[X]       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
             For the fiscal year ended September 30, 2001

**Commission File Number 0-22184**

**FIRST INDEPENDENCE CORPORATION**

|Delaware                                                       |  | 36-3899950                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

|Myrtle and Sixth Streets, Independence, Kansas |  | 67301     
|---------------------------------------------- |  | ----------
|(Address of principal executive offices)       |  | (Zip Code)

Registrant's telephone number, including area code:  (620) 331-1660









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

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

State the issuer's revenues for its most recent fiscal year:  $12,409,190.

The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the average of the
bid and asked prices of such stock on The Nasdaq Stock Market as of December 3, 2001, was $9.9 million.   (The exclusion
from such amount of the market value of the shares owned by any person shall not be deemed an admission by the registrant that such person
is an affiliate of the registrant.)

As of December 3, 2001, there were issued and outstanding 937,305 shares of the Registrant's Common Stock.







Part III of Form 10-KSB - Proxy Statement for 2002 Annual Meeting of Stockholders.



**FORWARD-LOOKING STATEMENTS**

First Independence Corporation ("First Independence"), and its wholly-owned subsidiary, First
Federal Savings and Loan Association of Independence ("First Federal"), may from time to time make
written or oral "forward-looking statements," including statements contained in its filings with the Securities
and Exchange Commission (the "SEC").  These forward-looking statements may be included in this Annual
Report on Form 10-KSB and the exhibits attached to it, in First Independence's reports to stockholders and
in other communications, which are made in good faith by us pursuant to the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995.

These forward-looking statements include statements about our beliefs, plans, objectives, goals,
expectations, anticipations, estimates and intentions, that are subject to significant risks and uncertainties,
and are subject to change based on various factors, some of which are beyond our control.  The words "may,"
"could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar
expressions are intended to identify forward-looking statements. The following factors, among others, could
cause our financial performance to differ materially from the plans, objectives, expectations, estimates and
intentions expressed in the forward-looking statements:

- the strength of the United States economy in general and the strength of the local economies
in which we conduct operations;
- the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest
rate policies of the Federal Reserve Board;
- inflation, interest rate, market and monetary fluctuations;
- the timely development of and acceptance of our new products and services and the
perceived overall value of these products and services by users, including the features,
pricing and quality compared to competitors' products and services;
- the willingness of users to substitute our products and services for products and services of
our competitors;
- our success in gaining regulatory approval of our products and services, when required;
- the impact of changes in financial services' laws and regulations (including laws concerning
taxes, banking, securities and insurance);
- the impact of technological changes;
- acquisitions;
- the availability of new construction lending opportunities in our market area;
- changes in consumer spending and saving habits; and
- our success at managing the risks involved in the foregoing.

The list of important factors stated above is not exclusive.  We do not undertake to update any
forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of
First Independence or First Federal.



**Item 1.  Description of Business**

**General**

First Independence is a Delaware corporation which was formed at the direction of First Federal in
June 1993 for the purpose of becoming the savings and loan holding company of First Federal.  First
Independence owns all of the outstanding stock of First Federal issued on October 5, 1993 in connection with
the completion of First Federal's conversion from the mutual to the stock form of organization.  First
Independence issued 727,375 shares of common stock at a price of $10.00 per share in the conversion.  On
January 6, 1999, The Neodesha Savings and Loan Association, FSA ("Neodesha Savings") combined with
First Federal through the conversion of Neodesha Savings from a mutual savings and loan association to a
stock savings and loan association and the simultaneous merger of Neodesha Savings into First Federal.  All
references to First Independence at or before October 5, 1993 refer to First Federal.  References in this Form
10-KSB to "we," "us" and "our" refer to First Independence and/or First Federal as the context requires.  First
Independence's common stock is quoted on The Nasdaq SmallCap Market under the symbol "FFSL."

At September 30, 2001, we had total assets of $152.7 million, and stockholders' equity of $14.2
million.

First Federal is a federally chartered stock savings and loan association headquartered in
Independence, Kansas.  First Federal was originally organized in 1905 as a state-chartered savings and loan
association and later converted to a federally chartered institution.

First Federal has been, and intends to continue to be, a community-oriented financial institution
offering a variety of financial services to meet the needs of the communities it serves.  We attract deposits
from the general public and use such deposits, together with borrowings and other funds, to originate one-
to four-family residential mortgage loans.  In addition, we originate residential construction loans at our loan production office in Lawrence, Kansas.  To a much lesser extent, we also originate loans secured by non-residential real estate and consumer loans and a limited amount of loans secured by multi-family real estate.
Subject to market conditions and loan demand in our market area, we expect to continue to originate the same
types of loans we currently offer, which include a limited number of commercial and multi-family real estate
loans secured by property located in our market area.  We do not intend to originate or purchase interests in
commercial or multi-family real estate loans secured by properties located outside of our market area.

We also invest in mortgage-backed securities which are insured by or guaranteed by federal agencies
and other investment securities.  See "Lending Activities - Originations, Purchases and Sales of Loans and
Mortgage-Backed Securities."

Like all federally chartered savings associations, our operations are regulated by the Office of Thrift
Supervision (the "OTS").  First Federal is a member of the Federal Home Loan Bank System ("FHLB
System") and a stockholder in the Federal Home Loan Bank ("FHLB") of Topeka.  First Federal is also a
member of the Savings Association Insurance Fund ("SAIF") and our deposit accounts are insured up to
applicable limits by the Federal Deposit Insurance Corporation ("FDIC").

Our revenue is derived principally from interest on mortgage loans and mortgage-backed securities,
interest on investment securities, dividends on FHLB stock and loan origination income.

Our executive offices are located at Myrtle and Sixth Streets in Independence, Kansas 67301 and
our telephone number is (620) 331-1660.

**Market Area**

Through our offices in Independence, Coffeyville and Neodesha, Kansas, we currently serve
primarily Montgomery and Wilson Counties, Kansas and, to a lesser extent, the eastern part of Chautauqua
County, Kansas.  We also originate construction loans in Douglas County, Kansas through a loan production
office in Lawrence, Kansas, which is the County Seat of Douglas County and the home of Kansas University.
We compete in loan originations and in attracting deposits with approximately 21 financial institutions
serving our primary market area.  We estimate our share of the savings market in Montgomery and
Wilson Counties to be approximately 14%.

Independence, Kansas, located in southeastern Kansas, is approximately 110 miles from Wichita,
Kansas.  Independence is the County Seat of Montgomery County and the location of Independence
Community College.

Montgomery and Wilson Counties have a population of approximately 36,300 and 10,300,
respectively.  Although the economy of southeast Kansas is closely tied to the gas, oil and agricultural
industries, Montgomery and Wilson Counties have attracted a variety of other industries.  Major employers
in our market area include Cessna Aircraft Company, a manufacturer of single engine airplanes, Dana Engine
Controls, a manufacturer of electronic and electrical parts, Cobalt Boats, a manufacturer of boats and car
hatch covers and Amazon.com, an online shopping site.

**Lending Activities**

*General*.  Historically, we have originated fixed-rate mortgage loans.  Since 1982, however, we have
emphasized, subject to market conditions, the origination and holding of adjustable-rate mortgage loans and
loans with shorter terms to maturity than traditional 30-year, fixed-rate loans.  Our strategy has been to
increase the percentage of assets in our portfolio with more frequent repricing or shorter maturities.  In
response to customer demand, however, we continue to originate for our loan portfolio fixed-rate mortgages
with terms not greater than 30 years.

Our primary focus in lending activities is on the origination of loans secured by first mortgages on
owner-occupied, one- to four-family residences.  Recently, a significant portion of our lending has been in
the form of construction loans.  To a much lesser extent, we also originate loans secured by non-residential
real estate and consumer loans and a limited amount of multi-family real estate loans.  See "- Originations,
Purchases and Sales of Loans and Mortgage-Backed Securities."  At September 30, 2001, our net loan
portfolio totaled $132.8 million.

All loans must be reviewed by a committee comprised of the President and three other officers of
First Federal.  The loan committee has authority to approve loans secured by real estate to any one borrower
of up to $500,000.  The executive committee has authority to approve loans up to $750,000 which provide
for a personal guarantee from the borrower.  Loans in excess of this limit require approval of the First
Federal Board of Directors.  All loan approvals made by the loan committee are ratified by the First Federal
Board of Directors.

The aggregate amount of loans that First Federal is permitted to make under applicable federal
regulations to any one borrower, including related entities, is generally equal to the greater of 15% of
unimpaired capital and surplus or $500,000.  At September 30, 2001, the maximum amount which First

*Loan Portfolio Composition.*  The following information sets forth the composition of our loan
portfolio in dollar amounts and in percentages (before deductions (or additions) for loans in process, deferred
fees and discounts, and allowances for losses) as of the dates indicated.

|                            | September 30,         
|--------------------------- | ----------------------
|                            | 2001                  
|                            | Amount                
|                            | (Dollars in Thousands)
|                            |                       
|Real Estate Loans           |                       
|One- to four-family         | $   93,534            
|Multi-family                | 865                   
|Non-residential             | 12,239                
|Construction                | 32,731                
|Total real estate loans     | 139,369               
|                            |                       
|Consumer Loans              |                       
|Deposit account             | 487                   
|Automobile                  | 2,541                 
|Home equity                 | 1,301                 
|Home improvement            | 86                    
|Other                       | 749                   
|                            |                       
|Total consumer loans        | 5,164                 
|                            |                       
|Total Loans                 | 144,533               
|                            |                       
|Less                        |                       
|Loans in process            | 10,614                
|Deferred fees and discounts | 358                   
|Allowance for losses        | 723                   
|Total loans receivable, net | $132,838              

|                                        | September 30,         
|--------------------------------------- | ----------------------
|                                        | 2001                  
|                                        | Amount                
|                                        | (Dollars in Thousands)
|                                        |                       
|Fixed-Rate Loans                        |                       
|Real estate:                            |                       
|One- to four-family                     | $   66,796            
|Multi-family                            | 803                   
|Non-residential                         | 9,076                 
|Construction                            | 32,731                
|Total fixed-rate real estate loans      | 109,406               
|Consumer                                | 3,863                 
|Total fixed-rate loans                  | 113,269               
|                                        |                       
|Adjustable-Rate Loans                   |                       
|Real estate:                            |                       
|One- to four-family                     | 26,738                
|Multi-family                            | 62                    
|Non-residential                         | 3,163                 
|Total adjustable-rate real estate loans | 29,963                
|Consumer                                | 1,301                 
|Total adjustable-rate loans             | 31,264                
|                                        |                       
|Total Loans                             | 144,533               
|                                        |                       
|Less                                    |                       
|Loans in process                        | 10,614                
|Deferred fees and discounts             | 358                   
|Allowance for losses                    | 723                   
|                                        |                       
|Total loans receivable, net             | $132,838              

|                                       | Real Estate            |                                   |             
|-------------------------------------- | ---------------------- | --------------------------------- | ------------
|                                       | One- to
Four-Family    | Multi-family, and
Non-Residential | Construction
|                                       | Amount                 | WeightedAverageRate               | Amount      
|                                       | (Dollars in Thousands)
|Due During PeriodsEnding September 31, |                        |                                   |             
|2002                                   | $   789                | 7.54%                             | $   737     
|2003                                   | 187                    | 8.31                              | ---         
|2004                                   | 216                    | 7.85                              | 8           
|2005 and 2006                          | 1,065                  | 7.87                              | 378         
|2007 to 2011                           | 9,752                  | 7.66                              | 1,661       
|2012 to 2026                           | 41,302                 | 7.64                              | 10,109      
|2027 and following                     | 40,223                 | 7.39                              | 211         
|Total                                  | $93,534                |                                   | $13,104     

*One- to Four-Family Residential Mortgage Lending.*  Residential loan originations are generated by
our marketing efforts, through our present customers and walk-in customers, and referrals from real estate
brokers and builders.  We have focused our lending efforts primarily on the origination of loans secured by
first mortgages on owner-occupied, single-family residences in our market area.  At September 30, 2001, our
one- to four-family residential mortgage loans, totaled $93.5 million, or 64.71% of our loan portfolio.

We currently make adjustable-rate, one- to four-family residential mortgage loans in amounts up to
97% of the appraised value, or selling price, of the security property, whichever is less.  For loans with a
loan-to-value ratio of 90% or greater, we require private mortgage insurance in order to reduce our exposure
level to less than an 80% loan-to-value ratio.  For loans with loan-to-value ratios of greater than 80% but less
than 90%, we typically require private mortgage insurance to reduce our exposure.  The determination as to
whether to obtain such insurance is made on a case-by-case basis, based on a variety of factors including the
borrower's payment history, the borrower's length of employment, the quality of the property, the term of the
loan and the debt to income ratio of the borrower.  At September 30, 2001, we had 832 loans totaling $53.8
million with a loan-to-value ratio of greater than 80%, but less than 90% and 477 loans totaling $26.1 million
with a loan-to-value ratio of 90% or greater.

We currently offer mortgage loans with a fixed rate for either the first five years or three years of
the loan term that automatically convert to a one-year adjustable-rate mortgage loan during the year following
the fixed term.  Rates are determined in accordance with market and competitive factors for a term of up to
30 years.  The interest rate charged on adjustable-rate mortgage loans currently originated by us is based
upon the one year Constant Maturity Treasury Index.  The adjustable-rate loans currently originated by us
provide for a 2% annual cap and floor, and a 6% lifetime cap on the interest rate adjustment over the rate in
effect on the date of origination.  The actual interest rate on these adjustable-rate loans may not be reduced
below 5% over the life of the loan.  The annual and lifetime caps on interest rate increases reduce the extent
to which these loans can help protect us against interest rate risk.  See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Asset/Liability Management and Market Risk"
in our Annual Report to Stockholders for the year ended September 30, 2001, attached hereto as Exhibit 13
(the "Annual Report to Stockholders").  Approximately 23.6% of the loans secured by one- to four-family
real estate originated by us during fiscal 2001 were originated with adjustable rates of interest.  See "-
Originations, Purchases and Sales of Loans and Mortgage-Backed Securities."

Adjustable-rate loans decrease the risks associated with changes in interest rates but involve other
risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by
the terms of the loan, thereby increasing the potential for default.  At the same time, the marketability of the
underlying property may be adversely affected by higher interest rates.  We believe that these risks, which
have not had a material adverse effect on our operations to date, are more than outweighed by the benefits
received by offering adjustable-rate mortgage loans.

We also originate fixed-rate mortgage loans.  Fixed-rate loans currently originated by us have terms
of up to 30 years.  Interest rates charged on these fixed-rate loans are competitively priced according to local
market conditions.

In underwriting residential real estate loans, we evaluate the borrower's ability to make monthly
payments, employment history, credit history and the value of the property securing the loan.  Potential
borrowers are typically qualified for both adjustable- and fixed-rate loans based upon the initial or stated rate
of the loan.  Adjustable rate loans increase the risk of default to the extent the interest rate adjusts upward
and the borrower is unable to make the payments at the increased rate.  Although borrowers on adjustable-rate loans are qualified based upon the initial rate of the loan, if a borrower's debt to income ratios are
marginal, we will take into consideration the borrower's ability to make future payments in the event the

An appraisal of the security property is obtained on all loan applications from Board-approved
independent fee appraisers.  In connection with the origination of residential real estate loans, we generally
require that the borrower obtain an opinion from an attorney regarding the title to the property or title
insurance and fire and casualty insurance, as well as flood insurance, where applicable, to protect our
interest.

Approximately $1.9 million, or 1.98% of our one- to four-family residential mortgage loan portfolio,
was purchased by us.  These loans are primarily secured by property located in Texas and have been in our
portfolio for several years.  We have purchased only a limited amount of one- to four-family residential
mortgage loans since 1989.  The level of delinquencies in our portfolio of purchased loans secured by one-
to four-family residential real estate is consistent with that of the loans originated and retained by us.

Our residential mortgage loans customarily include due-on-sale clauses giving us the right to declare
the loan immediately due and payable in the event, among other things, the borrower sells or otherwise
disposes of the property subject to the mortgage and the loan is not repaid.  We have enforced due-on-sale
clauses in our mortgage contracts for the purpose of increasing our loan portfolio yield.  The yield increase
is obtained through the authorization of assumptions of existing loans at higher rates of interest and the
imposition of assumption fees.  One- to four-family real estate loans may be assumed provided home buyers
meet our underwriting standards and the loan terms are modified, to the extent necessary, to conform with
present yield and maturity requirements.

*Construction Lending*.  We also make construction loans to builders and individuals for the
construction of residences.  There were $32.7 million of construction loans outstanding at September 30,
2001.

The majority of the construction loans were originated  at the Lawrence, Kansas loan production
office.  This office is staffed with an originator and three processors, each of whom has substantial
experience in construction lending.  Construction loans are made to both builders and individuals and
generally have terms of twelve months or less and interest rates tied to the prime rate plus a margin.  Once
the loan rate is determined, however, it remains fixed for the term of the loan.  The borrower pays interest
only during the construction period.  Residential construction loans are generally underwritten pursuant to
the same guidelines used for originating permanent residential loans, and are approved at our headquarters
in Independence.  The amount loaned to any one builder is subject to pre-approved guidelines with the
maximum amount not to exceed our loans-to-one-borrower limit.

Construction loans are generally considered to involve a greater degree of risk than permanent one-
to four- family residential mortgage loans.  Risk of loss on a construction loan depends largely upon the
concurrence of the initial estimate of the property's value at completion of construction and the estimated
cost (including interest) of construction, as well as the availability of permanent take-out financing.  During
the construction phase, a number of factors could result in delays and cost overruns.  If the estimate of value
proves to be inaccurate, we may be confronted, at or prior to the maturity of the loan, with a project which,
when completed, has a value which is insufficient to ensure full repayment.  Because of these uncertainties
inherent in estimating development and construction costs, it is relatively difficult to evaluate accurately the
total loan funds required to complete a project.  Also, the funding of loan fees and interest during the
construction phase makes the monitoring of the progress of the project particularly important, as customary
early warning signals of project difficulties may not be present.

Our Lawrence loan production office also originates loans secured by manufactured homes.  These
loans generally have terms of twelve months or less and interest rates tied to the prime rate plus a margin.
Once the loan rate is determined, however, it remains fixed for the term of the loan.  The proceeds from these
loans are used to fund the site preparation, purchase and improvements of the manufactured homes, during
which time the borrower pays interest only.  A take out by a third party lender that provides for the
permanent financing is obtained prior to the closing of the construction loan.  Once the project is complete,
our construction loan is paid-off by the lender providing the permanent financing.  At September 30, 2001,
we had $8.1 million in loans secured by manufactured homes, representing 5.6% of our loan portfolio.

During the construction phase a number of factors, such as a borrowers loss of employment,
bankruptcy or divorce, could result in our construction loan take out being voided.  If circumstances require
us to place a manufactured construction loan in portfolio, we may be faced with a situation where the value
of the property is insufficient to ensure full repayment of the loan.  Because of these uncertainties, loans
secured by manufactured homes increase credit quality risk, but also reduce interest rate risk and improve
earnings due to their shorter terms and higher rate when compared to permanent one- to four-family loans.

*Non-Residential/Multi-Family Real Estate Lending.*  In order to enhance the yield on and decrease
the average term to maturity of our assets, we have originated and purchased permanent loans and
participation interests in loans originated by other lenders secured by non-residential and multi-family real
estate.  We also have a limited amount of loans secured by land.  See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Asset/Liability Management and Market Risk"
in the Annual Report to Stockholders.  At September 30, 2001, we had $13.1 million in non-residential/
multi-family real estate loans, representing 9.07% of our loan portfolio.

Approximately 1.80% of the property securing our non-residential/multi-family (including land) real
estate loan portfolio is located outside our primary market area.  Many of the properties securing these
purchased loans or participations are located in Texas and neighboring states.  Some of these areas have
experienced adverse economic conditions including a general softening in real estate markets and the local
economy, which may result in increased loan delinquencies and loan losses.  However, most of our non-residential/multi-family real estate loan portfolio is seasoned and, during the past five years, we have had
no significant purchases or participations in such loans.

The table below sets forth, by type of security property, our non-residential/multi-family real estate
loans at September 30, 2001.

|                                                                             | Number
ofLoans         | Outstanding
PrincipalBalance | Amount
Non-Performing
or of Concern
|---------------------------------------------------------------------------- | ---------------------- | ---------------------------- | -----------------------------------
|                                                                             | (Dollars in Thousands)
|                                                                             |                        |                              |                                    
|Multi-family                                                                 | 5                      | $     865                    | $---                               
|Small business facilities and office buildings                               | 58                     | 4,363                        | ---                                
|Health care facility                                                         | 10                     | 3,273                        | ---                                
|Churches                                                                     | 1                      | 15                           | ---                                
|Warehouse/mini-storage                                                       | 1                      | 87                           | ---                                
|Hotel/motel                                                                  | 4                      | 1,054                        | ---                                
|Land                                                                         | 69                     | 3,447                        | ---                                
|                                                                             |                        |                              |                                    
|Total multi-family residential and non-residential real         estate loans | 148                    | $13,104                      | $---                               

Permanent non-residential and multi-family real estate loans originated by us generally have terms
ranging from 5 to 20 years and up to a 30-year amortization schedule.  Rates on permanent loans either (i)
adjust (subject, in some cases, to specified interest rate caps) at one year intervals to specified spreads over
an index, (ii) float (subject, in some cases, to specified interest rate caps) with changes in a specified prime
rate or (iii) carry fixed rates.  Under our current loan policy, multi-family/non-residential real estate loans
(other than loans to facilitate and land) are written in amounts of up to 80% of the appraised value of the
properties.

Appraisals on properties securing non-residential and multi-family real estate property loans
originated by First Federal are performed by an independent appraiser designated by us at the time the loan
is made.  All appraisals on multi-family and non-residential real estate loans are reviewed by us.  In addition,
our underwriting procedures generally require verification of the borrower's credit history, income and
financial statements, banking relationships, references and income projections for the property.  Personal
guarantees are generally obtained for all or a portion of our multi-family/non-residential real estate loans.
While we continue to monitor multi-family/non-residential real estate loans on a regular basis after
origination, updated appraisals are not normally obtained after closing unless we believe that there are
questions regarding the progress of the loan or the value of the collateral.

At September 30, 2001, we had no non-residential/multi-family real estate loans to one borrower,
or group of borrowers, which had an existing carrying value in excess of $500,000, except for the loans to
four unrelated borrowers or groups of borrowers described below.  The first borrower had four loans on non-residential properties with aggregate borrowings totaling $1,848,000.  The first loan is secured by a
residential care facility located in Caney, Kansas and had an outstanding balance at September 30, 2001 of
$738,000.  The second loan is secured by a nursing home located in Caney, Kansas and had an outstanding
balance at September 30, 2001 of $700,000.  The third and fourth loans are secured by residential care
facilities located in Chanute, Kansas and had an outstanding balance at September 30, 2001 of $235,000 and
$175,000, respectively.  The other loans in excess of $500,000 at September 30, 2001, included a loan with
an outstanding balance of $1,099,000 secured by a nursing home located in Independence, Kansas, a loan
with an outstanding balance of $954,000 secured by a hotel located in Independence, Kansas and a loan with
an outstanding balance of $676,000 secured by apartments located in Independence, Kansas.  All of these
loans were current at September 30, 2001.  See "Regulation - Federal Regulation of Savings Associations."

Non-residential/multi-family  real estate lending affords us the opportunity to receive interest at rates
higher than that generally available from one- to four-family residential lending.  Nevertheless, loans secured
by such properties are generally larger and involve a greater degree of risk than one- to four-family
residential mortgage loans.  Because payments on loans secured by non-residential/multi-family real estate
properties are often dependent on the successful operation or management of the properties, repayment of
such loans may be subject to adverse conditions in the real estate market or the economy.  If the cash flow
from the project is reduced (for example, if leases are not obtained or renewed), the borrower's ability to
repay the loan may be impaired.  We have attempted to minimize these risks through our underwriting
standards and by lending primarily on existing income-producing properties.

We also generally maintain an escrow account for most of our loans secured by real estate, in order
to ensure that the borrower provides funds to cover property taxes in advance of the required payment.  These
accounts are analyzed annually to confirm that adequate funds are available.  For loans which do not include
an escrow requirement, an annual review of tax payments is performed by us in order to confirm payment.
In order to monitor the adequacy of cash flows on income-producing properties, the borrower or lead lender
is notified annually, requesting financial information including rental rates and income, maintenance costs
and an update of real estate property tax payments.

*Consumer Lending.*  Consumer loans generally have shorter terms to maturity (thus reducing our
exposure to changes in interest rates) and carry higher rates of interest than do one- to four-family residential
mortgage loans.  In addition, we believe that the offering of consumer loan products helps to expand and
create stronger ties to our existing customer base, by increasing the number of customer relationships and
providing cross-marketing opportunities.  At September 30, 2001, our consumer loan portfolio totaled $5.2
million and was 3.57% of our total loan portfolio.  Under applicable federal law, First Federal is authorized
to invest up to 35% of our assets in consumer loans.

First Federal offers a variety of secured consumer loans, including home equity loans, home
improvement loans, auto loans, and loans secured by savings deposits and other consumer collateral.  We
also offer a limited amount of unsecured loans.  We currently originate all of our consumer loans in our
market area.  Our home equity and home improvement loans comprised approximately 26.9% of our total
consumer loan portfolio at September 30, 2001.  These loans are generally originated in amounts, together
with the amount of the existing first mortgage, of up to 100% of the appraised value of the property securing
the loan.  The term to maturity on such loans may be up to seven years.  Other consumer loan terms vary
according to the type of collateral, length of contract and credit worthiness of the borrower.  Our consumer
loans generally have a fixed rate of interest, except for the home equity lines of credit which adjust based
upon changes in the prime rate.

We do not originate any consumer loans on an indirect basis (*i.e.,* where loan contracts are purchased
from retailers of goods or services which have extended credit to their customers).

The underwriting standards employed by us for consumer loans include a determination of the
applicant's payment history on other debts and an assessment of the ability to meet existing obligations and
payments on the proposed loan.  Although creditworthiness of the applicant is a primary consideration, the
underwriting process also includes a comparison of the value of the security, if any, in relation to the
proposed loan amount.

Consumer loans may entail greater risk than do residential mortgage loans, particularly in the case
of consumer loans which are unsecured, such as checking account overdraft privilege loans, or are secured
by rapidly depreciable assets, such as automobiles.  In such cases, any repossessed collateral for a defaulted
consumer loan may not provide an adequate source of repayment of the outstanding loan balance as a result
of the greater likelihood of damage, loss or depreciation.  In addition, consumer loan collections are
dependent on the borrower's continuing financial stability, and thus are more likely to be affected by adverse
personal circumstances.  Furthermore, the application of various federal and state laws, including bankruptcy
and insolvency laws, may limit the amount which can be recovered on such loans.  Although the level of
delinquencies in our consumer loan portfolio has generally been low (at September 30, 2001, $117,000, or
approximately 2.27% of the consumer loan portfolio, was 60 days or more delinquent), there can be no
assurance that delinquencies will not increase in the future.

*Originations, Purchases and Sales of Loans and Mortgage-Backed Securities*.   We originate real
estate loans through marketing efforts, our customer base, walk-in customers, and referrals from real estate
brokers.  We originate both adjustable-rate and fixed-rate loans.  Our ability to originate loans is dependent
upon the relative demand for fixed-rate or adjustable-rate mortgage loans in the origination market, which
is affected by the term structure (short-term compared to long-term) of interest rates as well as the current
and expected future level of interest rates.

Historically, we have also purchased loans and loan participations, predominantly for non-residential
real estate and one- to four-family residential loans.  Such purchases have enabled First Federal to take
advantage of favorable lending opportunities in other markets, to diversify our portfolio and to limit

We have underwritten our loan purchases using the same criteria we use in originating loans.
Servicing of purchased loans is generally performed by the seller.  At September 30, 2001, approximately
$2.3 million of First Federal's loan portfolio was serviced by others.  During the year ended September 30,
2001, we purchased loans totaling $615,000 secured by one- to four-family real estate.  These loans are
secured by property located within our market area and were acquired with interest rates which exceeded the
then available rate on mortgage-backed securities.

During recent years, most of our loan purchase opportunities have been at yields that were not
sufficiently higher than the yields of comparable mortgage-backed securities that were guaranteed by a
federal agency as to principal and interest (or derived from certificates that were so guaranteed) to offset such
credit protection.  Accordingly, we have increased our mortgage-backed securities portfolio rather than loan
purchases.  See "Investment Activities - Mortgage-Backed Securities."

We had $560,000 in loans serviced for others as of September 30, 2001.

The following table shows our loan originations, purchases, sales and repayment activities for the
periods indicated.

|                                           | Year Ended September 30,
|------------------------------------------ | ------------------------
|                                           | 2001                    
|                                           | (Dollars in Thousands)  
|Originations by type                       |                         
|Adjustable-rate:                           |                         
|Real estate - one- to four-family          | $  4,411                
|- non-residential                          | 725                     
|Consumer  - home equity                    | 231                     
|Total adjustable-rate                      | 5,367                   
|Fixed-rate:                                |                         
|Real estate - one- to four-family          | 14,313                  
|- non-residential                          | 1,753                   
|Construction                               | 32,802                  
|Consumer  - non-residential                | 4,431                   
|Total fixed-rate                           | 53,299                  
|Total loans originated                     | 58,666                  
|                                           |                         
|Purchases                                  |                         
|Real estate - one- to four-family          | 615                     
|- non-residential                          | ---                     
|Total purchased                            | 615                     
|Sales and Repayments                       |                         
|Mortgage-backed securities                 | 1,440                   
|Principal repayments(1)                    | 50,661                  
|Total reductions                           | 52,101                  
|Loans transferred from Neodesha            | ---                     
|Increase (decrease) in other items, net(2) | (926)                   
|Net increase                               | $6,254                  

**Asset Quality**

When a borrower fails to make a required payment on a loan, we attempt to cause the delinquency
to be cured by contacting the borrower.  In the case of loans secured by real estate, a computer generated late
notice is sent 15 days after the due date.  If the delinquency is not cured between the 30th and 60th day, a
personal letter is sent to the borrower and if the delinquency is not cured by the 75th day, contact with the
borrower is made by phone.  Additional written and verbal contacts are made with the borrower to the extent
the borrower appears to be cooperative.  If the delinquency is not cured or a payment plan arranged by the
90th day, we send a 30-day default letter and, once that period elapses, usually institute appropriate action
to foreclose on the property.  Interest income on loans at this point is reduced by the full amount of accrued
and uncollected interest.  If foreclosed, the property is sold at a sheriff's sale and may be purchased by us.
Delinquent consumer loans are handled in a similar manner.  If these efforts fail to bring the loan current,
appropriate action may be taken to collect any loan payment that remains delinquent.  Our procedures for
repossession and sale of consumer collateral are subject to various requirements under Kansas consumer
protection laws.

Real estate properties acquired through, or in lieu of, loan foreclosure are to be sold and are initially
recorded at fair value at the date of foreclosure establishing a new cost basis.  Subsequent to foreclosure,
valuations are periodically performed by management and the real estate is carried at the lower of carrying
amount or fair value less cost to sell.  See Note A of the Notes to Consolidated Financial Statements in the
Annual Report to Stockholders.  Upon acquisition, revenues and expenses from operations and changes in
the valuation allowance are included in foreclosed assets expense.  However, costs relating to the
development and improvement of the property are capitalized to the extent of net realizable value.

*Delinquent Loans.*  The following table sets forth information concerning delinquent loans at
September 30, 2001, in dollar amounts and as a percentage of our loan portfolio.  The amounts presented
represent the total remaining principal balances of the related loans, rather than the actual payment amounts
which are overdue.

|                    | Loans Delinquent for: 
|------------------- | ----------------------
|                    | 60-90 Days            
|                    | Number                
|                    | (Dollars in Thousands)
|Real Estate:        |                       
|One- to four-family | 8                     
|Non-residential     | ---                   
|Construction        | 1                     
|Consumer            | 9                     
|                    |                       
|Total               | 18                    

|                                                | Year Ended September 30,
|----------------------------------------------- | ------------------------
|                                                | 2001                    
|                                                | (Dollars in Thousands)  
|Non-accruing loans:                             |                         
|One- to four-family                             | $1,022                  
|Non-residential real estate                     | ---                     
|Construction                                    | 670                     
|Consumer                                        | 103                     
|Total non-accruing loans                        | 1,795                   
|                                                |                         
|Accruing loans delinquent 90 days or more:      |                         
|One- to four-family                             | 607                     
|Non-residential real estate                     | ---                     
|Construction                                    | ---                     
|Consumer                                        | ---                     
|Total accruing loans delinquent 90 days or more | 607                     
|                                                |                         
|Troubled debt restructurings:                   |                         
|Consumer                                        | ---                     
|Total non-performing loans                      | 2,402                   
|Real estate acquired through foreclosure:       |                         
|One- to four-family                             | 356                     
|                                                |                         
|Total non-performing assets                     | $2,758                  
|Total as a percentage of total assets           | 1.81%                   

For the year ended September 30, 2001, gross interest income which would have been recorded had
the non-accruing loans been current in accordance with their original terms amounted to $95,000.  The
amount included in interest income on such loans was $44,000 for the year ended September 30, 2001.

Included in non-accruing loans at September 30, 2001, were seven construction loans totaling
$670,000 secured by one- to four-family real estate, 21 loans totaling $1,022,000 secured by one- to four-family real estate, and 13 consumer loans totaling $103,000.  All non-accruing loans at September 30, 2001,
were located in our primary market area except for one loan totaling $310,000 secured by a single family
residence located in Texas.  At September 30, 2001, accruing loans delinquent 90 days or more included 16
loans totaling $607,000 secured by one- to four-family real estate.  All of our accruing loans delinquent 90
days or more were secured by real estate located in our primary market area except for three loans totaling
$60,000 secured by single family residences located in Wichita, Kansas and the surrounding area.  All of the
non-performing construction loans were originated at our loan production office in Lawrence, Kansas.  In an effort to reduce non-performing loans in the future, since the second quarter of fiscal 2001, management has tightened its underwriting criteria for construction loans on manufactured homes.

*Real Estate Acquired Through Foreclosure.*  At September 30, 2001, our real estate acquired through
foreclosure consisted of seven single family residences located in our market area.  The properties have a
carrying value of $356,000 and are currently held for sale.

*Classified Assets*.  Federal regulations provide for the classification of loans and other assets, such
as debt and equity securities considered by the OTS to be of lesser quality, as "substandard," "doubtful" or
"loss."  An asset is considered "substandard" if it is inadequately protected by the current net worth and
paying capacity of the obligor or of the collateral pledged, if any.  "Substandard" assets include those
characterized by the "distinct possibility" that the insured institution will sustain "some loss" if the
deficiencies are not corrected.  Assets classified as "doubtful" have all of the weaknesses inherent in those
classified "substandard," with the added characteristic that the weaknesses present make "collection or
liquidation in full," on the basis of currently existing facts, conditions, and values, "highly questionable and
improbable."  Assets classified as "loss" are those considered "uncollectible" and of such little value that
their continuance as assets without the establishment of a specific loss reserve is not warranted.  Assets
which do not currently expose the insured institution to sufficient risk to warrant classification in one of the
aforementioned categories but possess weaknesses are placed on a "watch list" by management.

When an insured institution classifies problem assets as either substandard or doubtful, it may
establish general allowances in an amount deemed prudent by management to cover probable losses.  General
allowances represent loss allowances which have been established to cover probable losses associated with
lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets.
When an insured institution classifies problem assets as "loss," it is required either to establish a specific
allowance for losses equal to 100% of that portion of the asset so classified or to charge-off such amount.
An institution's determination as to the classification of its assets and the amount of its valuation allowances
is subject to review by the regulatory authorities, who may order the establishment of additional general or
specific loss allowances.

In connection with the filing of our periodic reports with the OTS and in accordance with our
classification of assets policy, we regularly review the problem loans in our portfolio to determine whether
any loans require classification in accordance with applicable regulations.  We had classified assets, all of
which at September 30, 2001 are included in the table of non-performing assets on the previous page, as
follows:

|                        | September 30,         
|----------------------- | ----------------------
|                        | 2001                  
|                        | (Dollars in Thousands)
|                        |                       
|Substandard             | $2,758                
|Doubtful                | ---                   
|Loss                    | ---                   
|Pass                    | ---                   
|                        |                       
|Total classified assets | $2,758                

*Allowance for Loan Losses*.  The allowance for loan losses is established through a provision for loan
losses based on our evaluation of the probable losses in our loan portfolio and changes in the nature and
volume of our loan activity.  Such evaluation, which includes a review of all loans for which full
collectibility may not be reasonably assured, considers among other matters, the estimated fair value of the
underlying collateral, economic conditions, historical loan loss experience and other factors that warrant
recognition in providing for an adequate loan allowance.  Although we believe we use the best information
available to make such determinations, future adjustments to the allowance may be necessary, and net income
could be significantly affected if circumstances differ substantially from the assumptions used in making the
initial determinations.  At September 30, 2001, we had an allowance for loan losses of $723,000.

The following table sets forth an analysis of our allowance for loan losses at the dates indicated.

|                                                                                    | Year Ended September 30, |       
|----------------------------------------------------------------------------------- | ------------------------ | ------
|                                                                                    | 2001                     | 2000  
|                                                                                    | (Dollars in Thousands)   |       
|                                                                                    |                          |       
|Balance at beginning of fiscal year                                                 | $758                     | $753  
|                                                                                    |                          |       
|Provision                                                                           | 177                      | 99    
|Transfer from Neodesha Savings merger/conversion                                    | ---                      | ---   
|Charge-offs:                                                                        |                          |       
|One- to four-family                                                                 | 176                      | 78    
|Consumer Loans                                                                      | 36                       | 16    
|                                                                                    |                          |       
|Net charge-offs                                                                     | 212                      | 94    
|Balance at end of fiscal year                                                       | $723                     | $758  
|                                                                                    |                          |       
|Ratio of net charge-offs during the fiscal year to total loans at end offiscal year | 0.16%                    | 0.08% 
|                                                                                    |                          |       
|Allowance for loan losses to total loans at end of fiscal year                      | 0.54%                    | 0.61% 
|                                                                                    |                          |       
|Allowance for loan losses to non-performing loans at end of fiscal year             | 30.09%                   | 57.86%

The distribution of the allowance for losses on loans at the dates indicated is summarized as follows:

|                    | September 30,         
|------------------- | ----------------------
|                    | 2001                  
|                    | Amount                
|                    | (Dollars in Thousands)
|Real Estate         |                       
|One- to four-family | $283                  
|Multi-family        | ---                   
|Non-residential     | 98                    
|Construction        | 309                   
|Consumer            | 33                    
|Total               | $723                  

*General.*First Federal must maintain minimum levels of investments that qualify as liquid assets
under OTS regulations.  Liquidity may increase or decrease depending upon the availability of funds and
comparative yields on investments in relation to the return on loans.  Historically, we have maintained liquid
assets at levels above the minimum requirements imposed by the OTS regulations and at levels believed
adequate to meet the requirements of normal operations, including repayments of maturing debt and potential
deposit outflows.  Cash flow projections are regularly reviewed and updated to assure that adequate liquidity

Federally chartered savings institutions have the authority to invest in various types of liquid assets,
including United States Treasury obligations, securities of various federal agencies, certain certificates of
deposit of insured banks and savings institutions, certain bankers' acceptances, repurchase agreements and
federal funds.  Subject to various restrictions, federally chartered savings institutions may also invest their
assets in commercial paper, investment grade corporate debt securities and mutual funds whose assets
conform to the investments that a federally chartered savings institution is otherwise authorized to make
directly.

Generally, our investment policy is to invest funds among various categories of investments and
maturities based upon our asset/liability management policies, investment quality and marketability, liquidity
needs and performance objectives.

*Investment Securities.*  At September 30, 2001, investment securities totaled $5.2 million, or 3.4%
of total assets.  As of that date, we also had a $2.3 million investment in FHLB stock, satisfying our
requirement for membership in the FHLB of Topeka.  It is our general policy to purchase investment
securities which are U.S. Government securities or federal agency obligations or other issues that are rated
investment grade or have credit enhancements.  At September 30, 2001, the average term to maturity or
repricing of the investment portfolio was 3.5 years.

The following table sets forth the composition of our securities portfolio at the dates indicated.

|                                                                                            | September 30,         
|------------------------------------------------------------------------------------------- | ----------------------
|                                                                                            | 2001                  
|                                                                                            | Book 
Value           
|                                                                                            | (Dollars in Thousands)
|Securities held to maturity:                                                                |                       
|Federal agency obligations                                                                  | $3,998                
|U.S. Government Securities                                                                  | ---                   
|Municipal Securities                                                                        | 197                   
|Total Securities held to maturity                                                           | 4,195                 
|                                                                                            |                       
|Securities available for sale:                                                              |                       
|Federal agency obligations                                                                  | 1,014                 
|Total securities                                                                            | $5,209                
|                                                                                            |                       
|Average remaining life or term to repricing of
 securities                                  | 4.77 yrs.             
|                                                                                            |                       
|Other Interest-Earning Assets:                                                              |                       
|Short-term money market investments                                                         | $1,905                
|                                                                                            |                       
|Average remaining life or term to repricing of securities and other interest-earning assets | 3.50 yrs.             

The composition and maturities of the securities portfolio are indicated in the following table.

|                            | September 30, 2001    
|--------------------------- | ----------------------
|                            | Less Than1 Year       
|                            | Amortized
Cost        
|                            | (Dollars in Thousands)
|Held to Maturity:           |                       
|Municipal securities        | $     ---             
|Federal agency obligations  | ---                   
|Total investment securities | $    ---              
|Weighted average yield      | ---%                  
|                            |                       
|Available for Sale:         |                       
|Federal agency obligations  | $1,000                
|Weighted average yield      | 6.42%                 

Our securities portfolio at September 30, 2001, did not contain securities of any issuer with an
aggregate book value in excess of 10% of our stockholders' equity, excluding securities issued by the United
States Government, or its agencies.

Our securities portfolio is managed in accordance with a written investment policy adopted by the
Board of Directors. Investments may be made by First Federal officers within specified limits and must be
approved in advance by the Board of Directors for transactions over certain limits.  At September 30, 2001,
we held no investments for trading purposes, but did hold securities as available for sale with an amortized
cost and market value of $1.0 million and $1.01 million, respectively.

*Mortgage-Backed Securities.*  We have a portfolio of mortgage-backed securities and have utilized
such investments to complement our mortgage lending activities.  At September 30, 2001, our
mortgage-backed securities totaled $7.3 million.  For information regarding the carrying and fair values of
our mortgage-backed securities portfolio, see Note C of the Notes to Consolidated Financial Statements
in the Annual Report to Stockholders.

At September 30, 2001, $5.5 million, or 76.2%, of First Federal's mortgage-backed securities carried
adjustable-rates of interest.  Under the OTS's risk-based capital requirements, Ginnie Mae mortgage-backed
securities have a zero percent risk weighting and Fannie Mae, Freddie Mac and AA-rated mortgage-backed
securities have a 20% risk weighting, in contrast to the 50% risk weighting carried by one- to four-family
performing residential mortgage loans.

The following table sets forth the contractual maturities of the mortgage-backed securities at
September 30, 2001.

|                                                  | Due in                 |                  
|------------------------------------------------- | ---------------------- | -----------------
|                                                  | 6 monthsor Less        | 6 monthsto 1 Year
|                                                  | (Dollars in Thousands)
|Held to Maturity                                  |                        |                  
|Adjustable-Rate Mortgage-Backed Securities:       |                        |                  
|Freddie Mac                                       | $  ---                 | $  ---           
|Fannie Mae                                        | ---                    | ---              
|Total adjustable-rate                             | ---                    | ---              
|                                                  |                        |                  
|Fixed-Rate Mortgage-Backed Securities:            |                        |                  
|Freddie Mac                                       | ---                    | ---              
|Fannie Mae                                        | ---                    | ---              
|Ginnie Mae                                        | ---                    | ---              
|Total fixed-rate                                  | ---                    | ---              
|Total mortgage-backed securities held to maturity | $  ---                 | $  ---           

**Sources of Funds**

*General.*  Our primary sources of funds are deposits, amortization and repayment of loan principal
(including mortgage-backed securities), sales or maturities of investment securities, mortgage-backed
securities and short-term investments, borrowings, and funds provided from operations.

Borrowings may be used on a short-term basis to compensate for seasonal reductions in deposits or
deposit inflows at less than projected levels, and have been used in the past on a longer-term basis to support
lending activities.  We had $33.0 million in FHLB advances outstanding at September 30, 2001.

*Deposits*.  We offer a variety of deposit accounts having a wide range of interest rates and terms.
Our deposits consist of passbook accounts, NOW accounts, and money market and certificate accounts.  We
rely primarily on advertising, competitive pricing policies and customer service to attract and retain these
deposits.  We only solicit deposits from our market area and do not use brokers to obtain deposits.

The flow of deposits is influenced significantly by general economic conditions, changes in money
market and prevailing interest rates and competition.  The variety of deposit accounts we offer have allowed
us to be competitive in obtaining funds and to respond with flexibility to changes in consumer demand.  We
have become more susceptible to short-term fluctuations in deposit flows as customers have become more
interest rate conscious.  We manage the pricing of our deposits in keeping with our asset/liability
management and profitability objectives.  Based on our experience, we believe that our passbook, NOW and
non-interest-bearing checking accounts are relatively stable sources of deposits.  However, our ability to
attract and maintain certificates of deposit, and the rates paid on these deposits, has been and will continue
to be significantly affected by market conditions.

The following table sets forth the dollar amount of savings deposits in the various types of deposit
programs we offered for the dates indicated and the rates offered.  See Note H of the Notes to the
Consolidated Financial Statements in the Annual Report to Stockholders for weighted average nominal rates.

|                                        | September 30,         
|--------------------------------------- | ----------------------
|                                        | 2001                  
|                                        | Amount                
|                                        | (Dollars in Thousands)
|Transactions and Savings Deposits:      |                       
|Passbook Demand (2.50-2.85%)            | $   5,109             
|NOW Accounts (1.25-2.25%)               | 8,545                 
|Money Market Accounts (2.00-5.25%)      | 26,464                
|                                        |                       
|Total Transactions and Savings Deposits | 40,118                
|                                        |                       
|Certificates:                           |                       
|0.00  -  3.99%                          | 1,262                 
|4.00  -  4.99%                          | 12,537                
|5.00  -  5.99%                          | 31,982                
|6.00  -  6.99%                          | 17,670                
|7.00%  and over                         | ---                   
|                                        |                       
|Total Certificates                      | 63,451                
|Accrued Interest                        | 98                    
|Total Deposits                          | $103,667              

The following table sets forth our savings flows during the periods indicated.  Net increase refers
to the amount of deposits during a period less the amount of  withdrawals during the period.

|                             | Year Ended September 30, |            
|---------------------------- | ------------------------ | -----------
|                             | 2001                     | 2000       
|                             | (Dollars in Thousands)   |            
|                             |                          |            
|Opening balance              | $   94,128               | $   95,453 
|Neodesha Savings acquisition | ---                      | ---        
|Deposits                     | 169,374                  | 145,613    
|Withdrawals                  | (163,724)                | (150,535)  
|Interest credited            | 3,791                    | 3,597      
|Ending balance               | $ 103,569                | $   94,128 
|                             |                          |            
|Net increase (decrease)      | $     9,441              | $   (1,325)
|                             |                          |            
|Percent increase (decrease)  | 10.03%                   | (1.39)%    

The following table shows rate and maturity information for our certificates of deposit as of September 30, 2001.

|                                                | 3.00-
3.99% | 4.00-4.99% | 5.00-5.99% | 6.00-6.99% | Total   | Percentof Total
|----------------------------------------------- | ----------- | ---------- | ---------- | ---------- | ------- | ---------------
|                                                |             |            |            |            |         |                
|Certificate accounts maturing inquarter ending: |             |            |            |            |         |                
|December 31, 2001                               | $  311      | $    576   | $ 6,647    | $ 3,194    | $10,728 | 16.91%         
|March 31, 2002                                  | 839         | 748        | 7,874      | 3,891      | 13,352  | 21.04          
|June 30, 2002                                   | ---         | 2,667      | 2,162      | 2,269      | 7,098   | 11.19          
|September 30, 2002                              | 103         | 1,746      | 3,772      | 5,142      | 10,763  | 16.96          
|December 31, 2002                               | 9           | 1,461      | 4,338      | 1          | 5,809   | 9.15           
|March 31, 2003                                  | ---         | 4,007      | 560        | ---        | 4,567   | 7.20           
|June 30, 2003                                   | ---         | ---        | 856        | ---        | 856     | 1.35           
|September 30, 2003                              | ---         | ---        | 890        | 120        | 1,010   | 1.59           
|December 31, 2003                               | ---         | 346        | 735        | 426        | 1,507   | 2.38           
|March 31, 2004                                  | ---         | 917        | 571        | ---        | 1,488   | 2.35           
|June 30, 2004                                   | ---         | ---        | 387        | 13         | 400     | 0.63           
|September 30, 2004                              | ---         | ---        | 676        | 99         | 775     | 1.22           
|December 31, 2004                               | ---         | ---        | 416        | 4          | 420     | 0.66           
|Thereafter                                      | ---         | 69         | 2,098      | 2,511      | 4,678   | 7.37           
|                                                |             |            |            |            |         |                
|TOTAL                                           | $1,262      | $12,537    | $31,982    | $17,670    | $63,451 | 100.00%        
|                                                |             |            |            |            |         |                
|Percent of Total                                | 1.99%       | 19.76%     | 50.40%     | 27.85%     |         |                

The following table indicates the amount of our certificates of deposit and other deposits by time
remaining until maturity as of September 30, 2001.

|                                            | Maturity               |                  
|------------------------------------------- | ---------------------- | -----------------
|                                            | 3 Months
or Less       | Over3 to 6
Months
|                                            | (Dollars in Thousands)
|                                            |                        |                  
|Certificates of deposit less than $100,000  | $  9,819               | $11,315          
|Certificates of deposit of $100,000 or more | 609                    | 1,237            
|Public funds(1)                             | 300                    | 800              
|Total certificates of deposit               | $10,728                | $13,352          

*Borrowings.*  Although deposits are our primary source of funds, our policy has been to utilize
borrowings when they are a less costly source of funds or can be  invested at a positive rate of return.  In
addition, we have relied upon borrowings for short-term liquidity needs.

We may obtain advances from the FHLB of Topeka upon the security of our capital stock in the
FHLB of Topeka and certain of our mortgage loans and mortgage-backed securities.  Such advances may be
made pursuant to several different credit programs, each of which has its own interest rate and range of
maturities.  At September 30, 2001, we had $33.0 million in FHLB advances outstanding.

The following table sets forth the maximum month-end balance and average balance of our FHLB
advances and other borrowings at and for the dates indicated.

|                 | At and For the Year Ended September 30, |        
|---------------- | --------------------------------------- | -------
|                 | ****2001                                | 2000   
|                 | (Dollars in Thousands)                  |        
|                 |                                         |        
|Maximum Balance: |                                         |        
|FHLB advances    | $42,000                                 | $39,100
|                 |                                         |        
|Average Balance: |                                         |        
|FHLB advances    | $38,583                                 | $34,975

The following table sets forth certain information as to our FHLB advances at the dates indicated.

|                                                | September 30,         
|----------------------------------------------- | ----------------------
|                                                | 2001                  
|                                                | (Dollars in Thousands)
|                                                |                       
|FHLB advances                                   | $33,000               
|                                                |                       
|Weighted average interest rate of FHLB advances | 5.635%                

**Regulation**

*General*.  First Federal is a federally chartered savings association, the deposits of which are
federally insured and backed by the full faith and credit of the United States Government.  Accordingly, First
Federal is subject to broad federal regulation and oversight extending to all its operations.  First Federal is
a member of the FHLB of Topeka and is subject to certain limited regulation by the Board of Governors of
the Federal Reserve System ("Federal Reserve Board").  As the savings and loan holding company of First
Federal, First Independence is also subject to federal regulation and oversight which is designed to protect
subsidiary savings associations, like First Federal.  First Federal is a member of the SAIF, which together
with the Bank Insurance Fund (the "BIF") are the two deposit insurance funds administered by the FDIC, and
the deposits of First Federal are insured by the FDIC.  As a result, the FDIC has certain regulatory and
examination authority over First Federal.

Certain of these regulatory requirements and restrictions are discussed below or elsewhere in this
document.

*Federal Regulation of Savings Associations*.  The OTS has extensive authority over the operations
of savings associations.  As part of this authority, First Federal is required to file periodic reports with the
OTS and is subject to periodic examinations by the OTS and the FDIC.  The last regular OTS examination
of First Federal was as of September 30, 2001.  When these examinations are conducted by the OTS and the
FDIC, the examiners may require First Federal to provide for higher general or specific loan loss reserves.
All savings associations are subject to a semi-annual assessment, based upon the savings association's total
assets, to fund the operations of the OTS.  First Federal's OTS assessment for the fiscal year ended
September 30, 2001 was $41,000.

The OTS also has extensive enforcement authority over all savings institutions and their holding
companies, including First Federal and First Independence.  This enforcement authority includes, among

In addition, the investment, lending and branching authority of First Federal is prescribed by federal
laws and it is prohibited from engaging in any activities not permitted by these laws.  For instance, no savings
institution may invest in non-investment grade corporate debt securities.  In addition, the permissible level
of investment by federal savings associations in loans secured by non-residential real property may not
exceed 400% of total capital, except with approval of the OTS.  Federal savings associations are also
generally authorized to branch nationwide.  First Federal is in compliance with the noted restrictions.

First Federal's general permissible lending limit for loans-to-one-borrower is equal to the greater of
$500,000 or 15% of unimpaired capital and surplus (except for loans fully secured by certain readily
marketable collateral, in which case this limit is increased to 25% of unimpaired capital and surplus).  At
September 30, 2001, First Federal's lending limit under this restriction was $2.1 million.  First Federal is in
compliance with the loans-to-one-borrower limitation.

The OTS, as well as the other federal banking agencies, has adopted guidelines establishing safety
and soundness standards on matters like loan underwriting and documentation, asset quality, earnings
standards, internal controls and audit systems, interest rate risk exposure and compensation and other
employee benefits.  Any institution which fails to comply with these standards must submit a compliance
plan.

*Insurance of Accounts and Regulation by the FDIC*.  First Federal is a member of the SAIF, which
is administered by the FDIC.  Deposits are insured up to applicable limits by the FDIC and the insurance is
backed by the full faith and credit of the United States Government.  As insurer, the FDIC imposes deposit
insurance premiums and is authorized to conduct examinations of and to require reporting by FDIC-insured
institutions.  It also may prohibit any FDIC-insured institution from engaging in any activity the FDIC
determines by regulation or order to pose a serious risk to the SAIF or the BIF.  The FDIC also has the
authority to initiate enforcement actions against savings associations, after giving the OTS an opportunity
to take action, and may terminate the deposit insurance if it determines that the institution has engaged in
unsafe or unsound practices or is in an unsafe or unsound condition.

The FDIC's deposit insurance premiums are assessed through a risk-based system under which all
insured depository institutions are placed into one of nine categories and assessed insurance premiums based
upon their level of capital and supervisory evaluation.  The current assessment rates range from zero to
0.27% per $100 of assessable deposits.   Under the system, institutions classified as well capitalized (i.e., a
core capital ratio of at least 5%, a ratio of Tier 1 or core capital to risk-weighted assets ("Tier 1 risk-based
capital") of at least 6% and a risk-based capital ratio of at least 10%) and considered healthy pay the lowest
premium while institutions that are less than adequately capitalized (i.e., core or Tier 1 risk-based capital
ratios of less than 4% or a risk-based capital ratio of less than 8%) and considered of substantial supervisory
concern pay the highest premium.  Risk classification of all insured institutions is made by the FDIC for each
semi-annual assessment period.

Prior to the enactment of the legislation recapitalizing the SAIF in 1996, a portion of the SAIF
assessment imposed on savings associations was used to repay obligations issued by a federally chartered
corporation to provide financing for resolving the thrift crisis in the 1980s.  Although the legislation also
required assessments to be made on BIF-assessable deposits for this purpose, effective January 1, 1997, that

*Regulatory Capital Requirements*.  Federally insured savings associations, such as First Federal, are
required to maintain a minimum level of regulatory capital.  The OTS has established capital standards,
including a tangible capital requirement, a leverage ratio (or core capital) requirement and a risk-based
capital requirement applicable to such savings associations.  These capital requirements must be generally
as stringent as the comparable capital requirements for national banks.  The OTS is also authorized to impose
capital requirements in excess of these standards on individual associations on a case-by-case basis.

The capital regulations require tangible capital of at least 1.5% of adjusted total assets (as defined
by regulation).  Tangible capital generally includes common stockholders' equity and retained income, and
certain noncumulative perpetual preferred stock and related income.  In addition, all intangible assets, other
than a limited amount of purchased mortgage servicing rights, must be deducted from tangible capital for
calculating compliance with the requirement.  At September 30, 2001, First Federal did not have any
intangible assets.

At September 30, 2001, First Federal had tangible capital of $14.1 million, or 9.25% of adjusted total
assets, which is approximately $11.8 million above the minimum requirement of 1.5% of adjusted total assets
in effect on that date.

The capital standards also require core capital equal to at least 4% of adjusted total assets.  Core
capital generally consists of tangible capital plus certain intangible assets, including a limited amount of
purchased credit card receivables.  As a result of the prompt corrective action provisions discussed below,
a savings association must maintain a core capital ratio of at least 4% to be considered adequately
capitalized unless its supervisory condition allows it to maintain a 3% ratio.  At September 30, 2001, First
Federal had no intangible assets which were subject to these tests.

At September 30, 2001, First Federal had core capital equal to $14.1 million, or 9.25% of adjusted
total assets, which is $8.0 million above the minimum leverage ratio requirement of 4% as in effect on that
date.

The OTS risk-based requirement requires savings associations to have total capital of at least 8%
of risk-weighted assets.  Total capital consists of core capital, as defined above, and supplementary capital.
Supplementary capital consists of certain permanent and maturing capital instruments that do not qualify as
core capital and general valuation loan and lease loss allowances up to a maximum of 1.25% of risk-weighted
assets.  Supplementary capital may be used to satisfy the risk-based requirement only to the extent of core
capital.  The OTS is also authorized to require a savings association to maintain an additional amount of total
capital to account for concentration of credit risk and the risk of non-traditional activities.  At September 30,
2001, First Federal had $723,000 of general loss reserves, which was less than 1.25% of risk-weighted assets.

Certain exclusions from capital and assets are required to be made for the purpose of calculating total
capital.  Such exclusions consist of equity investments (as defined by regulation) and that portion of land
loans and nonresidential construction loans in excess of an 80% loan-to-value ratio and reciprocal holdings
of qualifying capital instruments.  First Federal had no exclusions from capital and assets at September 30,
2001.

In determining the amount of risk-weighted assets, all assets, including certain off-balance sheet
items, will be multiplied by a risk weight, ranging from 0% to 100%, based on the risk inherent in the type
of asset.  For example, the OTS has assigned a risk weight of 50% for prudently underwritten permanent one-
to four-family first lien mortgage loans not more than 90 days delinquent and having a loan to value ratio of
not more than 80% at origination unless insured to such ratio by an insurer approved by Fannie Mae or
Freddie Mac.

On September 30, 2001, First Federal had total capital of $14.8 million (including $14.1 million in
core capital and $723,000 in qualifying supplementary capital) and risk-weighted assets of $76.7 million,
or total capital of 19.36% of risk-weighted assets.  This amount was $8.7 million above the 8% requirement
in effect on that date.

The OTS and the FDIC are authorized, and under certain circumstances required, to take certain
actions against savings associations that fail to meet their capital requirements.  The OTS is generally
required to take action to restrict the activities of an "undercapitalized association" (generally defined to be
one with less than either a 4% core capital ratio, a 4% Tier 1 risked-based capital ratio or an 8% risk-based
capital ratio).  Any undercapitalized association must submit a capital restoration plan and until the plan is
approved by the OTS may not increase its assets, acquire another institution, establish a branch or engage
in any new activities, and generally may not make capital distributions.  The OTS is authorized to impose
the additional restrictions that are applicable to significantly undercapitalized associations.

The OTS is also generally authorized to reclassify an association into a lower capital category and
impose the restrictions applicable to such category if the institution is engaged in unsafe or unsound practices
or is in an unsafe or unsound condition.

The imposition by the OTS or the FDIC of any of these measures on First Federal may have a
substantial adverse effect on its operations and profitability.

*Limitations on Dividends and Other Capital Distributions*.  OTS regulations impose various
restrictions on savings associations with respect to their ability to make distributions of capital, which include
dividends, stock redemptions or repurchases, cash-out mergers and other transactions charged to the capital
account.  OTS regulations generally permit a federal savings association to pay dividends in any calendar
year equal to net income for that year plus retained earnings for the preceding two years.  First Federal is in
compliance with this requirement.

*Liquidity*.  All savings associations, including First Federal, are required to maintain a sufficient level
of liquid assets to ensure their safe and sound operation.  For a discussion of what First Federal includes in
liquid assets, see "Management's Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources" in the Annual Report to Stockholders.

*Qualified Thrift Lender Test*.  All savings associations, including First Federal, are required to meet
a qualified thrift lender ("QTL") test to avoid certain restrictions on their operations.  This test requires a
savings association to have at least 65% of its portfolio assets (as defined by regulation) in qualified thrift
investments on a monthly average for nine out of every 12 months on a rolling basis.  As an alternative, the
savings association may maintain 60% of its assets in those assets specified in Section 7701(a)(19) of the
Internal Revenue Code of 1986, as amended.  Under either test, such assets primarily consist of residential
housing related loans and investments.  At September 30, 2001, First Federal met the test and has always met
the test since its effectiveness.

Any savings association that fails to meet the QTL test must convert to a national bank charter,
unless it requalifies as a QTL and thereafter remains a QTL.  If an association does not requalify and
converts to a national bank charter, it must remain SAIF-insured until the FDIC permits it to transfer to the
BIF.  If the association has not yet requalified or converted to a national bank, its new investments and
activities are limited to those permissible for both a savings association and a national bank, and it is limited
to national bank branching rights in its home state.  In addition, the association is immediately ineligible to
receive any new FHLB borrowings and is subject to national bank limits for payment of dividends.  If the
association has not requalified or converted to a national bank within three years after the failure, it must
divest of all investments and cease all activities not permissible for a national bank.  In addition, it must repay
promptly any outstanding FHLB borrowings, which may result in prepayment penalties.  If any association
that fails the QTL test is controlled by a holding company, then within one year after the failure, the holding
company must register as a bank holding company and become subject to all restrictions on bank holding
companies.  See "- Holding Company Regulation."

*Community Reinvestment Act*.  Under the Community Reinvestment Act ("CRA"), every FDIC
insured institution has a continuing and affirmative obligation consistent with safe and sound banking
practices to help meet the credit needs of its entire community, including low and moderate income
neighborhoods.  The CRA does not establish specific lending requirements or programs for financial
institutions nor does it limit an institution's discretion to develop the types of products and services that it
believes are best suited to its particular community, consistent with the CRA.  The CRA requires the OTS,
in connection with the examination of First Federal, to assess the institution's record of meeting the credit
needs of its community and to take such record into account in its evaluation of certain applications, such
as a merger or the establishment of a branch, by First Federal.  An unsatisfactory rating may be used as the
basis for the denial of an application by the OTS.

Due to the heightened attention being given to the CRA in recent years, First Federal may be required
to devote additional funds for investment and lending in its local community.  First Federal was examined
for CRA compliance in 1998 and received a rating of "satisfactory."

*Transactions with Affiliates*.  Generally, transactions between a savings association or its subsidi-aries and its affiliates are required to be on terms as favorable to the association as transactions with non-affiliates.  In addition, certain of these transactions, such as loans to an affiliate, are restricted to a percentage
of the association's capital.  Affiliates of First Federal include First Independence and any company which
is under common control with First Federal.  In addition, a savings association may not lend to any affiliate
engaged in activities not permissible for a bank holding company or acquire the securities of most affiliates.
The OTS has the discretion to treat subsidiaries of savings associations as affiliates on a case by case basis.

Certain transactions with directors, officers or controlling persons are also subject to conflict of
interest regulations enforced by the OTS.  These conflict of interest regulations and other statutes also
impose restrictions on loans to such persons and their related interests.  Among other things, such loans must
be made on terms substantially the same as for loans to unaffiliated individuals.

*Holding Company Regulation*.  First Independence is a unitary savings and loan holding company
subject to regulatory oversight by the OTS.  As a result, First Independence is required to register and file
reports with the OTS and is subject to regulation and examination by the OTS.  In addition, the OTS has
enforcement authority over First Independence and its non-savings association subsidiaries which also
permits the OTS to restrict or prohibit activities that are determined to be a serious risk to the subsidiary
savings association.

As a unitary savings and loan holding company that was in existence prior to May 4, 1999, First
Independence is generally not subject to activity restrictions at the holding company level.  If First
Independence acquires control of another savings association as a separate subsidiary, it would become a
multiple savings and loan holding company, and the activities of First Independence would be limited to
those that are only financial in nature.

If First Federal fails the QTL test, First Independence must obtain the approval of the OTS prior to
continuing after the failure, directly or through its other subsidiaries, any business activity other than those
approved for multiple savings and loan holding companies or their subsidiaries.  In addition, within one year
of the failure First Independence must register as, and will become subject to, the restrictions applicable to
bank holding companies.  The activities authorized for a bank holding company are more limited than are
the activities authorized for a unitary or multiple savings and loan holding company.  See "- Qualified Thrift
Lender Test."

First Independence must obtain approval from the OTS before acquiring control of any other SAIF-insured association.  These acquisitions are generally prohibited if they result in a multiple savings and loan
holding company controlling savings associations in more than one state.  However, interstate acquisitions
are permitted based on specific state authorization or in a supervisory acquisition of a failing savings
association.

*Federal Securities Law*.  The common stock of First Independence is registered with the SEC under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").  First Independence is subject to
the information, proxy solicitation, insider trading restrictions and other requirements of the SEC under the
Exchange Act.

First Independence stock held by persons who are affiliates (generally officers, directors and
principal stockholders) of First Independence may not be resold without registration unless sold in
accordance with certain resale restrictions.  If First Independence meets specified current public information
requirements, each affiliate of First Independence is able to sell in the public market, without registration,
a limited number of shares in any three-month period.

*Federal Reserve System*.  The Federal Reserve Board requires all depository institutions to maintain
noninterest bearing reserves at specified levels against their transaction accounts (primarily checking, NOW
and Super NOW checking accounts).  At September 30, 2001, First Federal was in compliance with these
reserve requirements.  The balances maintained to meet the reserve requirements imposed by the Federal
Reserve Board may be used to satisfy liquidity requirements that may be imposed by the OTS.  See "-
Liquidity."

Savings associations are authorized to borrow from the Federal Reserve Bank "discount window,"
but Federal Reserve Board regulations require associations to exhaust other reasonable alternative sources
of funds, including FHLB borrowings, before borrowing from the Federal Reserve Bank.

*Federal Home Loan Bank System*.  First Federal is a member of the FHLB of Topeka, which is one
of 12 regional FHLBs that administer the home financing credit function of savings associations.  Each
FHLB serves as a reserve or central bank for its members within its assigned region.  It is funded primarily
from proceeds derived from the sale of consolidated obligations of the FHLB System.  It makes loans to
members (i.e., advances) in accordance with policies and procedures, established by the board of directors
of the FHLB, which are subject to the oversight of the Federal Housing Finance Board.  All advances from
the FHLB are required to be fully secured by sufficient collateral as determined by the FHLB.  In addition,
all long-term advances are required to provide funds for residential home financing.

As a member, First Federal is required to purchase and maintain stock in the FHLB of Topeka.  At
September 30, 2001, First Federal had $2.3 million in FHLB stock, which was in compliance with this
requirement.  In past years, First Federal has received substantial dividends on its FHLB stock.  Over the past
five fiscal years these dividends have averaged 7.36% and were 7.59% for fiscal 2001.

Under federal law, the FHLBs are required to provide funds for the resolution of troubled savings
associations and to contribute to low- and moderately-priced housing programs through direct loans or
interest subsidies on advances targeted for community investment and low- and moderate-income housing
projects.  These contributions have affected adversely the level of FHLB dividends paid and could continue
to do so in the future.  These contributions could also have an adverse effect on the value of FHLB stock in
the future.  A reduction in value of First Federal's FHLB stock may result in a corresponding reduction in
First Federal's capital.

For the fiscal year ended September 30, 2001, dividends paid by the FHLB of Topeka to First
Federal totaled $166,032, which constitutes a $31,690 increase over the amount of dividends received in
fiscal year 2000.

**Federal and State Taxation**

*Federal Taxation*.  In addition to the regular income tax, corporations, including savings associations
like First Federal, generally are subject to a minimum tax.  An alternative minimum tax is imposed at a
minimum tax rate of 20% on alternative minimum taxable income, which is the sum of a corporation's regular
taxable income (with certain adjustments) and tax preference items, less any available exemption.  The
alternative minimum tax is imposed to the extent it exceeds the corporation's regular income tax and net
operating losses can offset no more than 90% of alternative minimum taxable income.

A portion of First Federal's reserves for losses on loans may not, without adverse tax consequences,
be utilized for the payment of cash dividends or other distributions to a shareholder (including distributions
on redemption, dissolution or liquidation) or for any other purpose (except to absorb bad debt losses).  As
of September 30, 2001, the portion of First Federal's reserves subject to this treatment for tax purposes
totaled approximately $2.8 million.

We file consolidated federal income tax returns on a fiscal year basis using the accrual method of
accounting.  Savings institutions that file federal income tax returns as part of a consolidated group are
required by applicable Treasury regulations to reduce their taxable income for purposes of computing the
percentage bad debt deduction for losses attributable to activities of the non-savings association members
of the consolidated group that are functionally related to the activities of the savings association member.

Our federal income tax returns for the last three years are open to possible audit by the IRS.  No
returns are being audited by the IRS at the current time.  In our opinion, any examination of still open returns
would not result in a deficiency which could have a material adverse effect on our financial condition.

For additional information regarding federal income taxation, see Note K of the Notes to
Consolidated Financial Statements in the Annual Report to Stockholders.

*Kansas Taxation.*  First Independence and First Federal file separate Kansas income and Kansas
privilege tax returns, respectively, on a fiscal year basis using the accrual method of accounting.

Kansas law permits savings and loan associations to deduct from net income, a reserve established
for the sole purpose of meeting or absorbing losses, in the amount of five percent of such net income

We have not been audited by the Kansas Department of Revenue for the last ten years and have
Kansas privilege tax returns which are open and subject to audit for the years 1998 through 2000.  In our
opinion, any examination of such open returns would not result in a deficiency which could have a material
adverse effect on our financial condition.

*Delaware Taxation*.  As a Delaware holding company, First Independence is exempted from
Delaware corporate income tax, but is required to file an annual report with and pay an annual fee to the State
of Delaware.  First Independence is also subject to an annual franchise tax imposed by the State of Delaware.

**Competition**

We face strong competition, both in originating real estate and other loans and in attracting deposits.
Competition in originating real estate loans comes primarily from commercial banks and credit unions.

We attract all of our deposits, primarily from Montgomery and Wilson Counties where our offices
are located; therefore, competition for those deposits is principally from commercial banks and credit unions
located in the same  communities.  We compete for these deposits by offering a variety of deposit accounts
at competitive rates and convenient business hours.  We estimate our share of the savings market in our
primary market area to be approximately 14%.

**Executive Officers of First Independence**

The following table sets forth certain information with respect to each of the executive officers of
First Independence.

|NAME              | AGE(1) | POSITION(S) HELD                               
|----------------- | ------ | -----------------------------------------------
|Larry G. Spencer  | 53     | President, Chief Executive Officer and Director
|Gary L. Overfield | 49     | Senior Vice President and Secretary            
|James B. Mitchell | 46     | Vice President and Chief Financial Officer     

**Executive Officers of First Federal**

The following table sets forth certain information with respect to each of the executive officers of
First Federal.

|NAME              | AGE(1) | POSITION(S) HELD                                       
|----------------- | ------ | -------------------------------------------------------
|Larry G. Spencer  | 53     | President, Chief Executive Officer and Director        
|Gary L. Overfield | 49     | Senior Vice President, Secretary and Chief Loan Officer
|Jim L. Clubine    | 48     | Vice President and Asset Manager                       
|James B. Mitchell | 46     | Vice President and Chief Financial Officer             

*Larry G. Spencer.*  Mr. Spencer is President and Chief Executive Officer of First Independence and
First Federal.  Mr. Spencer has been employed by First Federal since 1974 and has held a variety of positions
including Executive Vice President.  Mr. Spencer was promoted to President and Chief Executive Officer
of First Federal in 1990 and has been the President and Chief Executive Officer of First Independence since
inception.  Mr. Spencer received a degree in Business Administration from Pittsburg State University and
served in the U.S. Army for three years.  He has served on the boards of the Chamber of Commerce, Main
Street, the Independence Community College Endowment Association, Community Chest and Junior
Achievement.  He is presently a member of the board of Heartland Community Bankers, USD #446
Endowment Association, Kansas Food Bank, and Independence Industries.  He is also a member of the
Rotary Club.

*Gary L. Overfield.*  Mr. Overfield is Senior Vice President and Secretary of First Independence,
positions he has held since inception, and Senior Vice President, Secretary and Chief Loan Officer of First
Federal, positions he has held since 1990.  Mr. Overfield has been employed by First Federal since 1976 and
has held a variety of positions including Vice President and Loan Officer from 1985 to 1990.  Mr. Overfield
is a graduate of Pittsburg State University.  He is currently licensed by the State of Kansas as a Life and
Accident and Health Insurance agent.  He was a member of the Board of Directors and previous Secretary
of the Independence Rotary Club, a youth coach for the Independence Recreation Commission, previous
Treasurer for the local chapter of Duck's Unlimited, and previous Director and Treasurer for the
Independence Chamber of Commerce.

*Jim L. Clubine.*  Mr. Clubine is Vice President and Asset Manager of First Federal, positions he has
held since 1990.  Prior to joining First Federal, he was employed as Branch Manager by MidAmerica Federal
of Parsons, Kansas from 1979 to 1990.  Mr. Clubine is a member of Independence Chamber of Commerce
(Ambassador Club), Airport Advisory Board, Neewolah Board of Directors and Carnival Chairman, and a
member of the Rotary Club.  He was a previous member of the Mercy Hospital Foundation Fund Raising
Committee, Eisenhower Site Council team, Chairman of the March of Dimes and former board member for
Chamber of  Commerce, Community Chest and Junior Achievement.  Mr. Clubine is a graduate of Kansas
State University.

*James B. Mitchell.*  Mr. Mitchell is Vice President and Chief Financial Officer of First Independence,
positions he has held since inception, and also of First Federal, positions he has held since March 1992.  Prior
to joining First Federal, he was employed by Eureka Savings Bank, Eureka, Kansas, in the capacity of
Strategic Asset Manager from 1988 to 1991 and Chief Financial Officer from 1991 to 1992.  From 1976 to
1988, Mr. Mitchell was Chief Financial Officer for Peoples Savings and Loan, Parsons, Kansas.  He is
presently a member of the board of Junior Achievement.  Mr. Mitchell has an accounting degree from
Pittsburg State University.

**Employees**

At September 30, 2001, we had a total of 36 employees.  Our employees are not represented by any
collective bargaining group.  We consider our employee relations to be good.

**Item 2.  Description of Property**

First Independence owns its offices located at Myrtle and Sixth in Independence, Kansas, McArthur
and Eleventh in Coffeyville, Kansas and Eight and Main in Neodesha, Kansas.  The total net book value of
First Independence's premises and equipment at September 30, 2001, was $1,472,000.

First Federal established a loan production office in Lawrence, Kansas effective October 15, 1997.
The office primarily originates construction loans in Lawrence and the surrounding area.  Loan approvals
are made at the main office with disbursements and collections handled at the loan production office.

We maintain depositor and borrower customer files on an on-line basis with the FiServ Data
Processing System, Milwaukee, Wisconsin.  The net book value of the data processing and computer
equipment utilized by us at September 30, 2001, was approximately $151,000.

**Item 3.  Legal Proceedings**

From time to time, we are involved as plaintiff or defendant in various legal actions arising in the
normal course of  business.  We were not involved in any legal proceedings of a material nature at
September 30, 2001.

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

No matter was submitted to a vote of security holders, through the solicitation of proxies or
otherwise, during the quarter ended September 30, 2001.



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

Page 38 of the 2001 Annual Report to Stockholders is incorporated herein by reference.

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

Pages 4 through 12 of the 2001 Annual Report to Stockholders are incorporated herein by reference.

**Item 7.  Financial Statements**

The following information appearing in the 2001 Annual Report to Stockholders is incorporated
herein by reference.

|Annual Report Section                                                                                | Pages inAnnualReport
|---------------------------------------------------------------------------------------------------- | --------------------
|                                                                                                     |                     
|Report of Independent Certified Public Accountants                                                   | 13                  
|Consolidated Balance Sheets (September 30, 2001 and 2000)                                            | 14-15               
|Consolidated Statements of Earnings (For the Years Ended September 30, 2001 and 2000)                | 16                  
|Consolidated Statements of Comprehensive Income (For the Years Ended September 30, 2001
   and 2000) | 17                  
|Consolidated Statements of Stockholders' Equity (For the Years Ended September 30, 2001  and 2000)   | 18                  
|Consolidated Statements of Cash Flows (For the Years Ended September 30, 2001 and 2000)              | 19-20               
|Notes to Consolidated Financial Statements                                                           | 21                  

With the exception of the aforementioned information in Part II of this Form 10-KSB, the 2001
Annual Report to Stockholders is not deemed filed as part of this Annual Report on Form 10-KSB.

**Item 8.  Changes In and Disagreements With Accountants on Accounting and**               **Financial Disclosure**

There has been no Current Report on Form 8-K filed within 24 months prior to the date of the most
recent financial statements reporting a change of accountants and/or reporting disagreements on any matter
of accounting principle or financial statement disclosure.



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

Directors

Information concerning our directors is incorporated herein by reference from the definitive proxy
statement for the annual meeting of stockholders to be held in 2002, a copy of which will be filed not later
than 120 days after the close of the fiscal year.

Executive Officers

Information concerning our executive officers contained in Part I of this Form 10-KSB is
incorporated herein by reference.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires First Independence's
directors and executive officers, and persons who own more than 10% of First Independence's equity
securities to report their initial ownership of First Independence's common stock and other equity securities,
and any subsequent changes in that ownership to the Securities and Exchange Commission (the "SEC").
Specific due dates for these reports have been established by the SEC and First Independence is required to
disclose in this proxy statement any late filings or failures to file.

To our knowledge, based solely on a review of the copies of such reports furnished to us and written
representations that no other reports were required during the fiscal year ended September 30, 2001, all
Section 16(a) filing requirements applicable to First Independence's executive officers, directors and greater
than 10% beneficial owners were complied with, except that Mr. Clubine filed one late report relating to an
exercise of his stock options.

**Item 10.  Executive Compensation**

Information concerning executive compensation is incorporated herein by reference from the
definitive proxy statement for the annual meeting of stockholders to be held in 2002, a copy of which will
be filed not later than 120 days after the close of the fiscal year.

**Item 11.  Security Ownership of Certain Beneficial Owners and Management**

Information concerning security ownership of certain beneficial owners and management is
incorporated herein by reference from the definitive proxy statement for the annual meeting of stockholders
to be held in 2002, a copy of which will be filed not later than 120 days after the close of the fiscal year.

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

Information concerning certain relationships and related transactions is incorporated herein by
reference from the definitive proxy statement for the annual meeting of stockholders to be held in 2002, a
copy of which will be filed not later than 120 days after the close of the fiscal year.

******Item 13.  Exhibits and Reports on Form 8-K**

**(a)  Exhibits**

|**Regulation S-B
Exhibit
Number** | **Document**                                                                 | **Reference to
Prior Filing or
Exhibit Number
Attached Hereto**
|--------------------------------- | ---------------------------------------------------------------------------- | ---------------------------------------------------------------
|2                                 | Plan of acquisition, reorganization, arrangement, liquidation, or succession | None                                                           
|3(i)                              | Articles of Incorporation                                                    | *                                                              
|3(ii)                             | By-Laws                                                                      | *                                                              
|4                                 | Instruments defining the rights of security holders, including indentures    | *                                                              
|9                                 | Voting trust agreement                                                       | None                                                           
|10                                | Material contracts                                                           |                                                                
|                                  | (a)  1993 Stock Option and Incentive Plan                                    | *                                                              
|                                  | (b)  Recognition and Retention Plan                                          | *                                                              
|                                  | (c)  Employment Agreements                                                   | *                                                              
|11                                | Statement re: computation of per share earnings                              | **                                                             
|13                                | Annual report to stockholders                                                | 13                                                             
|16                                | Letter on change in certifying accountant                                    | None                                                           
|18                                | Letter on change in accounting principles                                    | None                                                           
|21                                | Subsidiaries of the registrant                                               | 21                                                             
|22                                | Published report regarding matters submitted to vote                         | None                                                           
|23                                | Consent of experts and counsel                                               | 23                                                             
|24                                | Power of attorney                                                            | None                                                           
|99                                | Additional exhibits                                                          | None                                                           

|*  | Filed as an exhibit to First Independence's Form S-1 registration statement filed on June 22, 1994 (File No. 33-64812) pursuant
to Section 5 of the Securities Act of 1933.  All of such previously filed documents are hereby incorporated herein by reference
in accordance with Item 601 of Regulation S-B.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|** | See Note A of Notes to Consolidated Financial Statements in the 2001 Annual Report to Stockholders attached hereto as Exhibit
13.                                                                                                                                                                             

**(b)  Reports on Form 8-K**

During the quarter ended September 30, 2001, we did not file any Current Reports on Form 8-K.



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

|                         |     | **FIRST INDEPENDENCE CORPORATION**                                                                                       
|------------------------ | --- | -------------------------------------------------------------------------------------------------------------------------
|Date:  December 27, 2001 | By: | /s/ Larry G. Spencer
Larry G. Spencer, President, Chief Executive
Officer and Director*(Duly Authorized**Representative)*

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons in the capacities and on the dates indicated.

|/s/ Larry G. Spencer
Larry G. Spencer, President, Chief
Executive Officer and Director *(Principal**Executive and* *Operating Officer)* |  | /s/ James B. Mitchell
James B. Mitchell, Vice President and Chief
Financial Officer *(Principal Financial and**Accounting Officer)*
|--------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                        |  |                                                                                                                                    
|Date:  December 27, 2001                                                                                                                |  | Date:  December 27, 2001                                                                                                           
|                                                                                                                                        |  |                                                                                                                                    
|/s/ E. JoVonnah Boecker
E. JoVonnah Boecker, Director                                                                                   |  | /s/ William T. NewKirk II
William T. NewKirk II, Director                                                                          
|                                                                                                                                        |  |                                                                                                                                    
|Date:  December 27, 2001                                                                                                                |  | Date:  December 27, 2001                                                                                                           
|                                                                                                                                        |  |                                                                                                                                    
|/s/ Harold L. Swearingen
Harold L. Swearingen, Director                                                                                 |  | /s/ Joseph M. Smith
Joseph M. Smith, Director                                                                                      
|                                                                                                                                        |  |                                                                                                                                    
|Date:  December 27, 2001                                                                                                                |  | Date:  December 27, 2001                                                                                                           
|                                                                                                                                        |  |                                                                                                                                    
|/s/ Lavern W. Strecker	
Lavern W. Strecker, Director                                                                                    |  | /s/ Robert A. Johnson
Robert A. Johnson, Director                                                                                  
|                                                                                                                                        |  |                                                                                                                                    
|Date:  December 27, 2001                                                                                                                |  | Date:  December 27, 2001                                                                                                           



|Exhibit Number | Document                      
|-------------- | ------------------------------
|               |                               
|13             | Annual Report to Stockholders 
|21             | Subsidiaries of the Registrant
|23             | Consent of Accountants