shares are allocated to participants by
          a formula based on total compensation.  The cost of unallocated shares
          is presented as unearned compensation in the accompanying consolidated
          balance sheets. The Company recognizes additional compensation expense
          equal to the fair  value of shares  allocated.  In  connection  with a
          principal  reduction on the ESOP loan, 12,432 shares were released and
          the Company recognized  $178,000 of compensation  expense during 2001,
          and 12,432 shares were released and the Company recognized $149,000 of
          compensation  expense  during  2000.  The fair value of the  remaining
          80,803   unallocated   shares  at   December   31,   2001   aggregated
          approximately $1,155,000.


                                      F-21                           (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


     (c)  Stock Option Plan and Restricted Stock Plan (RSP)

          In February  1999,  the Company  instituted  an RSP and a stock option
          plan.  Pursuant to the RSP,  the Company  purchased  62,158  shares of
          common stock during March 1999.  The cost of such shares,  aggregating
          $660,429,   has  been  recorded  as  unearned   compensation   in  the
          accompanying  consolidated  balance  sheet.  During  March  1999,  the
          Company  awarded  52,826  shares of common  stock to key  officers and
          directors.  The fair value of the shares  ($561,276) will be amortized
          to expense over their five-year vesting period. The Company recognized
          approximately   $112,000  of  compensation   expense  related  to  the
          amortization  of the shares  awarded for the years ended  December 31,
          2001 and 2000, respectively.

          Pursuant to the stock  option  plan,  the Company  granted  options to
          acquire  132,079  shares of common  stock to certain key  officers and
          directors in February  1999. The options  enable the  participants  to
          purchase  stock at an exercise price equal to the fair market value of
          the stock at the date of grant  ($10.75 per share).  The options  vest
          over five years and expire in 2008.  During 2001 and 2000,  there were
          no options which were exercised or forfeited.

          The  Company  applies  Accounting  Principles  Board  (APB)  No 25 and
          related  interpretations  in  accounting  for the stock  option  plan.
          Accordingly,  no  compensation  expense  has  been  recognized  in the
          accompanying consolidated financial statements.  SFAS No. 123 requires
          pro forma  disclosures  for companies that do not adopt its fair value
          method  of   accounting   for   stock-based   employer   compensation.
          Accordingly, the following pro forma information presents net earnings
          and  earnings per share  information  for 2001 and 2000 as if the fair
          value  method  required  by SFAS  No.  123 has  been  used to  measure
          compensation cost for stock options granted:

                                                      2001           2000
                                                   --------       ---------

Net earnings - as reported                         $637,000       1,102,000

Net earnings - pro forma                           $594,000       1,059,000

Basic earnings per share - as reported             $    .66             .96

Basic earnings per share - pro forma               $    .61             .92

          The fair value of options  granted in 1999 of $326,000  was  estimated
          using the following weighted average  information:  risk-free interest
          rate of 6.5%,  expected  life of five years,  expected  volatility  of
          stock price of 16.6%, and expected dividends of 2.0% per year.

          At  December  31,  2001,  the  exercise  price  and  weighted  average
          remaining  contractual life of the outstanding  options was $10.75 and
          7.1 years, respectively.

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

                                      F-22                           (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000

(13) Regulatory Capital Requirements

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

     The Federal Deposit Insurance Corporation  Improvement Act of 1991 (FDICIA)
     established  additional capital requirements that require regulatory action
     against depository  institutions in one of the undercapitalized  categories
     defined in  implementing  regulations.  Institutions  such as the  Company,
     which are  defined  as  well-capitalized,  must  generally  have a leverage
     (core)  capital ratio of at least 5%, a Tier 1 risk-based  capital ratio of
     at least 6%, and a total  risk-based  capital ratio of at least 10%. FDICIA
     also provides for increased  supervision  by federal  regulatory  agencies,
     increased reporting requirements for insured depository  institutions,  and
     other   changes  in  the  legal  and   regulatory   environment   for  such
     institutions.

     The Bank met all regulatory  capital  requirements at December 31, 2001 and
     2000.  The Bank's  actual and  required  capital  amounts  and ratios as of
     December 31, 2001 and 2000 were as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                      2001
 ------------------------------------------------------------------------------------------------------------------
                                                                                                 To be well-
                                                                                                 capitalized
                                                                                                 under prompt
                                                                        For capital               corrective
                                                                         adequacy                 actions
                                                 Actual                  purposes                 provisions
                                       ------------------------   ----------------------    ----------------------
                                         Amount        Ratio         Amount      Ratio         Amount      Ratio
                                       -----------   ----------   ------------  --------    ------------  --------

<S>                                 <C>              <C>         <C>           <C>        <C>         <C>
 Tangible capital (to tangible        $   16,046       10.54   %   $ 2,285       1.50   %   $     -          -%
 assets)
 Tier 1 leverage (core) capital (to       16,046       10.54         6,092       4.00         7,615       5.00
 adjusted tangible assets)
 Risk-based capital (to                   16,310       31.97         4,082       8.00         5,102      10.00
 risk-weighted assets)
 Tier 1 risk-based capital (to            16,046       31.45             -          -         3,061       6.00
 risk-weighted assets)
</TABLE>

<TABLE>
<CAPTION>
                                                      2000
 ------------------------------------------------------------------------------------------------------------------
                                                                                                 To be well-
                                                                                                 capitalized
                                                                                                 under prompt
                                                                        For capital               corrective
                                                                         adequacy                 actions
                                                 Actual                  purposes                 provisions
                                       ------------------------   ----------------------    ----------------------
                                         Amount        Ratio         Amount      Ratio         Amount      Ratio
                                       -----------   ----------   ------------  --------    ------------  --------
<S>                                 <C>              <C>         <C>           <C>        <C>
 Tangible capital (to tangible        $   15,045       10.02%      $ 2,252       1.50%      $     -          -%
 assets)
 Tier 1 leverage (core) capital (to       15,045       10.02         6,005       4.00         7,506       5.00
 adjusted tangible assets)
 Risk-based capital (to                   15,296       31.04         3,943       8.00         4,929      10.00
 risk-weighted assets)
 Tier 1 risk-based capital (to            15,045       30.53             -          -         2,957       6.00
 risk-weighted assets)

</TABLE>
                                      F-23                           (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


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

(14) Financial  Instruments With Off-Balance  Sheet Risk and  Concentrations  of
     Credit Risk

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

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

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

(15) Fair Value of Financial Instruments

     SFAS No. 107,  Disclosures About Fair Value of Financial  Instruments,  and
     SFAS No. 119,  Disclosure About Derivative  Financial  Instruments and Fair
     Value of Financial Instruments, require that the Company disclose estimated
     fair values for its  financial  instruments,  both  assets and  liabilities
     recognized and not  recognized in the  consolidated  financial  statements.
     Fair value  estimates have been made as of December 31, 2001 and 2000 based
     on  current  economic  conditions,  risk  characteristics  of  the  various
     financial instruments, and other subjective factors at such date.

                                      F-24                           (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


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

     (a)  Cash and Cash Equivalents

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

     (b)  Investment and Mortgage-Backed Securities

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

     (c)  Loans Receivable

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

     (d)  Stock of FHLB

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

     (e)  Accrued Interest

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

     (f)  Deposits

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

     (g)  Borrowings From FHLB of Topeka

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

                                      F-25                           (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


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

                                         December 31, 2001
                                        -------------------
                                         Carrying    Fair
                                          value      value
                                        ---------    ------

Financial assets:
Cash and cash equivalents                 $10,694    10,694
Investment securities (see note 3)         12,139    12,139
Mortgage-backed securities (see note 4)    63,107    62,971
Loans receivable                           59,699    60,708
Stock in FHLB                               2,650     2,650
Accrued interest receivable                   751       751

Financial liabilities:
Deposits                                   84,323    85,362
FHLB borrowings                            50,000    53,118
Accrued interest payable                      280       280

                                          December 31, 2000
                                          -----------------
                                          Carrying   Fair
                                          value      value
                                          --------  -------

Financial assets:
Cash and cash equivalents                 $ 5,723     5,723
Investment securities (see note 3)          6,322     6,194
Mortgage-backed securities (see note 4)    67,802    66,948
Loans receivable                           64,001    63,701
Stock in FHLB                               2,650     2,650
Accrued interest receivable                   772       772

Financial liabilities:
Deposits                                   81,484    81,503
FHLB borrowings                            50,000    49,695
Accrued interest payable                      315       315


                                      F-26                           (Continued)

<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


     (h)  Limitations

          Fair value  estimates are made at a specific  point in time,  based on
          relevant  market  information  and  information  about  the  financial
          instruments.  These  estimates  do not reflect any premium or discount
          that could  result from  offering  for sale at one time the  Company's
          entire  holdings  of a  particular  financial  instrument.  Fair value
          estimates  are based on judgments  regarding  future loss  experience,
          current economic conditions, risk characteristics of various financial
          instruments,  and other  factors.  These  estimates are  subjective in
          nature and involve  uncertainties and matters of significant  judgment
          and  therefore  cannot  be  determined  with  precision.   Changes  in
          assumptions  could  significantly  affect  the  estimates.  Fair value
          estimates are based on existing  balance sheet  financial  instruments
          without  attempting  to  estimate  the  value  of  anticipated  future
          business  and  the  value  of  assets  and  liabilities  that  are not
          considered financial instruments.

(16)   Parent Company Condensed Financial Statements

                            Condensed Balance Sheets
                           December 31, 2001 and 2000
                                 (In thousands)

                   Assets                                  2001      2000
                                                         -------   -------

        Cash and cash equivalents                        $    44       120
        Loan to ESOP                                         808       932
        Investment in and loan to subsidiary              16,558    16,519
        Other assets                                          48        51
                                                         -------   -------

            Total assets                                 $17,458    17,622
                                                         =======   =======

              Liabilities and Stockholders' Equity

        Accrued interest payable and other liabilities   $   251         5
        Stockholders' equity                              17,207    17,617
                                                         -------   -------

            Total liabilities and stockholders' equity   $17,458    17,622
                                                         =======   =======



                         Condensed Statements of Income
                     Years ended December 31, 2001 and 2000
                                 (In thousands)

                                                       2001    2000
                                                      -----   -----

            Income:
              Equity in earnings of subsidiary        $ 650   1,053
              Interest on loans                          71     172
              Interest on investments                     2       2
                                                      -----   -----

                  Total income                          723   1,227

              Expense, including income tax expense      86     125
                                                      -----   -----

                  Net income                          $ 637   1,102
                                                      =====   =====


                                      F-27                           (Continued)
<PAGE>

                       FIRST KANSAS FINANCIAL CORPORATION
                                 AND SUBSIDIARY
                               OSAWATOMIE, KANSAS

                   Notes to Consolidated Financial Statements

                           December 31, 2001 and 2000


                       Condensed Statements of Cash Flows
                     Years ended December 31, 2001 and 2000
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                           2001       2000
                                                                         -------    -------
<S>                                                                    <C>          <C>
   Operating activities:
     Net income                                                        $   637      1,102
     Less equity in earnings of subsidiary                                (650)    (1,053)
     Adjustments to reconcile net income to net cash provided by
       operating activities:
         Release of unallocated ESOP shares and amortization of RSP        290        261
         Change in other payables                                          246         (1)
         Change in other assets                                              3        (33)
                                                                       -------    -------

            Net cash provided by operating activities                      526        276
                                                                       -------    -------
   Investing activities:
     Decrease in investment in and loan to subsidiary, net               1,109      2,139
     Decrease in loan to ESOP                                              124        125
                                                                       -------    -------

            Net cash provided by investing activities                    1,233      2,264
                                                                       -------    -------

   Financing activities:
     Purchases of common stock for the treasury                         (1,624)    (2,263)
     Cash dividends paid on common stock                                  (211)      (252)
                                                                       -------    -------

            Net cash used by financing activities                       (1,835)    (2,515)
                                                                       -------    -------

            Increase (decrease) in cash and cash equivalents               (76)        25

   Cash and cash equivalents at beginning of year                          120         95
                                                                       -------    -------

   Cash and cash equivalents at end of year                            $    44        120
                                                                       =======    =======
</TABLE>


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


                                      F-28
<PAGE>

Corporate Information

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

                        First Kansas Federal Savings Bank


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

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

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


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

      Donald V. Meyer                               James E. Breckenridge
          Director                                        Director

      Sherman W. Cole                                 J. Darcy Domoney
          Director                                        Director

                               Executive Officers
                                 Larry V. Bailey
                      President and Chief Executive Officer

                                Daniel G. Droste
                       Senior Vice President and Treasurer

                                 Galen E. Graham
                       Senior Vice President and Secretary




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

Special Counsel                                 Transfer Agent and Registrar
Malizia Spidi & Fisch, PC                       ComputerShare, Inc.
1100 New York Avenue, N.W.                      12039 West Alameda Parkway
Suite 340 West                                  Suite Z-2
Washington, D.C. 20005                          Lakewood, Colorado  80228

         The  Company's  Annual  Report on Form 10-KSB for the fiscal year ended
December 31, 2001 is available  without charge upon written request.  For a copy
of the Form 10-KSB,  please write or call the Company's  Corporate  Secretary at
the Company's main office.  The Annual Meeting of  Stockholders  will be held on
April 16, 2002 at 1:00 p.m. at the Company's office.