SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 21549

                                    FORM 10-K

                          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
            THE SECURITIES AND EXCHANGE ACT OF 1934 (FEE REQUIRED)
                   For fiscal year ended December 31, 1999
                                       OR

                  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
            SECURITIES AND EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
                          For transition period from to

                         Commission File Number 0-21878

                             MNB BANCSHARES, INC.
                             --------------------
            (Exact name of Registrant as specified in its charter)

DELAWARE                                       48-1120026
--------                                       ----------
(State or other jurisdiction              (I.R.S.Employer Identification Number)
of incorporation or organization)

                  800 POYNTZ AVENUE, MANHATTAN, KANSAS 66505
                  ------------------------------------------
             (Address of principal executive offices) (Zip Code)

                                (785) 565-2000
                                --------------
             (Registrant's telephone number, including area code)

         SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                                   Name of Each Exchange
      TITLE OF EACH CLASS                          ON WHICH REGISTERED
             None                                           None

         SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                   COMMON STOCK, PAR VALUE $0.01 PER SHARE
                                (Title of Class)

      Indicate by check mark whether the Registrant (1) has filed all reports to
be filed by  Section  13 or 15(d) of the  Securities  and  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  Registrant
was  required  to file such  reports),  and (2) has been  subject to SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES X No ___

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this 10-K or any amendment to this form
10-K. [ ]

      The aggregate  market value of voting  common stock of Registrant  held by
non-affiliates  as of March 28, 2000 was  $5,588,171.*  At March 28, 2000, the
total number of shares of common stock outstanding was 1,443,622.

Documents incorporated by Reference:

      Portions of the 1999  Annual  Report to  Stockholders  for the fiscal year
ended  December  31, 1999,  are  incorporated  by reference  into Parts I and II
hereof, to the extent indicated herein.  Portions of the Proxy Statement for the
Annual  Meeting of  Stockholders  to be held May 17, 2000, are  incorporated  by
reference in Part III hereof, to the extent indicated herein.

* Based on the last reported price of actual transactions in Registrant's common
stock on March 28, 2000,  and reports of  beneficial  ownership  prepared by all
directors,  executive  officers  and  beneficial  owners  of more than 5% of the
outstanding shares of common stock of Registrant; however, such determination of
shares owned by affiliates does not constitute an admission of affiliate  status
or beneficial interest in shares of common stock of Registrant.
<PAGE>
                              MNB BANCSHARES, INC.

                          1999 Form 10-K Annual Report

                                Table of Contents

                                     PART I

ITEM 1.     BUSINESS..............................................       1

ITEM 2.     PROPERTIES............................................      20

ITEM 3.     LEGAL PROCEEDINGS.....................................      20

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY
            HOLDERS...............................................      20

ITEM 5.     MARKET FOR THE COMPANY'S COMMON STOCK AND
            RELATED STOCKHOLDER MATTERS...........................      20

ITEM 6.     SELECTED FINANCIAL DATA...............................      20

ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS...................      21

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA............      21

ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
            ACCOUNTING AND FINANCIAL DISCLOSURE...................      21

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT....      21

ITEM 11.    EXECUTIVE COMPENSATION................................      22

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
            AND MANAGEMENT........................................      22

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........      22

ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
            REPORTS ON FORM 8-K...................................      22

SIGNATURES  ......................................................      24



<PAGE>


                                     PART I.

ITEM 1.   BUSINESS

REGISTRANT AND ITS SUBSIDIARIES

      MNB   Bancshares,   Inc.  (the   "Company")  is  a  bank  holding  company
incorporated under the laws of the State of Delaware.  Currently,  the Company's
business consists solely of the ownership of Security National Bank,  Manhattan,
Kansas (the "Bank"). The Bank is a wholly-owned subsidiary of the Company and is
the successor-in-interest to Manhattan National Bank, formerly Manhattan Federal
Savings and Loan  Association  (the  "Association"),  which, on January 5, 1993,
converted  concurrently  from a federal mutual savings  association to a federal
stock  savings  association  (the "Stock  Conversion")  and from a federal stock
savings  association to a national bank (the "Bank  Conversion")  (collectively,
the "Conversion").  The term "Bank", as used in this Form 10-K, sometimes refers
to the Association during the period prior to the Conversion.

      The Company was  organized  on August 27,  1992,  at the  direction of the
Board of Directors of the  Association to acquire all of the stock issued by the
Association upon  consummation of the Stock  Conversion.  On January 5, 1993, in
connection with the Stock Conversion, the Company issued and sold 925,750 shares
of its common stock,  par value $0.01 per share, in a Subscription and Community
Offering to the Company's  employee  stock  ownership  plan,  the  Association's
members and the general  public.  Total net  proceeds  of the  Subscription  and
Community Offering,  after Conversion expenses of approximately  $600,000,  were
approximately $4 million. The Company utilized $2 million of the net proceeds to
acquire  all of the  common  stock,  par value  $1.00 per  share,  issued by the
Association in connection with the Stock Conversion.  The remaining net proceeds
were then invested by the Company in interest  bearing  deposit  accounts at the
Bank and in other investment securities.

      On April 1, 1995, the Company  acquired all of the issued and  outstanding
stock of Auburn Security  Bancshares,  Inc.  ("Auburn"),  which had consolidated
assets of approximately $20 million. Auburn was a one-bank holding company which
owned 99% of the  outstanding  stock of  Security  State Bank,  Auburn,  Kansas.
Subsequent to the  acquisition,  the Company acquired all of the remaining stock
of  Security   State  Bank.  On  December  31,  1995,  the  Company  merged  and
consolidated  Manhattan  National  Bank and  Security  State BANK INTO  SECURITY
NATIONAL BANK. IN MAY, 1997, A DE NOVO branch was opened in Topeka,  Kansas.  On
December 31, 1997, the Company  acquired Freedom  Bancshares,  Inc., Osage City,
Kansas  ("Freedom"),  the holding  company for Citizens State Bank,  Osage City,
Kansas  ("Citizens"),  with a branch  in  Beloit,  Kansas.  Consolidated  assets
acquired in this transaction were  approximately  $43 million.  On June 5, 1998,
the Company  sold the Beloit,  Kansas  branch.  On January 6, 2000,  the Company
opened an in-store  supermarket  branch in Manhattan, Kansas.  On March 29, 2000
the  Company  announced  an  agreement to  purchase  the Wamego and Osage City,
Kansas branches of Commercial Federal Bank, with total deposits of approximately
$17 million.

      As a bank holding  company,  the Company is subject to  regulation  by the
Board of Governors of the Federal Reserve System (the "Federal  Reserve Board").
The Company is also subject to various reporting  requirements of the Securities
and Exchange Commission (the "SEC").

      Pursuant to the  Conversion,  the Bank  succeeded to all of the assets and
liabilities   of  the   Association.   The   Association   was  organized  as  a
Kansas-chartered  mutual building and loan association in 1885, and converted to
a federally  chartered  mutual savings and loan association in 1938. The Bank is
principally  engaged in the  business of  attracting  deposits  from the general
public and using such deposits,  together with  borrowings  and other funds,  to
originate consumer, commercial, multi-family, and one-to-four family residential
mortgage loans in the Bank's principal  lending areas,  consisting  primarily of
Manhattan,   Auburn,   Topeka,  and  Osage  City,  Kansas  and  the  surrounding
communities in Riley, Pottawatomie,  Shawnee and Osage Counties in Kansas. Since
Conversion,  the Bank has focused on originating  greater numbers and amounts of
consumer, commercial, and agricultural loans. Additionally, greater emphasis has
been placed on  diversification  of the deposit  mix through  expansion  of core
deposit accounts such as checking,  savings, and money market accounts. The Bank
has also  diversified its  geographical  markets with the acquisitions of Auburn
and Osage City and the establishment of the branch facility in Topeka.

      The results of  operations of the Bank are  dependent  primarily  upon net
interest  income and, to a lesser  extent,  upon other income  derived from loan
servicing fees and customer deposit  services.  Additional  expenses of the Bank
include general and administrative expenses such as salaries, employee benefits,
federal  deposit  insurance  premiums,  data  processing,  occupancy and related
expenses.

      Deposits  of the  Manhattan  branch of the Bank are insured by the Savings
Association  Insurance  Fund  (the  "SAIF")  of the  Federal  Deposit  Insurance
Corporation  (the "FDIC") up to the maximum amount  allowable  under  applicable
federal laws and regulations. Deposits of the remaining branches of the Bank are
insured by the Bank  Insurance  Fund (the  "BIF").  The Bank is regulated by the
Office  of the  Comptroller  of the  Currency  (the  "OCC"),  as the  chartering
authority for national banks, and the FDIC, as the administrator of the SAIF and
the BIF. The Bank is also subject to  regulation  by the Federal  Reserve  Board
with respect to reserves required to be maintained  against deposits and certain
other matters.  The Bank is a member of the Federal  Reserve Bank of Kansas City
and the Federal Home Loan Bank (the "FHLB") of Topeka.

      The Company's executive office is located at 800 Poyntz Avenue, Manhattan,
Kansas 66502. Its telephone number is (785) 565-2000.

MARKET AREA

      The Bank's home office is located at 800 Poyntz Avenue, Manhattan, Kansas,
with  branches  located  at 1741 N.  Washington,  Auburn,  Kansas;  6100 SW 21st
Street, Topeka, Kansas, and 102 S 6th, Osage City, Kansas.  Manhattan is located
in east central Kansas,  approximately 45 miles west of Topeka. Manhattan is the
county seat and largest city in Riley County. Over the past decade, Riley County
has experienced household growth at an annual rate which is slightly higher than
the growth rates for Kansas in general. Auburn is located ten miles southwest of
Topeka and in an area  experiencing the growth and expansion of the metropolitan
Topeka area.  Topeka is the state capital.  Osage City is approximately 30 miles
south of Topeka and has a population of 2,700.

      The Bank's primary deposit gathering and lending market consists of Riley,
Osage,  Pottawatomie,  and Shawnee Counties,  Kansas.  Riley County's economy is
significantly  influenced by  employment at Fort Riley  Military Base and Kansas
State University,  the second largest university in Kansas,  which is located in
Manhattan. Shawnee County's economy is strongly influenced by the City of Topeka
and  several  major  private  firms and  public  institutions.  Osage  County is
primarily agricultural with small private industries and business firms.

      Other  sources of employment  in the  Manhattan  branch's  market area are
derived from a variety of service, trade and manufacturing  employers located in
southern  Riley County and western  Pottawatomie  County,  including the Unified
School District, the Kansas Farm Bureau and the McCall Pattern Company. Northern
Riley County and eastern  Pottawatomie County are primarily rural,  agricultural
areas. Other sources of employment in the Auburn,  Osage City, and Topeka market
areas are numerous  manufacturing,  distribution,  and retail centers located in
Shawnee County.  These include Goodyear Tire & Rubber;  Blue Cross/Blue  Shield;
Volume Shoe  Corporation;  the Menninger  Foundation;  and Washburn  University.
Others  in  the  Topeka  area  include   Frito-Lay,   Inc.;   Southwestern  Bell
Corporation; the Veteran's Administration;  and Hill's Pet Food. Major employers
in Osage City are  Kan-Build,  Inc., a firm which  specializes  in  manufactured
housing, and Mussatto Brothers, Inc., a wholesale beverage distributor.

COMPETITION

      The Bank faces strong  competition both in attracting  deposits and making
real estate and other loans. Its most direct competition for deposits comes from
commercial banks and other savings  institutions located in its principal market
areas of Riley, Osage,  Pottawatomie and Shawnee Counties,  including many large
financial  institutions  which have greater  financial and  marketing  resources
available  to them.  The  ability  of the Bank to attract  and  retain  deposits
generally depends on its ability to provide a rate of return, liquidity and risk
comparable  to that  offered by  competing  investment  opportunities.  The Bank
competes  for loans  principally  through  the  interest  rates and loan fees it
charges and the  efficiency  and  quality of  services  it  provides  borrowers.
Additionally,  competition may increase as a result of the continuing  reduction
on restrictions on the interstate  operations of financial  institutions.  Under
the  Gramm-Leach-Bliley  Act of 1999, effective March 11, 2000, securities firms
and insurance  companies that elect to become  financial  holding  companies may
acquire banks and other financial  institutions.  The Gramm-Leach-Bliley Act may
significantly  change the  competitive  environment in which the Company and the
Bank conduct business.  The financial services industry is also likely to become
more  competitive  as further  technological  advances  enable more companies to
provide  financial  services.  These  technological  advances  may  diminish the
importance of depository institutions and other financial  intermediaries in the
transfer of funds between parties.

EMPLOYEES

      At December 31, 1999,  the Bank had a total of 64 employees  (60 full time
equivalent  employees).  The  Company  has no direct  employees.  Employees  are
provided  with a  comprehensive  benefits  program,  including  basic  and major
medical insurance,  life and disability insurance, sick leave, an employee stock
ownership plan and a 401(k) profit sharing plan.  Employees are not  represented
by any union or collective  bargaining group and the Bank considers its employee
relations to be good.

SUPERVISION AND REGULATION

GENERAL

      Financial   institutions  and  their  holding  companies  are  extensively
regulated  under  federal  and state law. As a result,  the growth and  earnings
performance of the Company can be affected not only by management  decisions and
general  economic  conditions,  but also by the requirements of applicable state
and federal  statutes and regulations  and the policies of various  governmental
regulatory authorities,  including the Office of the Comptroller of the Currency
(THE "OCC"),  the Board of Governors of the Federal Reserve System (the "Federal
Reserve"),  the Federal Deposit Insurance Corporation (the "FDIC"), the Internal
Revenue  Service and state taxing  authorities  and the  Securities and Exchange
Commission  (the "SEC").  The effect of  applicable  statutes,  regulations  and
regulatory  policies can be  significant,  and cannot be  predicted  with a high
degree of certainty.

      Federal and state laws and regulations  generally  applicable to financial
institutions,  such as the Company and its subsidiaries,  regulate,  among other
things, the scope of business,  investments,  reserves against deposits, capital
levels  relative to  operations,  the nature and amount of collateral for loans,
the establishment of branches, mergers, consolidations and dividends. The system
of  supervision  and regulation  applicable to the Company and its  subsidiaries
establishes a  comprehensive  framework for their  respective  operations and is
intended  primarily for the protection of the FDIC's deposit insurance funds and
the depositors, rather than the shareholders, of financial institutions.

      The  following  is a summary of the  material  elements of the  regulatory
framework that applies to the Company and its subsidiaries. It does not describe
all of the  statutes,  regulations  and  regulatory  policies  that apply to the
Company and its subsidiaries, nor does it restate all of the requirements of the
statutes,  regulations and regulatory policies that are described.  As such, the
following is qualified in its entirety by reference to the applicable  statutes,
regulations and regulatory  policies.  Any change in applicable law, regulations
or regulatory policies may have a material effect on the business of the Company
and its subsidiaries.

RECENT REGULATORY DEVELOPMENTS

      On November 12, 1999, President Clinton signed legislation that will allow
bank  holding  companies  to engage in a wider range of  nonbanking  activities,
including  greater  authority to engage in securities and insurance  activities.
Under the Gramm-Leach-Bliley Act (the "Act"), a bank holding company that elects
to become a  financial  holding  company  may  engage in any  activity  that the
Federal Reserve, in consultation with the Secretary of the Treasury,  determines
by regulation or order is (i) financial in nature,  (ii)  incidental to any such
financial  activity,  or (iii)  complementary to any such financial activity and
does not pose a  substantial  risk to the  safety  or  soundness  of  depository
institutions  or the  financial  system  generally.  The Act  specifies  certain
activities  that are  deemed  to be  financial  in  nature,  including  lending,
exchanging,  transferring,  investing  for  others,  or  safeguarding  money  or
securities; underwriting and selling insurance; providing financial, investment,
or economic advisory services;  underwriting,  dealing in or making a market in,
securities;  and any activity currently  permitted for bank holding companies by
the Federal  Reserve  under section  4(c)(8) of the Bank Holding  Company Act. A
bank holding company may elect to be treated as a financial holding company only
if  all  depository   institution   subsidiaries  of  the  holding  company  are
well-capitalized, well-managed and have at least a satisfactory rating under the
Community Reinvestment Act.

      National  banks  are  also  authorized  by  the  Act  to  engage,  through
"financial  subsidiaries,"  in any activity that is permissible  for a financial
holding company (as described  above) and any activity that the Secretary of the
Treasury,  in consultation with the Federal Reserve,  determines is financial in
nature or  incidental  to any such  financial  activity,  except  (i)  insurance
underwriting,  (ii) real estate development or real estate investment activities
(unless   otherwise   permitted  by  law),  (iii)  insurance  company  portfolio
investments  and (iv)  merchant  banking.  The  authority of a national  bank to
invest  in a  financial  subsidiary  is  subject  to  a  number  of  conditions,
including,  among other things,  requirements that the bank must be well-managed
and  well-capitalized  (after  deducting  from  capital  the bank's  outstanding
investments  in financial  subsidiaries).  The Act provides that state banks may
invest in financial  subsidiaries  (assuming they have the requisite  investment
authority under  applicable state law) subject to the same conditions that apply
to national bank investments in financial subsidiaries.

      At this time, it is not possible to predict the impact the Act may have on
the  Company.   Various  bank  regulatory   agencies  have  just  begun  issuing
regulations  as mandated by the Act.  The Federal  Reserve has issued an interim
rule that sets forth  procedures  by which  bank  holding  companies  may become
financial holding companies,  the criteria necessary for such a conversion,  and
the  Federal  Reserve's  enforcement  powers  should a holding  company  fail to
maintain  compliance  with  the  criteria.  The OCC  has  issued  a  final  rule
discussing  the  procedures  by which  national  banks may  establish  financial
subsidiaries as well as the qualifications and safeguards that will be required.
In addition,  in February,  2000, all federal bank regulatory  agencies  jointly
issued a proposed rule that would implement the financial privacy  provisions of
the Act.

THE COMPANY

      GENERAL.  The  Company,  as the sole  shareholder  of the Bank,  is a bank
holding company. As a bank holding company,  the Company is registered with, and
is subject to regulation by, the Federal  Reserve under the Bank Holding Company
Act, as amended (the "BHCA").  In accordance with Federal  Reserve  policy,  the
Company is expected to act as a source of financial  strength to the Bank and to
commit  resources to support the Bank in  circumstances  where the Company might
not  otherwise  do so.  Under the BHCA,  the  Company  is  subject  to  periodic
examination  by the Federal  Reserve.  The Company is also required to file with
the  Federal  Reserve  periodic  reports of the  Company's  operations  and such
additional information regarding the Company and its subsidiaries as the Federal
Reserve may require.

      INVESTMENTS  AND  ACTIVITIES.  Under the BHCA, a bank holding company must
obtain Federal Reserve approval before:  (i) acquiring,  directly or indirectly,
ownership  or  control  of any voting  shares of  another  bank or bank  holding
company if, after the  acquisition,  it would own or control more than 5% of the
shares of the other bank or bank  holding  company  (unless  it already  owns or
controls the majority of such shares);  (ii) acquiring all or substantially  all
of the assets of another bank; or (iii)  merging or  consolidating  with another
bank holding company.  Subject to certain conditions  (including certain deposit
concentration  limits  established by the BHCA), the Federal Reserve may allow a
bank holding  company to acquire banks located in any state of the United States
without regard to whether the  acquisition is prohibited by the law of the state
in which the target  bank is  located.  In  approving  interstate  acquisitions,
however,  the Federal Reserve is required to give effect to applicable state law
limitations  on the  aggregate  amount  of  deposits  that  may be  held  by the
acquiring bank holding company and its insured depository institution affiliates
in the state in which the target bank is located  (provided that those limits do
not discriminate against out-of-state  depository  institutions or their holding
companies)  and state  laws  which  require  that the  target  bank have been in
existence  for a minimum  period of time (not to exceed five years) before being
acquired by an out-of-state bank holding company.

      The BHCA also  generally  prohibits the Company from  acquiring  direct or
indirect  ownership  or  control  of more  than 5% of the  voting  shares of any
company which is not a bank and from engaging in any business other than that of
banking,  managing and  controlling  banks or  furnishing  services to banks and
their  subsidiaries.  This  general  prohibition  is  subject  to  a  number  of
exceptions.  The principal exception allows bank holding companies to engage in,
and to own shares of  companies  engaged  in,  certain  businesses  found by the
Federal  Reserve to be "so  closely  related  to  banking  ... as to be a proper
incident thereto." Under current regulations of the Federal Reserve, the Company
and  its  non-bank  subsidiaries  are  permitted  to  engage  in  a  variety  of
banking-related  businesses,  including  the  operation  of a thrift,  sales and
consumer finance,  equipment leasing, the operation of a computer service bureau
(including software development),  and mortgage banking and brokerage.  The BHCA
generally does not place territorial  restrictions on the domestic activities of
non-bank subsidiaries of bank holding companies.

      Federal law also prohibits any person or company from acquiring  "control"
of a bank or bank  holding  company  without  prior  notice  to the  appropriate
federal bank regulator. "Control" is defined in certain cases as the acquisition
of 10% of the outstanding shares of a bank or bank holding company.

      CAPITAL  REQUIREMENTS.  Bank  holding  companies  are required to maintain
minimum levels of capital in accordance with Federal  Reserve  capital  adequacy
guidelines.  If capital falls below  minimum  guideline  levels,  a bank holding
company,  among other  things,  may be denied  approval to acquire or  establish
additional banks or non-bank businesses.

      The Federal Reserve's capital  guidelines  establish the following minimum
regulatory  capital  requirements  for  bank  holding  companies:  a  risk-based
requirement  expressed  as a percentage  of total  risk-weighted  assets,  and a
leverage  requirement  expressed as a percentage of total assets. The risk-based
requirement  consists of a minimum ratio of total capital to total risk-weighted
assets of 8%, at least  one-half of which must be Tier 1 capital.  The  leverage
requirement  consists of a minimum ratio of Tier 1 capital to total assets of 3%
for the most highly rated  companies,  with a minimum  requirement of 4% for all
others.  For  purposes  of these  capital  standards,  Tier 1  capital  consists
primarily of permanent  stockholders'  equity less intangible assets (other than
certain  mortgage  servicing  rights and purchased  credit card  relationships).
Total capital  consists  primarily of Tier 1 capital plus certain other debt and
equity  instruments  which do not qualify as Tier 1 capital and a portion of the
company's allowance for loan and lease losses.

      The  risk-based  and  leverage  standards   described  above  are  minimum
requirements.  Higher  capital  levels  will be  required  if  warranted  by the
particular  circumstances or risk profiles of individual banking  organizations.
For  example,   the  Federal  Reserve's  capital  guidelines   contemplate  that
additional  capital  may be required to take  adequate  account of,  among other
things,  interest  rate risk,  or the risks posed by  concentrations  of credit,
nontraditional activities or securities trading activities. Further, any banking
organization  experiencing or anticipating  significant growth would be expected
to maintain capital ratios,  including  tangible capital positions (I.E., Tier 1
capital less all intangible assets), well above the minimum levels.

      Under the Federal Reserve's  guidelines,  the capital standards  described
above apply on a  consolidated  basis to bank holding  companies  that have more
than  $150  million  in total  consolidated  assets,  but  generally  apply on a
bank-only basis to bank holding companies that, like the Company, have less than
$150  million in total  consolidated  assets.  Nevertheless,  as of December 31,
1999,  the  Company's  total  capital of $13.3  million is well in excess of the
Federal Reserve Board's consolidated minimum capital requirements.

      DIVIDENDS.  The Delaware  General  Corporation Law (the "DGCL") allows the
Company to pay  dividends  only out of its surplus  (as defined and  computed in
accordance  with  the  provisions  of the  DGCL) or if the  Company  has no such
surplus,  out of its net profits  for the fiscal  year in which the  dividend is
declared and/or the preceding fiscal year. Additionally, the Federal Reserve has
issued a policy  statement  with regard to the payment of cash dividends by bank
holding  companies.  The policy  statement  provides that a bank holding company
should not pay cash  dividends  which exceed its net income or which can only be
funded in ways that weaken the bank holding company's  financial health, such as
by borrowing.  The Federal Reserve also possesses  enforcement  powers over bank
holding  companies and their non-bank  subsidiaries to prevent or remedy actions
that represent unsafe or unsound practices or violations of applicable  statutes
and  regulations.  Among these powers is the ability to proscribe the payment of
dividends by banks and bank holding companies.

      FEDERAL  SECURITIES  REGULATION.  The Company's common stock is registered
with the SEC under the  Securities  Act of 1933, as amended,  and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Consequently, the Company
is subject to the  information,  proxy  solicitation,  insider trading and other
restrictions and requirements of the SEC under the Exchange Act.

THE BANK

      GENERAL.  The Bank is a  national  bank,  chartered  by the OCC  under the
National  Bank  Act.  The Bank is a member of the  FDIC's  Bank  Insurance  Fund
("BIF")  (but a portion of its  deposits  are deemed to be insured by the FDIC's
Savings Association  Insurance Fund ("SAIF")).  The Bank is also a member of the
Federal  Reserve  System.  As a  federally-insured  national  bank,  the Bank is
subject to the examination,  supervision, reporting and enforcement requirements
of the OCC, as the  chartering  authority for national  banks,  and the FDIC, as
administrator  of the BIF and the SAIF. The Bank is also a member of the Federal
Home Loan Bank System,  which provides a central credit  facility  primarily for
member institutions.

      DEPOSIT INSURANCE. As an FDIC-insured institution, the Bank is required to
pay deposit  insurance  premium  assessments to the FDIC. The FDIC has adopted a
risk-based assessment system under which all insured depository institutions are
placed into one of nine  categories and assessed  insurance  premiums based upon
their  respective  levels of capital  and  results of  supervisory  evaluations.
Institutions  classified  as  well-capitalized  (as  defined  by the  FDIC)  and
considered  healthy pay the lowest premium while institutions that are less than
adequately  capitalized  (as defined by the FDIC) 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.

      During the year ended December 31, 1999, BIF and SAIF  assessments  ranged
from 0% of deposits to 0.27% of deposits.  For the semi-annual assessment period
beginning  January 1, 2000, BIF and SAIF assessment rates will continue to range
from 0% of deposits to 0.27% of deposits.

      The FDIC may  terminate  the deposit  insurance of any insured  depository
institution if the FDIC  determines,  after a hearing,  that the institution (i)
has engaged or is engaging in unsafe or unsound practices,  (ii) is in an unsafe
or unsound condition to continue operations or (iii) has violated any applicable
law,  regulation,  order,  or any  condition  imposed in writing  by, or written
agreement  with,  the  FDIC.  The  FDIC  may  also  suspend  deposit   insurance
temporarily during the hearing process for a permanent  termination of insurance
if the  institution  has no tangible  capital.  Management of the Company is not
aware of any  activity or  condition  that could  result in  termination  of the
deposit insurance of the Bank.

      FICO  ASSESSMENTS.   Since  1987,  a  portion  of  the  deposit  insurance
assessments paid by SAIF members has been used to cover interest payments due on
the  outstanding  obligations of the Financing  Corporation  ("FICO").  FICO was
created in 1987 to finance the  recapitalization of the Federal Savings and Loan
Insurance  Corporation,  the SAIF's  predecessor  insurance fund. As a result of
federal legislation  enacted in 1996,  beginning as of January 1, 1997, both BIF
members and SAIF members  became  subject to  assessments  to cover the interest
payments on outstanding FICO obligations. These FICO assessments are in addition
to amounts assessed by the FDIC for deposit  insurance.  Between January 1, 2000
and the final maturity of the outstanding  FICO obligations in 2019, BIF members
and SAIF  members will share the cost of THE INTEREST ON THE FICO BONDS ON A PRO
RATA basis.  During the year ended December 31, 1999, the FICO  assessment  rate
for  SAIF  members   ranged  between   approximately   0.058%  of  deposits  and
approximately 0.061% of deposits, while the FICO assessment rate for BIF members
ranged between  approximately  0.0116% of deposits and approximately  0.0122% of
deposits.  During  the  year  ended  December  31,  1999,  the  Bank  paid  FICO
assessments totaling $45,000.

      SUPERVISORY   ASSESSMENTS.   All  national   banks  are  required  to  pay
supervisory assessments to the OCC to fund the operations of the OCC. The amount
of the  assessment  is  calculated  using a formula which takes into account the
bank's size and its supervisory condition (as determined by the composite rating
assigned to the bank as a result of its most recent OCC EXAMINATION). During the
year ended December 31, 1999, the Bank paid  supervisory  assessments to the OCC
totaling $46,000.

      CAPITAL  REQUIREMENTS.  The  OCC has  established  the  following  minimum
capital standards for national banks,  such as the Bank: a leverage  requirement
consisting  of a minimum  ratio of Tier 1 capital to total  assets of 3% for the
most  highly-rated  banks  with a  minimum  requirement  of at  least 4% for all
others,  and a risk-based capital  requirement  consisting of a minimum ratio of
total capital to total  risk-weighted  assets of 8%, at least  one-half of which
must be Tier 1 capital. For purposes of these capital standards,  Tier 1 capital
and total capital consist of substantially the same components as Tier 1 capital
and total  capital  under the  Federal  Reserve's  CAPITAL  GUIDELINES  FOR BANK
HOLDING COMPANIES (SEE "--The Company--Capital Requirements").

      The capital requirements described above are minimum requirements.  Higher
capital levels will be required if warranted by the particular  circumstances or
risk profiles of individual  institutions.  For example,  the regulations of the
OCC provide that additional capital may be required to take adequate account of,
among other things,  interest rate risk or the risks posed by  concentrations of
credit, nontraditional activities or securities trading activities.

      During the year ended  December 31, 1999, the Bank was not required by the
OCC to increase  its  capital to an amount in excess of the  minimum  regulatory
requirement.  As of December 31, 1999, the Bank exceeded its minimum  regulatory
capital  requirements  with a leverage  ratio of 8.88% and a risk-based  capital
ratio of 14.84%.

      Federal law provides the federal  banking  regulators  with broad power to
take  prompt  corrective  action to resolve  the  problems  of  undercapitalized
institutions.  The extent of the  regulators'  powers  depends  on  whether  the
institution  in  question  is  "well  capitalized,"   "adequately  capitalized,"
"undercapitalized,"     "significantly    undercapitalized"    or    "critically
undercapitalized,"  in each case as defined by  regulation.  Depending  upon the
capital category to which an institution is assigned, the regulators' corrective
powers include:  requiring the institution to submit a capital restoration plan;
limiting  the  institution's   asset  growth  and  restricting  its  activities;
requiring  the  institution  to  issue   additional   capital  stock  (including
additional voting stock) or to be acquired; restricting transactions between the
institution  and its  affiliates;  restricting the interest rate the institution
may pay on deposits;  ordering a new  election of directors of the  institution;
requiring that senior executive officers or directors be dismissed;  prohibiting
the institution from accepting deposits from correspondent banks;  requiring the
institution to divest certain subsidiaries; prohibiting the payment of principal
or interest on subordinated debt; and ultimately,  appointing a receiver for the
institution.  As of December 31, 1999, the Bank was well capitalized, as defined
by OCC regulations.

      DIVIDENDS.  The  National  Bank Act imposes  limitations  on the amount of
dividends that may be paid by a national bank,  such as the Bank.  Generally,  a
national bank may pay dividends  out of its undivided  profits,  in such amounts
and at such times as the bank's board of directors deems prudent.  Without prior
OCC  approval,  however,  a national  bank may not pay dividends in any calendar
year which, in the aggregate, exceed the bank's year-to-date net income plus the
bank's retained net income for the two preceding years.

      The  payment of  dividends  by any  financial  institution  or its holding
company is affected by the requirement to maintain  adequate capital pursuant to
applicable  capital  adequacy  guidelines  and  regulations,   and  a  financial
institution  generally is prohibited  from paying any  dividends  if,  following
payment thereof, the institution would be undercapitalized.  As described above,
the Bank exceeded its minimum capital  requirements under applicable  guidelines
as of December 31, 1999.  Further,  the Bank may not pay  dividends in an amount
which would reduce its capital  below the amount  required  for the  liquidation
account  established in connection with the Bank's conversion from THE MUTUAL TO
THE STOCK FORM OF OWNERSHIP IN 1993. As of December 31, 1999,  approximately $.4
million  was  available  to be paid as  dividends  to the  Company  by the Bank.
Notwithstanding  the availability of funds for dividends,  however,  the OCC may
prohibit  the payment of any  dividends by the Bank if the OCC  determines  such
payment would constitute an unsafe or unsound practice.

      INSIDER TRANSACTIONS.  The Bank is subject to certain restrictions imposed
by federal law on extensions of credit to the Company and its  subsidiaries,  on
investments in the stock or other securities of the Company and its subsidiaries
and the  acceptance  of the  stock or other  securities  of the  Company  or its
subsidiaries  as  collateral  for  loans.   Certain  limitations  and  reporting
requirements  are  also  placed  on  extensions  of  credit  by the  Bank to its
directors  and  officers,  to  directors  and  officers  of the  Company and its
subsidiaries,  to  principal  stockholders  of  the  Company,  and  to  "related
interests" of such directors,  officers and principal stockholders. In addition,
federal law and  regulations may affect the terms upon which any person becoming
a director or officer of the Company or one of its  subsidiaries  or a principal
stockholder  of the  Company  may obtain  credit  from banks with which the Bank
maintains a correspondent relationship.

      SAFETY AND SOUNDNESS STANDARDS.  The federal banking agencies have adopted
guidelines which establish  operational and managerial  standards to promote the
safety  and  soundness  of  federally  insured  depository   institutions.   The
guidelines  set forth  standards  for internal  controls,  information  systems,
internal audit systems, loan documentation,  credit underwriting,  interest rate
exposure,  asset  growth,  compensation,  fees and  benefits,  asset quality and
earnings.  Since the fourth  quarter of 1998,  and through the first  quarter of
2000, the federal banking regulators have issued safety and soundness  standards
for achieving  Year 2000  compliance,  including  standards for  developing  and
managing Year 2000 project plans,  testing  remediation efforts and planning for
contingencies.

      In general,  the safety and soundness guidelines prescribe the goals to be
achieved in each area, and each  institution is responsible for establishing its
own procedures to achieve those goals.  If an  institution  fails to comply with
any of the  standards set forth in the  guidelines,  the  institution's  primary
federal regulator may require the institution to submit a plan for achieving and
maintaining  compliance.  If  an  institution  fails  to  submit  an  acceptable
compliance plan, or fails in any material respect to implement a compliance plan
that has been  accepted by its  primary  federal  regulator,  the  regulator  is
required to issue an order  directing the  institution  to cure the  deficiency.
Until the deficiency cited in the regulator's  order is cured, the regulator may
restrict the institution's  rate of growth,  require the institution to increase
its capital,  restrict the rates the institution pays on deposits or require the
institution  to take any  action  the  regulator  deems  appropriate  under  the
circumstances.  Noncompliance  with the standards  established by the safety and
soundness guidelines may also constitute grounds for other enforcement action by
the federal  banking  regulators,  including  cease and desist  orders and civil
money penalty assessments.

      BRANCHING  AUTHORITY.  National banks headquartered in Kansas, such as the
Bank,  have the same branching  rights in Kansas as banks chartered under Kansas
law.  Kansas  law  grants  Kansas-chartered  banks the  authority  to  establish
branches  anywhere  in the State of Kansas,  subject to receipt of all  required
regulatory approvals.

      Under the Riegle-Neal  Interstate Banking and Branching  Efficiency Act of
1994 (the  "Riegle-Neal  Act"),  both state and  national  banks are  allowed to
establish  interstate  branch  networks  through  acquisitions  of other  banks,
subject to certain  conditions,  including certain  limitations on the aggregate
amount of deposits that may be held by the surviving bank and all of its insured
depository institution affiliates.  The establishment of new interstate branches
or the  acquisition  of  individual  branches of a bank in another state (rather
than the acquisition of an out-of-state  bank in its entirety) is allowed by the
Riegle-Neal  Act only if  specifically  authorized by state law. The legislation
allowed  individual states to "opt-out" of certain provisions of the Riegle-Neal
Act by enacting appropriate legislation prior to June 1, 1997. Kansas banks have
the  authority to engage in  interstate  mergers to the extent  permitted by the
Riegle-Neal Act.

      FEDERAL  RESERVE  SYSTEM.  Federal  Reserve  regulations,  as presently in
effect,  require  depository   institutions  to  maintain  non-interest  earning
reserves against their transaction  accounts (primarily NOW and regular checking
accounts),  as follows:  for transaction  accounts  aggregating $44.3 million or
less,  the reserve  requirement  is 3% of total  transaction  accounts;  and for
transaction  accounts  aggregating  in  excess  of $44.3  million,  the  reserve
requirement  is  $1.329  million  plus  10% of the  aggregate  amount  of  total
transaction  accounts  in excess of $44.3  million.  The first  $5.0  million of
otherwise reservable balances are exempted from the reserve requirements.  These
reserve  requirements  are subject to annual  adjustment by the Federal Reserve.
The Bank is in compliance with the foregoing requirements.


<PAGE>


I.    DISTRIBUTION OF ASSETS, LIABILITIES,  AND STOCKHOLDERS' EQUITY; INTEREST
RATES AND INTEREST DIFFERENTIALS

      The  average  balance  sheets  are  incorporated  by  reference  from  the
Company's 1999 Annual Report to  Stockholders  (attached as Exhibit  13.1).  The
following  table  describes the extent to which  changes in interest  income and
interest   expense  for  major   components  of   interest-earning   assets  and
interest-bearing  liabilities  affected the Bank's  interest  income and expense
during the  periods  indicated.  The table  distinguishes  between  (i)  changes
attributable to rate (changes in rate multiplied by prior volume),  (ii) changes
attributable to volume (changes in volume  multiplied by prior rate),  and (iii)
net change (the sum of the previous  columns).  The net changes  attributable to
the combined  effect of volume and rate,  which cannot be segregated,  have been
allocated  proportionately  to the  change  due to volume  and the change due to
rate.
<TABLE>
<CAPTION>

    DECEMBER 1999 VS 1998                          DECEMBER 1998 VS 1997
INCREASE/(DECREASE) ATTRIBUTABLE TO         INCREASE/(DECREASE) ATTRIBUTABLE TO
      --------------                                 ------------
<S>                        <C>      <C>        <C>      <C>     <C>       <C>
                          VOLUME   RATE        NET     VOLUME   RATE      NET
                          ------   ----        ---     ------   ----      ---
  (Dollars in thousands)                (Dollars in thousands)
Interest income:
  Investment securities    $(113)    $(144)    $(257)    $  992  $ (80)   $  912
  Loans                      (70)     (411)     (481)     1,429     19     1,448
                           ------     -----    ------    ------    ---     -----
    Total                   (183)     (555)     (738)     2,421    (61)    2,360
                           ------     -----    ------    ------    ----    -----
Interest expense:
  Deposits                 $(296)    $(454)    $(750)    $1,296  $(111)   $1,185
  Other borrowings           198       (53)      145        334     36       370
                            ----      -----      ----      ----    ---       ---
    Total                    (98)     (507)     (605)     1,630    (75)    1,555
                           -----      -----     ------    ------   ----    -----
NET INTEREST INCOME        $ (85)  $   (48)  $  (133)   $   791  $  14    $  805
                          =======  ========  ========= ========= ======= =======

</TABLE>


<PAGE>


II.  INVESTMENT PORTFOLIO

INVESTMENTS

INVESTMENT  SECURITIES.  The following  table sets forth the carrying value of
the investment securities portfolio at the dates indicated.
<TABLE>
<CAPTION>
                                                            At December 31,
                                                       1999       1998      1997
                                                       ----       ----      ----
                                                         (Dollars in thousands)
<S>                                                    <C>       <C>       <C>
Investment securities:
  U.S. government and agency obligations              $ 18,622  $18,062  $26,087
  Mortgage-backed securities                            16,088   21,121   11,401
  Municipal bonds                                        8,861    8,690    3,097
  Bankers' acceptances                                       -    1,140      108
  FHLB, Federal Reserve, and Bankers Bank of
  KANSAS STOCK                                           1,434    1,638    1,386
                                                        ------    ------   -----
    TOTAL                                              $45,005  $50,651  $42,079
                                                       =======  =======  =======

</TABLE>
As of December 31, 1999, the carrying value, maturities and the weighted average
yields of investment securities were as follows:

<TABLE>
<CAPTION>
                                   After One Year  After Five Years
                  One Year or       Through Five    Through Ten         Total
                     Less             Years            Years
                 ------------      --------------  ---------------  ------------
                 AMOUNT  YIELD     AMOUNT  YIELD    AMOUNT  YIELD  AMOUNT  YIELD
                 ------  -----     ------  -----    ------  -----  ------  -----
                                        (Dollars in thousands)
<C>                                     <S>    <S>        <S>    <S>        <S>   <S>     <S>     <S>
U.S. government and agency securities $ 8,704  6.00%    $ 9,919  6.40%    $   -      -  $ 18,622  6.22%
Mortgage-backed securities              5,621  6.00%      9,751  6.05%       716  6.60%   16,088  6.06%
Municipal bonds                         1,422  4.13%      7,043  4.21%       395  4.71%    8,861  4.22%
FHLB, FEDERAL RESERVE, AND BANKERS
Bank of Kansas Stock                        -     -%          -     -      1,434  7.00%    1,434  7.00%
                                        -----   ----     ------  ------    -----  -----    -----  -----
  TOTAL                               $15,747  5.84%    $26,713  5.70%    $2,545  6.70%  $45,005  5.79%
                                       ======  =====    =======  =====    ======  =====  =======  =====
With the exception of U.S. government and federal agency obligations, there were
no investment  securities of any single issuer the book value of which  exceeded
10% of consolidated stockholders' equity at December 31, 1999.

</TABLE>
<PAGE>




III.  LOAN PORTFOLIO

LOAN PORTFOLIO  COMPOSITION.  The following  table sets forth the  composition
of the loan portfolio by type of loan at the dates indicated.
<TABLE>
<CAPTION>

                                                               At December 31
                                            1999                    1998                    1997
                                    ----------------------  ----------------------  ---------------------
                                                Percent                 Percent                 Percent
                                                   of                      of                      of
                                       AMOUNT     TOTAL       AMOUNT      TOTAL       AMOUNT     TOTAL
                                       ------     -----       ------      -----       ------     -----
                                                           (Dollars in thousands)
<S>                                     <C>           <C>          <C>          <C>        <C>        <C>
Real estate loans:
    Residential one-to-four family (1) $ 27,877      31.78%    $ 25,814      34.39%    $  37,218     41.95%
    Multi-family                          8,185       9.33        4,355       5.80         4,758      5.36
    COMMERCIAL REAL ESTATE(2)            23,450      26.73       21,118      28.14        20,713     23.35
                                         ------      -----      -------     --------     -------     -----
      Total real estate loans            59,512      67.84       51,287       68.33       62,689     70.66
Consumer loans                            7,169       8.17        5,818        7.75        6,357      7.16
Commercial non-real estate loans         20,483      23.35       17,131       22.83       18,305     20.63
Student loans                             1,877       2.14        2,388        3.18        2,887      3.25
 Less:
    Unearned fees, discounts and premiums    67       0.08           88        0.12          120      0.18
    Undisbursed loan funds                    5       0.01          191        0.25           59      0.01
    ALLOWANCE FOR LOAN LOSSES             1,249       1.42        1,292        1.72        1,335      1.51
                                          -----       ----       ------     -------       ------      ----
      TOTAL LOANS                        $87,720     100.00%    $ 75,053      100.00%    $ 88,724     100.00%
                                        =======     =======      ======      =======      =======    ======


(1)   Includes  loans held for sale totaling  $751,000,  $756,000 and $744,000
      at December 31, 1999, 1998 and 1997, respectively.
(2)   Includes construction loans totaling $3,807,000, $3,807,000 and $2,162,000
      at December 31, 1999, 1998 and 1997 respectively.

</TABLE>
<PAGE>

<TABLE>
<CAPTION>

      The  following  table sets forth the  contractual  maturities  of loans at
December 31, 1999. The table does not include unscheduled prepayments.

                                           At December 31, 1999
                      ----------------------------------------------------------------
                                          (Dollars in thousands)
                      Up to    After 1     After 3    After 5       10 through  Beyond
                      1 year   to 3 years  to 5 years to 10 years   20 years    20 years     Total
                      -------  --------    -------    --------      ---------   --------     -------
<S>                     <C>      <C>         <C>       <C>            <C>         <C>         <C>
Real Estate loans    $ 9,327   $1,890      $4,013     $10,736       $24,029     $7,081       $57,076
Other loans           10,543    6,693      11,671       2,347           619         92        31,965
                      -------   ------     -------     ------        ------     ------       -------
TOTAL                $19,870   $8,583     $15,684     $13,083       $24,648     $7,173       $89,041
                      -------   ------    -------     -------       -------     ------       -------
Less:
    Unearned Discounts and
       deferred loan fees                                                                         67
    Undisbursed loan funds                                                                         5
    Allowance for LOAN LOSSES                                                                  1,249
                                                                                               -----
    LOANS, NET                                                                               $87,720
                                                                                             =======
</TABLE>



      The  following  table sets forth at December 31, 1999 the dollar amount of
all loans due after  December 31, 2000 and whether such loans had fixed interest
rates or adjustable interest rates:
<TABLE>
<CAPTION>


                               FIXED      ADJUSTABLE       TOTAL
                               -----      ----------       -----
                                     (Dollars in thousands)
           <S>                 <C>             <C>           <C>

          Real Estate loans  $  6,918      $ 30,831       $ 47,749

          OTHER LOANS          13,340         8,082         21,422
                               ------        ------        -------

              TOTAL           $30,258      $ 38,913       $ 69,171
                             ==========   ==========     =========
</TABLE>

NONPERFORMING ASSETS. The following table sets forth information with respect to
nonperforming  assets,  including  non-accrual  loans and real  estate  acquired
through  foreclosure  or by deed in lieu of foreclosure  ("real estate  owned").
Under the original terms of the Bank's  non-accrual  loans at December 31, 1999,
interest  earned on such loans during the year ended December 31, 1999 would not
have been  significantly  different  than  reported.  For each year  shown,  the
Company  had no loans  greater  than 90 days past due which were still  accruing
interest.
<TABLE>
<CAPTION>

                                            At December 31,
                          -----------------------------------------------------
                                        1999       1998      1997        1996       1995
                                        ----       ----      ----        ----       ----
                                         (Dollars in thousands)
<S>                                      <C>        <C>        <C>        <C>        <C>

Total non-accrual loans                $  466     $ 144      $  172    $   140    $   39
Real estate owned ("REO")                  60         -         125         27         5
                                          ---      ----        ----        ---        --
TOTAL NONPERFORMING ASSETS             $  526     $ 144      $  297    $   167    $   44
                                       ======     =====      ======      ======   ======
Nonperforming assets to
  total adjusted loans                    0.60%      0.19%     0.34%       0.27%      0.07%
Nonperforming assets to total assets      0.37%      0.11%     0.21%       0.16%      0.04%
   total assets
Allowance for loan
losses to non-Performing assets         237.45%    897.22%   448.89%     490.88%   1,871.30%

</TABLE>

<PAGE>


IV.   SUMMARY OF LOAN LOSS EXPERIENCE

ALLOWANCE FOR LOSSES ON LOANS AND REAL ESTATE. The following table sets forth an
analysis of the allowance for loan losses at the dates indicated.

<TABLE>
<CAPTION>

                                                    At December 31,
<S>                                    <C>       <C>      <C>      <C>      <C>

                                         1999     1998    1997     1996     1995
                                         ----     ----    ----     ----     ----
                                                   (Dollars in thousands)

Balance at beginning of year       $  1,292  $ 1,335     $ 820    $ 826   $  562
Provision for loan losses:
    Mortgage loans                        -       17        18        4       23
    Non-mortgage loans                   15       73        42       11       17
                                         --      ---       ---      ---       --
Total provision for loan losses          15       90        60       15       40
                                         --      ---       ---      ---       --
Allowance for loans of acquired bank:
    Allowance for mortgage loans
        of acquired bank                  -        -        92        -      103
    Allowance for non-mortgage loans      -        -       369        -      126
        of accquired bank             -----     ----      ----     ----      ---

Total of allowance for loans of           -        -       461        -      229
  acquired bank                        ----     ----      ----     ----      ---
Recoveries:
    Mortgage loans                       29       15         1        -        8
    Non-mortgage loans                   27       23        10        6       16
                                         --      ---       ---        --      --
Total recoveries                         56      38         11        6       24
                                         --      ---       ---       --       --
Charge-offs:
    Mortgage loans                       26       9          -        1       10
    Non-mortgage loans                   88     162         17       26       19
                                         --     ----       ---      ---       --
Total charge-offs                       114     171         17       27       29
                                        ---     ----       ---      ---       --
BALANCE AT END OF YEAR               $1,249  $1,292     $1,335     $820     $826
                                     ======  ======     ======     ====    =====


Ratio of allowance for loan losses
to total outstanding loans (gross)    1.41%    1.70%     1.48%    1.29%    1.30%

Ratio of net charge-offs during the
year to average loans outstanding
    during the year                   0.07%    0.16%     0.01%    0.03%    0.01%

Ratio of allowance for loan losses
to total NON-PERFORMING LOANS       268.03%  897.22%   773.92%  584.91% 2107.57%
                                    =======  =======   ======   ======= ========

</TABLE>

<PAGE>

The following  table sets forth the  allocation of the allowance for loan losses
at  the  dates  indicated  by  category  of  loans.  This  allocation   reflects
management's judgment as to risks inherent in the types of loans indicated,  but
the general reserves  included in the table are not restricted and are available
to absorb all loan losses.  The amount  allocated in the following  table to any
category  should  not  be  interpreted  as  an  indication  of  expected  actual
charge-offs in that category.

<TABLE>
<CAPTION>
                                          At December 31,
               -----------------------------------------------------------------
                         1999                  1998                   1997
               --------------------  --------------------   --------------------
                         % of                  % of                   % of
                         Loans                 Loans                  Loans
                        in Each               in Each                in Each
                        Category              Category               Category
                          to                    to                     to
                              Total                 Total                  Total
                   AMOUNT     LOANS      AMOUNT     LOANS       AMOUNT     LOANS
                   ------     -----      ------     -----       ------     -----
                                       (Dollars in thousands)
<S>                  <C>         <C>       <C>        <C>        <C>         <C>
Allocated to:
Mortgage loans    $   512       41%      $  509       39%       $  486       36%
Non-mortgage loans    737       59          783       61           849       64
                      ---       ---        ----       ----         ---       ---
TOTAL               1,249      100%     $ 1,292      100%      $ 1,335      100%
                 ========      ====     =======      ====      =======      ====
</TABLE>

 V.   AVERAGE DEPOSITS BY CLASSIFICATION

      The following  table sets forth the amounts of deposits by type of account
at the dates indicated.
<TABLE>
<CAPTION>
                                            At December 31,
                 ---------------------------------------------------------------
                           1999                   1998                   1997
           ----------------------- ---------------------- ----------------------
           Average Percent  AverageAverage PercentAverage AveragePercent Average
                             of                     of                    of
             BALANCE  TOTAL   RATE   BALANCE TOTAL   RATE   BALANCE TOTAL   RATE
             -------  -----   ----   ------- -----   ----   ------- -----   ----
                                         (Dollars in thousands)
<S>                    <C>      <C>    <C>     <C>        <C>    <C>      <C>      <C>    <C>
Non-interest demand    $ 9,950  8.88%  0.00%  $10,677     8.94%  0.00%   $7,235    8.23%  0.00%
Money market deposits   16,311 14.56%  3.62%   17,866    14.97%  3.63%   15,378   17.50%  3.76%
Checking/NOW            20,851 18.62%  2.73%   23,217    19.45%  3.73%   13,513   15.37%  3.75%
Savings                 10,561  9.43%  3.21%    9,357     7.84%  3.11%    5,100    5.80%  2.44%
CERTIFICATES OF deposit 54,334 48.51%  5.13%   58,261    48.80%  5.54%   46,666   53.09%  5.66%
                        ------ ------  -----   ------   ------   -----   ------  ------  -----
TOTAL DEPOSITS        $112,007 100.00% 3.83% $119,378   100.00%  4.22%   $87,892  100.00% 4.38%
                      ======== ============  ========   =======  =====   =======  ======= ====
</TABLE>

<PAGE>


As of December 31, 1999, the aggregate amount  outstanding of jumbo certificates
of deposit (amounts of $100,000 or more) was $10.9 million.  The following table
presents the maturities of these time certificates of deposit at such date:
<TABLE>
<CAPTION>
                                 (Dollars in thousands)
                        <S>                                   <C>
                     3 months or less                $        3,749
                     Over 3 months through 6 months           1,311
                     Over 6 months through 12 months          2,823
                     Over 12 months                           3,015
                                                             ------
                     TOTAL                          $        10,898
                                                    ===============
</TABLE>

VI.   RETURN ON EQUITY AND ASSETS
<TABLE>


                                    At or for the years ended December 31,
                        --------------------------------------------------------
                                   1999      1998      1997      1996      1995
                               --------   -------   -------   -------   -------
<S>                                <C>      <C>        <C>       <C>      <C>

Return on average assets ....      0.65      0.69      1.03      0.70      0.78%
Return on average equity ....      6.82      7.73      9.18      6.54      7.48
Equity to total assets ......      9.28      9.75      8.48     10.96     10.68
Dividend payout ratio .......     40.98     35.71     31.00     27.43     19.08
Net earnings per share, basic (1) $ .63    $  .69    $  .76    $  .50    $  .55
Net earnings per share, diluted(1)  .61       .66       .73       .49       .53

(1)   All per share  amounts  have been  adjusted to give effect to the 5% stock
      dividends paid by the Company  annually since 1994 and the February,  1998
      two-for-one stock split.
</TABLE>
<PAGE>

ITEM 2.     PROPERTIES

The following table sets forth information concerning the offices of the Bank.
<TABLE>
<CAPTION>
                        YEAR OPENED
ADDRESS                 OR ACQUIRED       SQUARE FOOTAGE          TITLE

<S>                        <C>                <C>                  <C>
800 Poyntz Avenue
Manhattan, KS 66505         1974             12,000                Owned

1741 N. Washington
Auburn, KS 66402            1991              8,000                Owned

6100 SW 21st Street
Topeka, KS 66667            1997              3,500               Leased

102 S 6th
Osage City, KS  66523       1997              7,932                Owned
</TABLE>

ITEM 3.     LEGAL PROCEEDINGS

There are no pending  legal  proceedings  to which the  Company or the Bank is a
party, other than ordinary routine litigation incidental to the Bank's business.

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

                                    PART II.

ITEM 5.     MARKET FOR THE  COMPANY'S  COMMON  STOCK AND  RELATED  STOCKHOLDER
            MATTERS

The Company  incorporates by reference the  information  called for by Item 5 on
this Form 10-K from the  section  captioned  "Stock  Price  Information"  of the
Company's 1999 Annual Report to Stockholders  for the fiscal year ended December
31, 1999 (attached as Exhibit 13.1).

ITEM 6.     SELECTED FINANCIAL DATA

The Company  incorporates by reference the  information  called for by Item 6 of
this Form 10-K from the sections  entitled  "Selected  Financial and Other Data"
and "Management's  Discussion and Analysis of Financial Condition and Results of
Operations" of the Company's 1999 Annual Report to  Stockholders  for the fiscal
year ended December 31, 1999 (attached as Exhibit 13.1).

ITEM 7.     MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
            RESULTS OF OPERATIONS

The Company  incorporates by reference the  information  called for by Item 7 of
this Form 10-K from the section entitled  "Management's  Discussion and Analysis
of Financial  Condition and Results of  Operations" of the Company's 1999 Annual
Report to Stockholders  for the fiscal year ended December 31, 1999 (attached as
Exhibit 13.1).

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

The Company  incorporates by reference the  information  called for by Item 8 of
this Form 10-K from the Financial  Statements  set forth in the  Company's  1999
Annual  Report to  Stockholders  for the fiscal  year ended  December  31,  1999
(attached as Exhibit 13.1).

ITEM 9.     CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS ON ACCOUNTING AND
            FINANCIAL DISCLOSURE

None.


                                    PART III.

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS

The Company  incorporates by reference the information  called for by Item 10 of
this Form 10-K  regarding  directors  of the Company  from the section  entitled
"Election of Directors" of the Company's  Proxy Statement for the annual meeting
of stockholders to be held May 17, 2000 (the "2000 Proxy  Statement")  (attached
as Exhibit 99.1).

Section  16(a)  of the  Exchange  Act  requires  that  the  Company's  executive
officers,  directors and persons who own more than 10% of their Company's Common
Stock file reports of ownership and changes in ownership with the Securities and
Exchange  Commission  and with the  exchange  on which the  Company's  shares of
Common Stock are traded.  Such persons are also  required to furnish the Company
with copies of all Section 16(a) forms they file.  Based solely on the Company's
review of the  copies of such  forms,  the  Company is not aware that any of its
directors and executive  officers or 10% stockholders  failed to comply with the
filing requirements of Section 16(a) during 1999.

EXECUTIVE OFFICERS

The  executive  officers  of the  Company,  each of whom  is also  currently  an
executive  officer of the Bank and both of whom serve at the  discretion  of the
Board of Directors, are identified below:

<TABLE>
<CAPTION>
NAME                    AGE         POSITIONS WITH THE COMPANY
<S>                     <C>         <C>
Patrick L. Alexander    47          President and Chief Executive Officer
Mark A. Herpich         32          Vice President, Secretary, Chief Financial
                                    Officer and Treasurer
</TABLE>

ITEM 11.    EXECUTIVE COMPENSATION

The Company  incorporates by reference the information  called for by Item 11 of
this Form 10-K from the section  entitled  "Executive  Compensation" of the 2000
Proxy   Statement,   except  for   information   contained  under  the  headings
"Compensation  Committee  Report on  Executive  Compensation"  and  "Performance
Graph".

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The Company  incorporates by reference the information  called for by Item 12 of
this  Form  10-K  from the  section  entitled  "Security  Ownership  of  Certain
Beneficial Owners" of the 2000 Proxy Statement.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company  incorporates by reference the information  called for by Item 13 of
this Form 10-K from the section entitled "Transactions with Directors,  Officers
and Associates" of the 2000 Proxy Statement.

                                     PART IV

ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

ITEM 14(A)1 AND 2.  FINANCIAL STATEMENTS AND SCHEDULES

                    MNB BANCSHARES, INC. AND SUBSIDIARIES
                          LIST OF FINANCIAL STATEMENTS

The following audited  Consolidated  Financial Statements of the Company and its
subsidiaries  and  related  notes  and  auditors'  report  are  incorporated  by
reference from the Company's 1999 Annual Report to  Stockholders  for the fiscal
year ended December 31, 1999 (attached as Exhibit 13.1).

      Report of Independent Public Accountants

      Consolidated Balance Sheets - December 31, 1999 and 1998

      Consolidated Statements of Earnings - Years Ended
        December 31, 1999, 1998 and 1997

      Consolidated Statements of Stockholders' Equity - Years Ended December 31,
        1999, 1998 and 1997

      Consolidated  Statements  of Cash Flows - Years Ended  December  31, 1999,
        1998 and 1997

      Notes to Consolidated Financial Statements

All schedules are omitted because they are not required or are not applicable or
the required  information is shown in the financial  statements  incorporated by
reference or notes thereto.

ITEM 14(A)3.      EXHIBITS

The exhibits  required by Item 601 of Regulation S-K are included with this Form
10-K and are  listed  on the  "Index  to  Exhibits"  immediately  following  the
signature page.

ITEM 14(B). REPORTS ON FORM 8-K

None.

***
Upon written request to the President of the Company,  P.O. Box 308,  Manhattan,
Kansas  66505-0308,  copies  of the  exhibits  listed  above  are  available  to
stockholders of the Company by specifically  identifying each exhibit desired in
the request.  A fee of $.20 per page of exhibit will be charged to  stockholders
requesting copies to cover copying and mailing costs. The Company's filings with
the  Securities  and Exchange  Commission are also available via the Internet at
www.sec.gov.

<PAGE>

SIGNATURES

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.

    MNB BANCSHARES, INC.
      (Registrant)

    By: /s/ Patrick L. Alexander          By:  /s/ Mark A. Herpich
        Patrick L. Alexander                   Mark A. Herpich
        President and Chief Executive Officer  Principal  Financial  and
                                               Accounting Officer

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

SIGNATURE                                            TITLE
<S>                              <C>                 <C>
/s/ Patrick L. Alexander         March 22, 2000      President,  Chief Executive
                                                     Officer and Director
------------------------------   ----------------
Patrick L. Alexander                  Date
/s/ Brent A. Bowman              March 22, 2000      Chairman of the Board
------------------------------   ----------------
Brent A. Bowman                       Date
/s/ Joseph L. Downey             March 22, 2000      Director
------------------------------   ----------------
Joseph L. Downey                      Date
/s/ Charles D. Green             March 22, 2000      Director
------------------------------   ----------------
Charles D. Green                      Date
/s/ Vernon C. Larson             March 22, 2000      Director
------------------------------   ----------------
Vernon C. Larson                      Date
/s/ Jerry R. Pettle              March 22, 2000      Director
------------------------------   ----------------
Jerry R. Pettle                       Date
/s/Susan E. Roepke               March 22, 2000      Director
------------------------------   ----------------
Susan E. Roepke                       Date
/s/ Donald J. Wissman            March 22, 2000      Director
------------------------------   ----------------
Donald J. Wissman                     Date
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                INDEX TO EXHIBITS

EXHIBIT                                                           SEQUENTIAL

NUMBER                  DESCRIPTION                               PAGE NO.
<S>                      <C>                                          <C>

3.1                     Articles of Incorporation of the Company--    N/A
                        Incorporated  by reference  from Exhibit 3.1
                        of the Form S-1 of the  Company,  as amended,
                        filed on September 3, 1992 (Registration No.
                        33-51710)

3.2                     Bylaws of the Company--Incorporated by        N/A
                        reference  from  Exhibit  3.2  of  the
                        Form  S-1 of the Company,   as  amended,
                        filed  on  September  3,  1992
                        (Registration No. 33-51710)

4.1                     Specimen Common Stock Certificate of the     N/A
                        Company--Incorporated  by Reference  from
                        Exhibit 4.1 of the  Form  S-1 of the  Company,
                        as  amended,  filed  on September 3, 1994
                       (Registration No. 33-51710)

10.1                    MNB Bancshares, Inc. 1992 Stock Option       N/A
                        Plan--Incorporated  by  reference  from
                        Exhibit A to the Company's  Proxy
                        Statement for the  Annual  Meeting of
                        Stockholders held May 17, 1994

10.2                    Stock Option Agreement between the Company   N/A
                        and Patrick L. Alexander--Incorporated by
                        reference from Exhibit 10.2 to Form 10-K dated
                        March 26, 1994

10.3                    Stock Option Agreement between the Company   N/A
                        and Vernon C. Larson--Incorporated by
                        reference from Exhibit 10.3 to Form 10-K dated
                        March 26, 1994

10.4                    Stock Option Agreement between the Company   N/A
                        and Brent A. Bowman--Incorporated by
                        reference from Exhibit 10.4 to Form 10-K dated
                        March 26, 1994

<PAGE>

10.5                    Stock Option Agreement between the Company   N/A
                        and Charles D. Green--Incorporated by
                        reference from Exhibit 10.6 to Form 10-K dated
                        March 26, 1994

10.6                    Stock Option Agreement between the Company   N/A
                        and Jerry R. Pettle--Incorporated by
                        reference from Exhibit 10.9 to Form 10-K dated
                        March 26, 1994

10.7                    Stock Option Agreement between the Company   N/A
                        and Susan E. Roepke--Incorporated by
                        reference from Exhibit 10.11 to Form 10-K dated
                        March 26, 1994

10.8                    Stock Option Agreement between the Company   N/A
                        and Michael R. Toy--Incorporated by
                        reference from Exhibit 10.13 to Form 10-K dated
                        March 26, 1994

10.9                    Stock Option Agreement between the Company   N/A
                        and Dennis D. Wohler--Incorporated by
                        reference from Exhibit 10.14 to Form 10-K dated
                        March 26, 1994

10.10                   Employment Agreement among the Company,         N/A
                        Security National Bank and Patrick L.
                        Alexander--Incorporated by reference from
                        Exhibit 10.15 to Form 10-K dated March 26,
                        1994

10.11                   Security National Bank Deferred Compensation    N/A
                        Plan, dated December 21, 1994--Incorporated by reference
                        from Exhibit 10.20 dated March 26, 1994


<PAGE>

10.12                   Stock Option Agreement between the Company     N/A
                        and   Michael   E.   Scheopner--Dated
                        May   13,   1996
                        Incorporated  by reference  from
                        Exhibit  10.15 to Form
                        10-K dated March 31, 1997.

10.13                   Stock Option Agreement between the Company     N/A
                        and Mark A. Herpich--Dated November 4, 1998

10.14                   Stock Option Agreement between the Company     N/A
                        and Dean R. Thibault--Dated November 4, 1998

10.15                   Stock Option Agreement between the Company     N/A
                        and David Salisbury--Dated November 4, 1998

10.16                   Stock Option Agreement between the Company     N/A
                        and Sandra Falen--Dated November 4, 1998

10.17                   Stock Option Agreement between the Company     N/A
                        and Marcia Kemper--Dated November 4, 1998

10.18                   Stock Option Agreement between the Company
                        and Kerry L.Thompson - Dated August 31, 1999

13.1                    1999 Annual Report to Stockholders of the Company
                        for the fiscal year ended December 31, 1999

21.1                    Subsidiaries of the Company

23.1                    Consent of KPMG LLP

27.1                    Financial Data Schedule

99.1                    Proxy Statement of the Company for the Annual
                        Meeting of Stockholders to be held May 17, 2000
</TABLE>

<PAGE>
EXHIBIT 10.18

                              MNB BANCSHARES, INC.
                             1992 STOCK OPTION PLAN
                             STOCK OPTION AGREEMENT

      1. A STOCK  OPTION TO  ACQUIRE  262  shares  (hereinafter  referred  to as
"Shares") of Common Stock of MNB BANCSHARES,  INC.  (hereinafter  referred to as
THE "COMPANY") IS HEREBY GRANTED TO KERRY THOMPSON  (hereinafter  referred to as
the "Optionee"),  subject in all respects to the terms and conditions of the MNB
BANCSHARES,  INC. 1992 STOCK OPTION PLAN (hereinafter referred to as the "Plan")
and such other terms and conditions as are set forth herein.

      2. This Option is not intended to  constitute  an  Incentive  Stock Option
under Section 422 (b) of the Internal Revenue Code of 1986.

      3.    The option price as determined by the Board of Directors of the
Company (the "Board") is Twelve Dollars and 38.1/100 ($12.381) per Share.

      4.    This Option may be exercised in accordance with the following
table:


                                                NUMBER OF SHARES
                  DATE                             EXERCISABLE
                  ------                           -----------

                  1/25/2000                           53
                  1/25/2001                           53
                  1/25/2002                           52
                  1/25/2003                           52
                  1/25/2004                           52


      In the event of a Change of Control,  this Option shall become immediately
and fully  exercisable.  A "Change of Control"  shall be deemed to have occurred
if:

                  (i) as a result of, or in connection with, any tender offer or
      exchange offer,  merger or other business  combination,  sale of assets or
      contested election,  or any combination of the foregoing  transaction (the
      "Transaction"),  the persons who were  directors of the Company before the
      Transaction  shall  cease to  constitute  a  majority  of the Board or any
      successor to the Company,  unless the election, or nomination for election
      by the  stockholders,  of any new  director  was  approved  by a vote of a
      majority of the Board,  then such new director shall,  for purposes of the
      Plan, be considered as a member of the Board;

                  (ii)  the Company is merged or consolidated with another
      corporation and as a result of the merger or consolidation less than sixty
      -seven percent (67%) of the outstanding  voting  securities of the
      surviving or resulting  corporation shall then be owned in the aggregate
      by the former stockholders of the Company,  other than (a)  affiliates
      within the meaning of the  Securities  and Exchange Act of 1934 or
      (b) any party to the merger or consolidation;

                  (iii) a tender offer or exchange offer is made and consummated
      for the ownership of securities of the Company representing thirty-three
      percent (33%) or more of the combined  voting power of the  Company's
      then  outstanding voting securities; or

                  (iv)  the Company transfers substantially all of its assets
      to another corporation which is not a wholly-owned subsidiary of the
      Company.

Notwithstanding the foregoing,  a Change of Control shall not be deemed to occur
solely because  thirty-three  percent (33%) or more of the combined voting power
of the  Company's  then  outstanding  voting  securities  are  acquired by (a) a
trustee or other fiduciary holding securities under one or more employee benefit
plans  maintaining for employees  benefit plans  maintained for employees of the
Company or (b) any corporation which, immediately prior to such acquisition,  is
owned  directly or  indirectly  by the  stockholders  of the Company in the same
proportion as their ownership of stock immediately prior to such acquisition.

      5. This Option may not be  exercised  if the  issuance of Shares upon such
exercise  would  constitute  a  violation  of any  applicable  federal  or state
securities  law, or any other  valid law or  regulation.  As a condition  to the
exercise of this Option,  the Optionee  shall  represent to the Company that the
Shares  being  acquired  under  this  Option are for  investment  and not with a
present view for distribution or resale,  unless counsel for the Company is then
of the opinion that such a  representation  is not required under any applicable
law, regulation or rule of any governmental agency.

      6. This Option may not be  transferred  in any manner and may be exercised
during the lifetime of the Optionee  only by him. The terms of this Option shall
be binding upon the Optionee's  executors,  administrators,  heirs,  assigns and
successors.

      7. This  Option  may not be  exercised  more than 10 years  after the date
indicated  below and may be exercised  during such term only in accordance  with
the terms and conditions set forth in the Plan.

Dated: August 31, 1999.



                                    MNB BANCSHARES, INC.



                                    BY: _____________________
                                          Chairman of the Board

ATTEST:

      The Optionee  acknowledges  that he has received a copy of the Plan and is
familiar with the terms and conditions set forth therein. The Optionee agrees to
accept as binding,  conclusive,  and final all decisions and  interpretations of
the  Committee.  As a condition  to the  exercise of this  Option,  the Optionee
authorizes the Company to withhold from any regular cash compensation payable by
the Company any taxes required to be withheld under any federal,  state or local
law as a result of exercising this Option.

Dated: August 31, 1999



                                    BY: ____________________
                                          Optionee

                        (To be executed in duplicate)

<PAGE>

 CORPORATE PROFILE

      MNB Bancshares,  Inc. is a bank holding company which is  headquartered in
Manhattan, Kansas. Its wholly-owned subsidiary, Security National Bank, also has
its home office in Manhattan,  Kansas,  with branch offices operating in Auburn,
Osage City, and Topeka, Kansas. Security National Bank is dedicated to providing
quality services to its local communities and continues to originate  commercial
real  estate  and non real  estate  loans,  small  business  loans,  residential
mortgage loans, consumer loans, home equity loans, and student loans.

      MNB  Bancshares  was first  listed on the Nasdaq  Stock  Market  Small-Cap
Market  System in 1993 (symbol  "MNBB",  with a newspaper  abbreviation  of "MNB
Bn"). The company was formed in 1992 to become the holding  company for Security
National Bank, which was converted from a federal mutual savings association.

      Since its listing on Nasdaq, MNB Bancshares has nearly doubled in size and
has  entered  numerous  markets  outside  of  Manhattan   through  a  series  of
acquisitions  and  start-up  branches.  The  company's  continuing  focus  is to
concentrate on being the premier community  banking  organization in the markets
it currently  serves and is continuing to explore and evaluate  opportunities to
expand and provide  services to new  complimentary  markets,  through  strategic
acquisitions and establishing de novo branches where  appropriate,  in an effort
to enhance its asset base, long-term earnings and resources.


<PAGE>

TO OUR STOCKHOLDDERS, CUSTOMERS, AND FRIENDS:

      The completion of a solid  foundation was  accomplished  in 1999 that will
enable MNB Bancshares,  Inc. to leverage its resources and resume its history of
growth and enhancement of stockholder  value. We have assembled an extraordinary
management team, witnessed outstanding growth in our loan portfolio,  maintained
high asset quality, and are prepared to launch several new financial services in
the year  2000.  On January  6, 2000 we opened  our first  in-store  supermarket
branch  bank.  We  announced  on March 29, 2000 an  agreement  to purchase  bank
branches  in Wamego  and Osage  City,  Kansas.  We were  disappointed  that 1999
earnings fell slightly from the previous year to $904,000. However, I think that
you too will be  excited  about our future as you  review  this  report and hear
about our upcoming plans.

      Net loans  outstanding at year-end 1999 totaled $87.7 million versus $75.1
million at  year-end  1998.  This is an  increase  of 17  percent.  This  growth
reflects  the efforts of our  talented  lending  staff and the success that they
have had in  developing  relationships  with  both  our  retail  and  commercial
customers and prospects.  Commercial and commercial  real estate loans grew from
$42.6  million to $52.1  million  during the last 12 months.  Consumer  and home
equity loans, exclusive of student loans, grew from $6.7 million at December 31,
1998 to $8.8 million at year-end  1999.  This is an annual growth rate of 22 and
32 percent  respectively on these two  portfolios.  At the same time this growth
was occurring we were successful in reducing  classified loans from $2.0 million
at year-end 1998 to $0.8 million at year-end 1999.  Classified loans equaled .92
percent of total loans at December 31, 1999.  The continued  diversification  of
our loan portfolio  further reduces our dependence  upon 1-4 family  residential
loans and the resultant  volatility in earnings as  originations,  pre-payments,
and gains on sale of these loans fluctuate dramatically with changes in interest
rates.  The growth of our consumer and commercial loan portfolios in 1999 should
position us well for continued advances in core earnings for the upcoming years.
While it may be difficult to duplicate these  outstanding  growth rates in 2000,
we feel  confident  that this  momentum  will  continue  and  should  contribute
significantly to enhance long term profitability.

      As we expect to experience  continued  loan growth,  it will be imperative
that we find ways to grow our core  deposit base in a cost  effective  manner in
order to fund these  loans.  Deposit  growth has become a top  priority for your
company.  This was a key  consideration  as we  committed  to opening  our first
in-store  supermarket  branch  bank in the  Dillons  Supermarket  located in the
Westloop  Shopping  Center in Manhattan,  Kansas.  We felt that this would be an
outstanding opportunity to differentiate ourselves based upon convenience and an
aggressive   retail  sales   culture.   We  have  staffed  this   facility  with
enthusiastic,  outgoing  individuals who are dedicated to  establishing  banking
relationships with the numerous people who frequent this leading  supermarket in
the Manhattan  area. We are confident that their efforts will allow us to expand
our  deposit  base  in  a  cost  effective  manner  and  also  provide  numerous
opportunities to cross sell other bank services to these patrons.  We anticipate
that  we  will  continue  to  explore   additional   in-store   branch   banking
opportunities  to assist us in expanding our penetration into the retail banking
market and contribute to the growth of our core deposits.

      The  acquisition  of the  Wamego  and  Osage  City  branches  presents  an
outstanding  opportunity for your company. The Wamego branch, with $7 million in
deposits,  will be an excellent  complement  to our  Manhattan  locations as the
Highway 24 corridor  continues to develop with the  completion  of the four-lane
project  between  the two  communities.  Many people who live in Wamego work and
shop in Manhattan  as it takes less than 15 minutes to travel from  Manhattan to
Wamego.  As a result of the  development of this  transportation  corridor,  the
residential  and  commercial  growth  that  is  taking  place  between  the  two
communities  is  significant  and  accelerating.  We expect that having  banking
locations in both  communities  will allow our bank to take a leadership role in
providing  banking  services  to this  expanding  market.  The Osage City branch
provides us with  approximately $10 million in deposits which we will be able to
assimilate into our existing  branch with very little in additional  overhead or
expense.  The  acquisition  of this branch will further  strengthen our dominant
position in the Osage City market. In addition to the strategic value that these
branches provide to us, the acquisition of approximately $17 million in deposits
will offer  liquidity to assist in our funding needs as we anticipate  continued
asset growth in the future.

      In March we unveiled  our  Internet  banking  program and  services.  This
initiative will give both our retail and commercial banking customers tremendous
convenience  and  flexibility  in accessing  their  banking  accounts and in the
management  of their  financial  affairs.  This service will allow for automated
bill payment,  cash management,  loan applications and new account openings,  as
well as providing  access to several  other  financial  products and  management
tools.  Our  program  will also  interface  with  several of the  popular  money
management  software  programs on the market  today.  Not only will this service
provide the convenience that many of our customers have requested,  it will also
allow us to market ourselves to the ever increasing number of people who do more
and more of their  shopping and market  research on the  Internet.  We feel that
this service  properly  positions us for the  increasingly  important  role that
technology will play in our lives, financial and otherwise.

      Over the past year we have made tremendous strides in the  diversification
of our asset base,  and over the last  several  years have  greatly  reduced our
dependence upon one to four family residential loans.  However, as I am sure you
are aware,  competition  remains keen in the  financial  service  market  place.
Competition for loans and deposits is having the effect of reducing net interest
margins.  This  development  makes it  imperative  that we find ways to grow our
operations, and at the same time have minimal increases in non-interest expense.
We feel  that we  have  the  talent  in  place  to do that  and  will  focus  on
accomplishing  that goal.  It will also be critical that we find ways to enhance
our non-interest  income through the sales of financial products that create fee
income.  One of our  goals in 2000 is to  identify  and  implement  the sales of
products and services  that will  positively  impact our fee income with minimal
incremental  expense.  In March we initiated an overdraft  privilege  program to
enhance our  checking  account  services and protect our  customers  from having
checks  returned in the event that they  inadvertently  overdraw  their checking
account.  We will manage this  service in a very  disciplined  manner and expect
that the fees we receive  will more than  compensate  for the  higher  losses we
incur from increased overdraft activity. We also anticipate that we will explore
avenues to  introduce  securities  brokerage  services and the sale of insurance
products to our customers without incurring significant  incremental expenses in
the implementation of these services.

      Profitable  growth  is  imperative  for your  company  to  prosper  in the
upcoming years. The customer will require that we have the financial products to
meet their needs in a competitive manner. We intend to provide these products to
our customers.  However,  the concept of market based banking and local decision
making  remains a  principal  upon  which your  company  operates  daily.  It is
imperative  that we  maintain  our focus on the  customer  and meet their  needs
responsively  and timely.  Our staff is dedicated  to community  banking and the
delivery of all the benefits  that a community  bank can offer.  Not only are we
dedicated to our  customers,  but we are also  dedicated to the  communities  in
which we serve. We recognize that when our customers and communities prosper, so
does your company.

      In  February  2000 your Board of  Directors  approved  a stock  repurchase
program  authorizing  your  company  to  repurchase  up to five  percent  of our
outstanding  stock.  The  last  year  has not  been  kind to the  valuations  of
financial  institution  stocks,  as we have seen industry  stock values  decline
significantly.  MNB Bancshares, Inc. has not been immune to these influences. We
feel  very  confident  in the  future  of your  Company  and feel that our stock
represents  an  extremely  good  value.  That is why we feel  that it is in your
Company's and our  stockholder's  best  interests to implement  this  repurchase
program.

      We are excited about your company and its future.  The tireless efforts of
all of my associates have made this success,  growth, and excitement possible. I
would like to personally thank them for their  contributions.  I also would like
to thank our  customers  for their faith and  confidence  in allowing us to meet
their banking needs. And of course, I would like to thank you, our stockholders,
for your  investment and belief in our efforts and vision.  We will continue our
efforts  to grow  and  diversify  your  company,  with  the  goal  of  enhancing
stockholder  value. We look forward to the  opportunities  and the challenges of
2000.

Sincerely,



Patrick L. Alexander
President and Chief Executive Officer

<PAGE>

<TABLE>
<CAPTION>

      SELECTED FINANCIAL AND OTHER DATA OF MNB BANCSHARES, INC.


                                                     At or for the years
                                                      ended December 31,
                                        1999    1998     1997      1996     1995
                                        ----    ----     ----      ----     ----
                                                  (Dollars in thousands, except
per share amounts and percentages)

<S>                                     <C>      <C>      <C>      <C>     <C>
SELECTED FINANCIAL DATA:
-----------------------

Total assets                        $143,262 $135,830 $144,752 $103,420 $101,185
Loans (1)                             87,720   75,053   88,724   62,549   62,582
Investment securities                 45,005   50,651   42,079   33,239   32,329
Deposits                             112,336  115,062  122,209   86,710   86,399
Borrowings                            16,699    6,530    9,099    3,615    2,881
Stockholders' equity                  13,290   13,242   12,276   11,334   10,810
Book value per share (2)                9.17     9.22     8.69     8.10     7.71

SELECTED OPERATING DATA:

Total interest income                 $9,551  $10,289   $7,929   $7,670   $7,051
Total interest expense                 4,988    5,593    4,038    4,049    3,820
Net interest income                    4,563    4,696    3,891    3,621    3,231
Provision for loan losses                 15       90       60       15       40
Net interest income after
  provision for loan losses            4,548    4,606    3,831    3,606    3,191
Gains on sales of loans                  141      384       99       75       95
Other noninterest income                 861      828      591      608      432
Total noninterest income               1,002    1,212      690      683      527
Total noninterest expense              4,183    4,358    2,977    3,233    2,618
Income tax expense                       463      478      471      339      347
Net earnings                            $904     $982   $1,073  $   717  $   753
Net earnings per share (2):
    Basic                                .63      .69      .76      .50      .55
    Diluted (3)                          .61      .66      .73      .49      .53
Dividends per share (2)                  .25      .24      .23      .13      .10

OTHER DATA:

Return on average assets                .65%     .69%    1.03%    0.70%    0.78%
Return on average equity               6.82     7.73     9.18     6.54     7.48
Equity to total assets                 9.28     9.75     8.48    10.96    10.68
Net interest rate spread(4)            2.92     2.93     3.11     2.95     2.78
Net yield on average
  interest-earning assets (5)          3.49     3.52     3.89     3.67     3.55

Average interest-earning assets to
  average interest-bearing liabilities 114.85  114.17   119.29   117.37   114.73
Other expenses to average assets         3.03    3.07     2.86     3.15     2.71
Nonperforming loans to total loans       0.53    0.19     0.19     0.22     0.06
Net charge-offs to average loans         0.07    0.16     0.01     0.03     0.01
Nonperforming assets to total assets     0.33    0.11     0.21     0.16     0.04
Dividend payout ratio                   40.98   35.71    31.00    27.43    19.08
Number of full service banking offices      4       4        5        2        2

(1) Loans are presented after  adjustments for undisbursed loan funds,  unearned
    fees and discounts, and the allowance for losses.

(2) All per share  amounts  have been  adjusted  to give  effect to the 5% stock
    dividends  paid by the Company  annually  since 1994 and the February,  1998
    two-for-one stock split.

(3) Diluted net earnings per share,  before FDIC special assessment (net of tax)
    was $0.69 in 1996.

(4) Represents  the  difference  between the average  yield on  interest-earning
    assets and the average cost of interest-bearing liabilities.

(5) Represents net interest income as a percentage of average
    interest-earning assets.
</TABLE>

<PAGE>

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

OVERVIEW

    MNB  Bancshares,   Inc.  (the  "Company")  is  a  one-bank  holding  company
incorporated  under  the laws of the State of  Delaware  and is  engaged  in the
banking  business through its wholly-owned  subsidiary,  Security  National Bank
(the "Bank").  On December 31, 1995, the Company merged and consolidated its two
banking  subsidiaries,  Manhattan National Bank and Security State Bank, to form
Security  National  Bank.  On December 31, 1997,  the Company  acquired  Freedom
Bancshares, Inc. ("Freedom"), the holding company for Citizens State Bank, Osage
City ("Citizens"),  with a branch in Beloit, Kansas. The branch facility located
in  Beloit,  Kansas was sold on June 5, 1998.  On January 6, 2000,  the  Company
opened an in-store  supermarket  branch in Manhattan,  Kansas.  The Company also
announced an agreement to purchase the Wamego and Osage City, Kansas branches of
Commercial Federal Bank on March 29, 2000.

    The Company achieved net earnings of $904,239 in 1999, a decline of $77,789,
or 7.9%, over 1998. 1999 earnings  declined as the Company  repositioned  itself
for continued growth, profitability and financial strength through the continued
strengthening  of  management  and  systems   infrastructure   directed  to  the
development  of core earnings with less  reliance on  residential  mortgage loan
origination  and the  resulting  gains on sale of loans.  The  return on average
assets was .65% compared to .69% in 1998. Return on average equity was 6.82% and
diluted net  earnings  per share was $.61.  Consistent  with 1998,  the Board of
Directors  declared  cash  dividends of  twenty-five  cents per share and a five
percent  stock  dividend in 1999. On March 16, 2000,  the Company  announced the
approval of a stock repurchase  program enabling the Company to repurchase up to
72,465 shares of its outstanding  stock in the open market or through  privately
negotiated transactions.

    The tradition of quality assets continues and management's  ongoing strategy
to diversify the deposit and loan portfolios in order to increase  profitability
continues to progress and show  results.  Focusing on  customers'  needs and the
development of full service banking  relationships  has been instrumental to the
Company's success.  Management  believes that the strong capital position of the
Company  puts it on solid  ground and  provides  an  excellent  base for further
growth and expansion.

    The Bank is principally  engaged in the business of attracting deposits from
the general public and using such deposits,  together with  borrowings and other
funds,  to originate  commercial and consumer  loans,  multi-family  residential
mortgage loans and one-to-four family residential mortgage loans.

    Deposits of the Bank are insured by either the Savings Association Insurance
Fund (the "SAIF") and the Bank Insurance Fund (the "BIF") of the Federal Deposit
Insurance  Corporation  (the  "FDIC")  up  to  the  maximum  amount  allowed  by
applicable  federal law and  regulation.  The Bank's  primary  regulator  is the
Office of the Comptroller of the Currency (the "OCC"). Additionally, the Bank is
subject to regulation by the FDIC, as  administrator of the SAIF and the BIF and
by the Board of Governors of the Federal  Reserve  System (the "Federal  Reserve
Board") with respect to reserves required to be maintained  against deposits and
certain  other  matters.  The Bank is a member of the Federal  Home Loan Bank of
Topeka (the "FHLB") and the Federal Reserve Bank of Kansas City.

    As a bank  holding  company,  the  Company  is  subject  to  regulation  and
supervision by the Federal Reserve Board. The Company is also subject to various
reporting  and other  requirements  under the  federal  securities  laws and the
regulations of the Securities and Exchange Commission (the "SEC").

    Currently,  the Company's  business  consists of ownership of the Bank, with
its main office in Manhattan and branch offices in Auburn, Manhattan, Osage City
and Topeka,  Kansas.  The Company  plans to continue  exploring  and  evaluating
opportunities to expand and enter complementary  markets in an effort to enhance
its asset base, long-term earnings and resources.

<PAGE>

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

GENERAL.  Net earnings for 1999 decreased 7.9% to $904,239  compared to $982,028
for 1998.  This  decrease in net earnings was primarily the result of a decrease
in average loans outstanding.  Gains on sale of loans also decreased as a result
of reduced  mortgage loan  originations,  which offset by fee and service charge
initiatives and  non-interest  expense  savings  related to the  assimilation of
Freedom.  Net interest income after provision for loan losses decreased $58,630,
or 1.3%, to $4.5 million.  Gains on sale of loans decreased  63.2%, or $242,926,
to $141,501,  fees and service charges  increased  $70,157 or 9.5%, to $805,616,
and non-interest expense decreased $175,795 or 4.0%, to $4.2 million.

INTEREST INCOME. Interest income decreased by $738,901, or 7.2%, to $9.6 million
in 1999. Average  interest-earning  assets decreased from $133.5 million in 1998
to  $130.6  million  in  1999.  The  average  yield on  interest-earning  assets
decreased from 7.7% in 1998 to 7.3% in 1999.  Interest income on loans decreased
$480,525,  or 6.6%,  to 6.8 million.  Interest  earned on  securities  and other
investments  decreased  $258,376,  or 8.7%,  to $2.7  million.  The  decrease in
interest  income was due to a decrease in average loans and  investments,  which
was coupled with the decline in rates  experienced  as  interest-earning  assets
repriced  during 1999.  The Company  experienced a significant  31.3%,  or $11.4
million,  decline  in  one-to-four  family  loans  during  1998 as a  result  of
borrowers  taking  advantage of  declining  mortgage  loan  interest  rates.  In
accordance with the Company's interest rate risk guidelines, the majority of the
long-term  fixed rate mortgage  loans  originated in 1998 were sold to secondary
market investors. While the Company was able to fund other types of loans as the
loans  on  one-to-four   family  residences  were  refinanced,   the  volume  of
refinancings  was so great that a significant  amount of the funds available for
investment were invested in relatively short term investment  securities,  which
typically  carry lower  interest  rates than can be obtained on  commercial  and
consumer  loans.  The Company was able to counter 1998's decline in loans during
1999 by  increasing  commercial,  commercial  real estate and consumer  loans by
$10.9 million. This growth was a result of successful relationships developed by
the Company's  management team.  Interest income on other investments  decreased
substantially  as a result  of a  decrease  in funds  available  for  short-term
overnight interest bearing deposits.

INTEREST  EXPENSE.  Interest expense decreased from $5.6 million in 1998 to $5.0
million in 1999, or 10.8%.  Deposit  interest  expense  decreased  14.9% to $4.3
million  compared to $5.0  million  for 1998.  Interest  expense on  borrowings,
consisting  of advances  from the Federal  Home Loan Bank of Topeka (the "FHLB")
and funds borrowed for the acquisition of Freedom increased  $144,511,  or 25.9%
during 1999. Average  interest-bearing  liabilities  decreased $3.2 million from
$116.9  million  in 1998 to  $113.7  million  in 1999,  while the  average  cost
declined from 4.8% in 1998 to 4.4% in 1999.  The  decreased  expense on deposits
was due to lower average balances and the reduction in interest rates.  Interest
on borrowed funds  increased as a result of borrowing to fund the Company's loan
growth.

NET INTEREST  INCOME.  Net interest  income  represents the  difference  between
income derived from interest-earning  assets and the expense on interest-bearing
liabilities.  Net interest income is affected by both (a) the difference between
the rates of interest earned on  interest-earnings  assets and the rates paid on
interest-bearing  liabilities  ("interest  rate  spread")  and (b) the  relative
amounts of interest-earning assets and interest-bearing liabilities.

    Net  interest  income  decreased  to $4.6  million in 1999  compared to $4.7
million  in 1998.  This was  primarily  the  result of the  average  balance  of
interest-earning  assets  decreasing  $2.8  million  during  1999.  The yield on
interest-earning  assets  declined from 7.7% in 1998 to 7.3% in 1999,  while the
cost of interest-bearing  liabilities also declined forty basis points from 4.8%
in 1998 to 4.4% in 1999.  The  Company's  ratio of  interest-earning  assets  to
interest-bearing liabilities increased slightly from 114.2% in 1998 to 114.9% in
1999,  which  ultimately  resulted in the net interest margin  remaining flat at
3.5% in 1999 and 1998.

PROVISION FOR LOAN LOSSES.  The  provision for loan losses  decreased to $15,000
during 1999 compared to $90,000 in 1998. The decreased  provision  resulted from
some of the loans previously  identified as potential concerns either paying off
or  refinancing  at other  financial  institutions  during 1999. At December 31,
1999,  the allowance  for loan losses was $1.2  million,  or 1.4% of gross loans
outstanding, compared to $1.3 million, or 1.7%, at December 31, 1998.

NONINTEREST  INCOME.  Noninterest income decreased  $209,779,  or 17.3%, to $1.0
million in 1999.  Fees and service  charge  income  increased  from  $735,459 to
805,616,  or by 9.5%.  Gains on sale of loans  decreased  $242,926,  or 63.2% to
$141,501.  Gains  on sale of  investment  securities  available  for  sale  were
realized  in the amount of  $10,795  in 1998 and  $7,147 in 1999 as the  Company
sought to reposition its portfolio.  The reduction of gains on sale of loans was
a result of  decreased  loan  originations  due to fewer higher  interest  rates
during the latter part of the year.  The  increase  in fees and  service  charge
income was  primarily a result of  analyzing  the fee  structure of products and
services offered, making adjustments where necessary.

<TABLE>
<CAPTION>

NONINTEREST INCOME:               1999          1998       1997
                                  ----          ----       ----
<S>                                <C>            <C>       <C>
Fees and service charges          $805,616     $735,459  $506,899
Gains on sales of loans            141,501      384,427    99,381
OTHER                               55,392       92,402    83,829
                                    ------       ------    ------
TOTAL NONINTEREST income:       $1,002,509   $1,212,288  $690,109
                                ==========   ==========  ========
</TABLE>

NONINTEREST  EXPENSE.  Noninterest  expense  decreased  4.0% to $4.2 million for
1999. This decrease was due in part to the continued assimilation of the Freedom
acquisition.  Amortization of goodwill  decreased 8.1% from $245,958 to $226,113
resulting from reduced core deposit  amortization.  Professional  fees decreased
$73,708 from $212,424 to $138,716 as a result of expenses incurred in 1998 which
were not encountered in 1999 relating to the  acquisition,  expenses  related to
Year 2000 issues and fees incurred for professional  services used for acquiring
new personnel  during 1998. Other operating  expense  decreased 7.1% to $959,875
due primarily to cost savings associated with the acquisition.

AVERAGE ASSETS/LIABILITIES.  The following table sets forth information relating
to average balances of interest-earning assets and interest-bearing  liabilities
for the years ended  December 31, 1999,  1998 and 1997.  This table reflects the
average  yields on assets  and  average  costs of  liabilities  for the  periods
indicated  (derived by dividing income or expense by the monthly average balance
of assets or  liabilities,  respectively)  as well as the "net interest  margin"
(which reflects the effect of the net earnings balance) for the periods shown.

<TABLE>
<CAPTION>

AVERAGE BALANCE SHEETS-AVERAGE YIELDS AND RATES
                 Year Ended December 31, 1999      Year Ended December 31, 1998   Year Ended December 31, 1997
                Average            Average        Average            Average      Average          Average
                Balance  Interest  Yield/Rate     Balance  Interest  Yield/Rate   Balance Interest Yield/Rate
                          ======================================================================
<S>                            <C>     <C>     <C>    <C>      <C>       <C>       <C>     <C>      <C>
ASSETS:
  Interest-earning assets
    Investment securities (1) $50,613  $2,705  5.34%  $52,686 $2,962     5.62%    $35,001 $2,050     5.86%
    LOANS RECEIVABLE, net (2)  80,019   6,846  8.56%   80,788  7,327     9.07      65,057  5,879     9.04
                               ------   -----  ------  ------  ------    -----     ------  -----     ------

TOTAL INTEREST-EARNING assets 130,632   9,551  7.31%  133,474 10,289     7.71%    100,058  7,929     7.92%
                              -------                 ------- ------              -------  ------
Non interest-earning assets    7,552                    8,402                       4,111
                              ------                  ------                        -----
    TOTAL                   $138,184                 $141,876                    $104,169
                           =========                 ========                    ========

LIABILITIES AND STOCKHOLDERS' EQUITY:

   Interest-bearing liabilities:
     Certificates of deposit $54,334  $2,788   5.13%    $58,261 $3,230      5.54%  $46,666 $2,642    5.66%
     Money market deposits    16,311     590   3.62%     17,866    648      3.63    15,378    578    3.76
     Other deposits           31,413     908   2.89%     32,574  1,158      3.55    18,613    631    3.39
     FHLB ADVANCES AND
        Other borrowings      11,684     702   6.01%      8,212    557      6.78     3,221    187    5.81
                              ------    ----   -----     ------  -----      ----    ------  -----    ----

TOTAL INTEREST-BEARING
 liabilities                 113,742   4,988   4.39%    116,913  5,593      4.78%   83,878  4,038    4.81%
                             -------   -----   -----    -------  -----      -----   ------ ------    -----
Non interest-bearing
 liabilities                  11,193                     12,254                      8,609
Stockholders' equity          13,249                     12,709                     11,682
                             -------                    -------                     ------
     TOTAL                  $138,184                   $141,876                   $104,169
                           =========                   ========                   ========

NET INTEREST INCOME                   $4,563                    4,696                      3,891
                                     =======                   ======                      =====
Interest rate spread (3)                      2.93%                         2.93%                   3.11%
Net interest margin (4)                       3.49%                         3.52%                   3.89%
Ratio of average interest-earning
assets to average interest-bearing
 liabilities                         114.85%                  114.17%                    119.29%
                                     =======                  =======                    =======

(1) Income on investment  securities  includes all securities,  interest bearing
    deposits in other financial institutions and stock owned in the FHLB and the
    Federal Reserve.

(2) Includes non-accrual loans.
(3) Interest rate spread  represents the difference  between the average rate on
    interest-earning   assets   and  the   average   cost  of   interest-bearing
    liabilities.

(4) Net  interest  margin  represents  net  interest  income  divided by average
interest-earning assets.

</TABLE>

COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

GENERAL.  Net  earnings  for 1998  decreased  8.4% to $982,028  compared to $1.1
million for 1997.  This decrease in net earnings was the result of a decrease in
loans outstanding  related to increased levels of home mortgage  refinancing due
to lower interest rates. Additionally, expenses increased due to the acquisition
of Freedom, along with new personnel and Year 2000 expenses. Net interest income
after provision for loan losses increased  $775,303,  or 20.2%, to $4.6 million.
Gains on sale of loans  increased  286.8%,  or $285,046,  to $384,427,  fees and
service  charges  increased  $228,560 or 45.1%,  to $735,459,  and  non-interest
expense increased $1.4 million or 46.4%, to $4.4 million.  The increase in gains
on sale of loans resulted from increased loan originations due to refinancings.

INTEREST INCOME.  Interest income increased by $2.4 million,  or 29.8%, to $10.3
million in 1998. Average  interest-earning  assets increased from $100.1 million
in 1997 to $133.5 million in 1998. The average yield on interest-earning  assets
decreased  slightly from 7.9% in 1997 to 7.7% in 1998.  Interest income on loans
increased $1.5 million, or 24.6%, to $7.3 million. Interest earned on securities
and other  investments  increased  $913,042,  or  44.5%,  to $3.0  million.  The
increase  in  interest  income  was due to an  increase  in  average  loans  and
investments,  primarily due to the Freedom  acquisition,  which more than offset
the decline in rates  experienced as  interest-earning  assets  repriced  during
1998. The Company experienced a significant 31.3%, or $11.4 million,  decline in
one-to-four  family loans during 1998 as a result of borrowers  taking advantage
of declining  mortgage loan  interest  rates.  In accordance  with the Company's
interest rate risk guidelines, the majority of the long-term fixed rate mortgage
loans  originated  in 1998 were sold to secondary  market  investors.  While the
Company was able to fund other types of loans as the loans on one-to-four family
residences  were  refinanced,  the  volume of  refinancings  was so great that a
significant  amount of the funds  available  for  investment  were  invested  in
relatively  short  term  investment  securities,  which  typically  carry  lower
interest rates than can be obtained on commercial and consumer  loans.  Interest
income  on other  investments  also  increased  substantially  as a result of an
increase in funds available for short-term overnight interest bearing deposits.

INTEREST  EXPENSE.  Interest expense increased from $4.0 million in 1997 to $5.6
million in 1998, or 38.5%.  Deposit  interest  expense  increased  30.8% to $5.0
million  compared to $3.9  million  for 1997.  Interest  expense on  borrowings,
consisting  of advances  from the Federal  Home Loan Bank of Topeka (the "FHLB")
and funds borrowed for the acquisition of Freedom increased $370,445,  or 198.3%
during this time period.  Average  interest-bearing  liabilities increased $33.0
million  from  $83.9  million  in 1997 to  $116.9  million  in 1998,  while  the
respective  average cost  remained  relatively  constant at 4.8%.  The increased
expense on deposits was a direct result of the acquisition. Interest on borrowed
funds  increased as a result of the funds borrowed for the  acquisition  and the
additional Freedom borrowings assumed.

NET INTEREST  INCOME.  Net interest  income  represents the  difference  between
income derived from interest-earning  assets and the expense on interest-bearing
liabilities.  Net interest income is affected by both (a) the difference between
the rates of interest earned on  interest-earnings  assets and the rates paid on
interest-bearing  liabilities  ("interest  rate  spread")  and (b) the  relative
amounts of interest-earning assets and interest-bearing liabilities.

    Net  interest  income  increased  to $4.7  million in 1998  compared to $3.9
million in 1997. This was the result of the average balance of  interest-earning
assets  increasing  $33.4  million  during  1998  as a  result  of  the  Freedom
acquisition.  The yield on interest-earning assets declined from 7.9% in 1997 to
7.7% in 1998, while the cost of interest-bearing  liabilities  remained constant
at 4.8% in 1998 and 1997.  The  Company's  ratio of  interest-earning  assets to
interest-bearing  liabilities  decreased from 119.3% in 1997 to 114.17% in 1998,
which also contributed to a decline in the net interest margin from 3.9% in 1997
to 3.5% in 1998.

PROVISION FOR LOAN LOSSES.  The  provision for loan losses  increased to $90,000
during 1998 compared to $60,000 in 1997. The increased  provision  resulted from
the general  increase in the Company's loan portfolio as a result of the Freedom
acquisition.  At  December  31,  1998,  the  allowance  for loan losses was $1.3
million, or 1.7% of gross loans outstanding,  compared to $1.3 million, or 1.5%,
at December 31, 1997.

NONINTEREST  INCOME.  Noninterest income increased  $522,179,  or 75.7%, to $1.2
million in 1998.  Fees and service  charge  income  increased  from  $506,899 to
$735,459,  or by 45.1%. Gains on sale of loans increased $285,046,  or 286.8% to
$384,427. A loss on sale of investment  securities available for sale of $21,309
was incurred in 1997 compared to a gain of $10,795 in 1998 as the Company sought
to  reposition  its  portfolio.  The  gains  on sale of loans  were a result  of
increased loan originations due to refinancing  because of lower interest rates.
The  increase in fees and service  charge  income was  primarily a result of the
acquisition.

NONINTEREST  EXPENSE.  Noninterest  expense  increased to $4.4 million for 1998.
This large increase was due in part to the Freedom acquisition.  Amortization of
goodwill  increased  130.3%  from  $106,816  to  $245,958  as a  result  of  the
acquisition. Compensation and benefits increased 42.9% from $1.4 million to $2.0
million along with occupancy and equipment  expense which increased  $201,617 to
$632,727,  both primarily as a result of the acquisition and the first full year
of operating the Topeka branch  facility which opened in May 1997.  Professional
fees increased $94,416 from $118,008 to $212,424 as a result of the acquisition,
expenses related to Year 2000 issues and fees incurred for professional services
used for acquiring new personnel.  Other  operating  expense  increased 39.0% to
$1,032,965 due primarily to the acquisition.

CAPITAL RESOURCES AND LIQUIDITY

ASSET QUALITY AND  DISTRIBUTION.  The Company's total assets were $143.3 million
at December  31, 1999  compared to $135.8  million at December  31,  1998.  This
increase was  primarily  attributable  to the 17% increase in loans  experienced
during 1999,  which was funded by  investment  proceeds and FHLB  advances.  The
Company's primary ongoing sources of funds are deposits, proceeds from principal
and interest  payments on loans and investment  securities and proceeds from the
sale of mortgage loans and investment securities. While maturities and scheduled
amortization  of loans are a  predictable  source of  funds,  deposit  flows and
mortgage prepayments are greatly influenced by general interest rates,  economic
conditions,  competition,  and  the  restructuring  of  the  financial  services
industry.

    The primary investing activities of the Company are the origination of loans
and the purchase of investment  securities.  During the years ended December 31,
1999, 1998 and 1997, the Company purchased  investment  securities in the amount
of $15.9 million, $27.1 million and $9.3 million, respectively.  These purchases
were funded primarily by deposits, proceeds from the sale of fixed rate mortgage
loans and maturing  securities.  Generally,  the Company  originates  fixed rate
mortgage  loans for immediate  sale and does not  originate and warehouse  those
loans for resale in order to speculate on interest rates. During the years ended
December  31,  1999,  1998 and 1997,  the Company  originated  loans for sale of
approximately  $12.3  million,  $33.0 million and $14.7  million,  respectively.
During the year ended  December 31,  1997,  the  Company's  ability to originate
quality  loans for  retention  in the  portfolio  exceeded  the  volume of loans
originated for sale. The dramatic  increase in the volume of fixed rate mortgage
loans  originated for resale in 1998,  many of which were  refinances out of the
Company's  existing loan portfolio,  resulted in a decline in net loans of $10.4
million,   while  the  excess   available  funds  were  invested  in  investment
securities. During 1999, the origination of fixed rate mortgage loans for resale
declined  to more  customary  levels,  however  the Company was able to generate
significant  commercial,  commercial real estate and consumer loans resulting in
an increase in net loans of $12.8 million. During the past two years, management
has diversified  the loan portfolio which will ultimately  enhance the Company's
loan portfolio yields.

<TABLE>
<CAPTION>

LOAN PORTFOLIO COMPOSITION COMPARISON

                                 Balance Balance

<S>                          <C>      <C>           <C>

TYPE                      12/31/99    12/31/98     % CHANGE
----                      --------    --------     --------
1-4 Family Residence     $27,125,681 $25,058,459      8.25%
Commercial Real Estate    31,635,398  25,473,084     24.19%
Consumer & commercial     29,528,475  25,336,172     16.55%
                          ----------  ----------
   Non-Mortgage          $88,289,554 $75,867,715
                         =========== ===========
</TABLE>

    Management  believes that the quality of the loan portfolio  continues to be
strong.  As of December 31, 1999,  nineteen  real estate loans were more than 30
days past due, with a total balance of $1,124,284, which was 1.3% of total loans
outstanding.  Six of these loans totaling $408,838 were on non-accrual status as
of December 31, 1999.  Excluding  guaranteed  student  loans,  there were twenty
consumer  loans in the amount of  $122,640,  or less than 0.1% of the total loan
portfolio, over 30 days past due and two of these loans with a balance of $4,702
were on non-accrual.  Additionally,  six commercial loans totaling $232,219,  or
0.2% of the  total  loan  portfolio,  were  past due over 30 days.  One of these
commercial loans, with a balance of $58,565, was on non-accrual.

LIABILITY  DISTRIBUTION.  At December 31, 1999,  total  deposits  decreased $2.7
million  from  December  31,  1998.  Borrowings  increased  $11,047,860  as FHLB
advances  were  obtained by the Company to fund the loan growth  experienced  in
1999.  In  addition,  $830,000  was  paid on  funds  borrowed  for  the  Freedom
acquisition.

    The  deposit  base has  remained  relatively  consistent  with  prior  year.
Noninterest-bearing  demand deposits and NOW accounts at the end of 1999 totaled
$30.9  million,  or 27.5% of deposits,  compared to $32.9  million,  or 28.6% of
deposits at December 31, 1998.  Money market deposit  accounts were 14.5% of the
portfolio and totaled $16.3  million,  compared to $17.7 million at December 31,
1998 and savings  accounts  totaled $10.0  million  compared to $10.3 million at
December 31, 1998.  Certificates of deposit were $55.1 million,  or 49.1% of the
portfolio compared to $54.2 million, or 47.1% at December 31, 1997.

    Certificates of deposit at December 31, 1999, which were scheduled to mature
in one year or less totaled $40.3 million. Historically,  maturing deposits have
remained and  management  believes  that a  significant  portion of the deposits
maturing in one year or less will remain with the Company upon maturity.

<TABLE>
<CAPTION>

DEPOSIT PORTFOLIO COMPOSITION COMPARISON
<S>                     <C>           <C>         <C>
                       Balance       Balance
TYPE                   12/31/99      12/31/98   % CHANGE
----                   --------      --------   --------
DDA                $10,124,653    $ 9,307,879     8.78%
NOW                 20,819,388     23,595,955   (11.77%)
MMDA                16,253,710     17,653,265    (7.93%)
Savings             10,017,267     10,327,847     3.01%
CERTIFICATES        55,121,311     54,177,076     1.74%
                    ----------     ----------
                  $112,336,329   $115,062,022
                   ===========    ===========

</TABLE>

CASH FLOWS.  Cash flows provided by operating  activities  equalled $1.7 million
for the year ended  December  31, 1999,  compared to $1.4 million in 1998.  This
increase  in cash flows  provided  by  operating  activities  resulted  from the
stabilization  of loans  held for sale and  accrued  expenses,  taxes  and other
liabilities.

    Net cash used in investing  activities  was $8.5 million in 1999 compared to
net cash  provided by investing  activities  of $2.9 million in 1998.  Net loans
increased approximately $12.8 million in 1999 versus a decrease of $10.4 million
in 1998.  Maturities and prepayments of investment  securities  held-to-maturity
were $.6  million in 1999 versus $4.3  million in 1998.  Proceeds  from sales of
investment  securities  available-for-sale  were $5.9 million in 1999 versus $.6
million in 1998. No purchases of securities  held-to-maturity  were made in 1999
or 1998. Purchases of securities  available-for-sale  in 1999 were $15.9 million
compared to $27.1 million in 1997, a decrease  corresponding  to the increase in
net loans.

    Net cash provided by financing  activities was $7.2 million in 1999 compared
to $7.1 million used in 1998.  Deposits  decreased $2.7 million in 1999 and FHLB
advances  increased  $11,047,860  in 1999  compared to a decrease of $821,427 in
1998.  In  addition,  $830,000  was paid on the line of credit  utilized  by the
Company to finance the purchase of Freedom.

LIQUIDITY.  The Company's most liquid assets are cash and cash  equivalents  and
investment  securities  available  for  sale.  The  level  of these  assets  are
dependent  on  the  Company's  operating,   financing,   lending  and  investing
activities  during any given period. At December 31, 1999 and 1998, these liquid
assets totaled $47.7 million and $52.3 million, respectively.  During periods in
which the Company is not able to originate a  sufficient  amount of loans and/or
periods of high principal  prepayments,  the Company increases its liquid assets
by investing in short-term U.S.  Government and agency  securities or high grade
municipal securities.

    Liquidity  management is both a daily and long-term function of management's
strategy. Excess funds are generally invested in short-term investments.  In the
event the Company requires funds beyond its ability to generate them internally,
additional  funds are  available  through  the use of FHLB  advances,  a line of
credit with the FHLB or through sales of  securities.  At December 31, 1999, the
Company had outstanding FHLB advances of $14,690,010 and $965,000 outstanding on
its $17.5  million line of credit with the FHLB.  Additionally,  the Company has
guaranteed  a loan made to the  Company's  Employee  Stock  Ownership  Plan (the
"ESOP"),  with an outstanding  balance of $173,847 at December 31, 1999, to fund
the ESOP's purchase of shares in the Company's 1993 common stock  offering.  The
total  borrowings by the Company were $16.7 million at December 31, 1999,  which
included  $870,000  borrowed  by the  Company  for the  acquisition  of Freedom,
compared to $6.5 million at December 31, 1998.

    At December 31, 1999, the Company had outstanding  loan commitments of $16.4
million.  Management anticipates that sufficient funds will be available to meet
current  loan  commitments.  These  commitments  consist  of  letters of credit,
unfunded lines of credit and commitments to finance real estate loans.

CAPITAL. The Federal Reserve Board has established capital requirements for bank
holding companies which generally parallel the capital requirements for national
banks  under  the  Office  of the  Comptroller  of the  Currency  (the  "OCC  ")
regulations.  The  regulations  provide that such  standards  will  generally be
applied on a bank-only (rather than a consolidated)  basis in the case of a bank
holding company with less than $150 million in total consolidated  assets,  such
as the Company.  The Company's total capital of $13.3 million is, however,  well
in  excess  of  the  Federal  Reserve  Board's   consolidated   minimum  capital
requirements.

    At December 31, 1999,  the Bank continued to maintain a sound Tier 1 capital
ratio  of 8.88%  and a risk  based  capital  ratio  of  14.84%.  As shown by the
following table,  the Bank's capital exceeded the minimum capital  requirements:
(dollars in thousands)

                              AMOUNT     PERCENT    REQUIRED

Tier 1 Leverage Capital      $12,395       8.88%       4.00%
Risk Based Capital           $13,535      14.84%       8.00%

    Banks and bank holding  companies  are  generally  expected to operate at or
above the minimum capital  requirements.  The above ratios are well in excess of
regulatory  minimums  and should  allow the Company to operate  without  capital
adequacy concerns. The Federal Deposit Insurance Corporation  Improvement Act of
1991  establishes a bank rating system based on the capital levels of banks. The
Bank is rated "well  capitalized",  which is the highest rating  available under
this capital-based rating system.

DIVIDENDS

    During 1999, dividends of $.25 per share were paid to the stockholders and a
5% stock dividend was paid during August 1999. The cash and stock  dividends are
consistent with those paid during 1998.

      The  payment of  dividends  by any  financial  institution  or its holding
company is affected by the requirement to maintain  adequate capital pursuant to
applicable capital adequacy guidelines and regulations.  As described above, the
Bank exceeded its minimum capital requirements under applicable guidelines as of
December 31, 1999.  The National Bank Act imposes  limitations  on the amount of
dividends  that a  national  bank may pay  without  prior  regulatory  approval.
Generally,  the amount is limited to the bank's current year's net earnings plus
the adjusted  retained  earnings for the two preceding years. As of December 31,
1999,  approximately  $419,000  was  available  to be paid as  dividends  to the
Company by the Bank.

RECENT ACCOUNTING DEVELOPMENTS

    The  Financial  Accounting  Standards  Board  ("FASB")  issued  Statement of
Financial  Accounting  Standards  ("SFAS") No. 133,  "Accounting  for Derivative
Instruments  and Hedging  Activities",  in June 1998.  SFAS No. 133  establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts,  and for hedging activities.
It  requires  that an entity  recognize  all  derivatives  as  either  assets or
liabilities in the statement of financial position and measure those instruments
at fair value. This statement,  as amended by SFAS No. 137, is effective for all
fiscal  quarters of fiscal  beginning after June 15, 2000.  Management  believes
adoption  of SFAS  Nos.  133 and 137  will  not have a  material  effect  on the
Company's financial position or results of operations, nor will adoption require
additional capital resources.

EFFECTS OF INFLATION

    The Company's  financial  statements  and  accompanying  footnotes have been
prepared in accordance with GAAP  (generally  accepted  accounting  principles),
which  generally  requires the  measurement of financial  position and operating
results in terms of historical dollars without  consideration for changes in the
relative  purchasing  power of money over time due to  inflation.  The impact of
inflation can be found in the increased cost of the Company's operations because
the assets and  liabilities  of the Company are primarily  monetary and interest
rates have a greater impact on the Company's  performance than do the effects of
inflation.

YEAR 2000 COMPLIANCE

    The Year 2000  posed a unique  set of  challenges  to  companies  reliant of
information  technology.  The  Company  utilizes  and is  depenndent  upon  data
processing  systems and software to conduct its business.  In 1997,  the Company
established a Year 2000  committee and initiated a review and  assessment of all
hardware  and software  issues  related to the Year 2000 and the  potential  for
those issues to adversely affect the Company's operations.

    As a result of the Company's  efforts,  the Company has not  experienced any
business  interruptions or encountered any credit or deposit  customers who have
experienced  adverse  consequences  resulting  from the  Year  2000.  Among  the
benefits  derived  from the time,  effort  and costs  related to Year 2000 was a
complete  review and update of the Company's  disaster  recovery and contingency
plans. As a result, the Company is now better prepared to deal with technical or
natural  disasters  which could threaten the Company's  operations.  The Company
will  continue  to  remain  aware of dates  during  2000  which  are  considered
critical,  such as 10/10/2000,  and will address issues with the  aforementioned
contingency plan should the need arise.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    The Company's assets and liabilities are principally financial in nature and
the  resulting  net  interest  income  thereon  is  subject to changes in market
interest rates and the mix of various assets and liabilities.  Interest rates in
the financial  markets  affect the Company's  decision on pricing its assets and
liabilities  which impacts net interest  income,  a significant cash flow source
for the  Company.  As a result,  a  substantial  portion of the  Company's  risk
management activities relates to managing interest rate risk.

    The Company's  Asset/Liability  Management  Committee  monitors the interest
rate sensitivity of the Company's balance sheet using earnings simulation models
and interest  sensitivity  GAP  analysis.  The Company has set policy  limits of
interest  rate risk to be assumed in the normal  course of business and monitors
such limits through its simulation process.

    The Company has been  successful  in meeting the interest  rate  sensitivity
objectives set forth in its policy.  Simulation models are prepared to determine
the impact on net interest  income for the coming twelve  months,  including one
using rates at December  31, 1999 and  forecasting  volumes for the twelve month
projection.  This position is then subjected to a shift in interest rates of 200
basis points rising and 200 basis points falling with an impact to the Company's
net interest income on a one year horizon as follows:

<TABLE>
<CAPTION>

<S>                          <C>                 <C>
                            $ change in net     % of net
SCENARIO                    INTEREST INCOME     INT. INCOME
--------                    ---------------     -----------
200 basis point rising      $(121,000)           (2.53%)
200 basis point falling     $197,000              4.11%

</TABLE>

    The Company also believes it is appropriately positioned for future interest
rate  movements,  although it may experience  some  fluctuations in net interest
income due to short term timing differences  between the repricing of assets and
liabilities.

ASSET/LIABILITY MANAGEMENT

    Since the mid 1980s,  the Bank has emphasized the  origination of adjustable
rate  mortgages for portfolio  retention  along with  shorter-term  consumer and
commercial  loans to reduce the  sensitivity  of its  earnings to interest  rate
fluctuations.  Interest  rate  "gap"  analysis  is a common,  though  imperfect,
measure of interest  rate risk which  measures  the relative  dollar  amounts of
interest-earning  assets and interest bearing liabilities which reprice within a
specific time period,  either through maturity or rate adjustment.  The "gap" is
the  difference  between  the amounts of such  assets and  liabilities  that are
subject to such  repricing.  A "positive"  gap for a given period means that the
amount of  interest-earning  assets maturing or otherwise  repricing within that
period exceeds the amount of interest-bearing  liabilities maturing or otherwise
repricing  during that same period.  In a rising interest rate  environment,  an
institution with a positive gap would generally be expected,  absent the effects
of other  factors,  to experience a greater  increase in the yield of its assets
relative to the cost of its  liabilities.  Conversely,  the cost of funds for an
institution  with a positive  gap would  generally  be expected to decline  less
quickly  than the yield on its assets in a falling  interest  rate  environment.
Changes in interest rates  generally have the opposite  effect on an institution
with a "negative" gap.

    Following is the "static gap" schedule for the Company.  All loans are based
on scheduled repricing,  with no prepayment assumptions.  The Company's mortgage
backed securities  included published  prepayment  assumptions,  while all other
investments assume no prepayments. All assets are reflected at amortized cost.

    Certificates of deposit reflect  contractual  maturities  only. Money market
accounts are rate sensitive and accordingly, a higher percentage of the accounts
have been included as repricing immediately in the first period. Savings and NOW
accounts are not as rate sensitive as money market  accounts and for that reason
a  significant  percentage  of the  accounts  are  reflected in the 2 to 5 years
category.

    The  Company  has  been  successful  in  meeting  the  interest  sensitivity
objectives  set forth in its policy.  This has been  accomplished  primarily  by
managing the assets and  liabilities  while  maintaining  the  traditional  high
credit standards of the Company.

    Management  believes  the  Company is  appropriately  positioned  for future
interest rate  movements,  although it may experience  some  fluctuations in net
interest  income due to short term timing  differences  between the repricing of
assets and liabilities.
<PAGE>
<TABLE>
<CAPTION>

INTEREST-EARNING ASSETS AND INTEREST-BEARING LIABILITIES REPRICING SCHEDULE
("GAP" TABLE)

                           AT DECEMBER 31, 1999
                           --------------------
                          (dollars in thousands)

<S>                                       <C>        <C>          <C>          <C>       <C>
                                         3 months   More than  More than      Over 5
                                         or less    3 to 12    1 to 5 years   years     Total
                                                    months
Interest-earning assets:
    Interest-bearing deposits             $1,362    $    -     $    -        $   -    $1,362
    Investment securities                  3,803    12,160     27,008         2,654    46,625
    LOANS                                 31,554    31,459     20,654         4,623    88,290
                                          ------    ------     ------         ------    ------
      TOTAL INTEREST-EARNING assets      $36,719   $43,619    $47,662        $7,277   $135,277
                                          ======    ======     ======         ======   =======

Interest-bearing liabilities
    Certificates of deposit              $14,104   $26,185    $14,382       $     -    $55,121
    Money market deposit accounts          8,618         -      7,636             -     16,254
    Savings and NOW accounts              13,055         -     17,782             -     30,837
    Borrowed money                         6,405     2,000      8,294             -     16,699
                                          ------   -------    -------       -------    -------
      TOTAL INTEREST-BEARING liabilities $42,182   $28,185    $48,544             -   $118,911
                                         =======    =======    ======       $======   ========


Interest sensitivity gap per period      $(5,463)  $15,434     $(882)        $7,277    $16,366
Cumulative interest sensitivity gap      $(5,463)    $9,971     $9,089      $16,366

Cumulative gap as a percent
of total interest-earning assets          (4.04%)    (7.37%)      6.72%      12.10%

Cumulative interest sensitive assets
as a percent of cumulative
interest sensitive liabilities            87.05%    114.17%     107.64%     113.76%

</TABLE>
<PAGE>

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995.

    This quarterly report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E
of the  Securities  Exchange Act of 1934, as amended.  The Company  intends such
forward-looking  statements  to be covered  by the safe  harbor  provisions  for
forward-looking  statements  contained in the Private  Securities  Report Act of
1995,  and is  including  this  statement  for  purposes  of these  safe  harbor
provisions.  Forward-looking statements,  which are based on certain assumptions
and describe  future plans,  strategies  and  expectations  of the Company,  are
generally  identifiable  by use  of the  words  "believe,"  "expect,"  "intend,"
"anticipate,"  "estimate,"  "project,"  or similar  expressions.  The  Company's
ability to predict results or the actual effect of future plans or strategies is
inherently  uncertain.  Factors  which could have a material  adverse  effect on
operations and future prospects of the Company and the subsidiaries include, but
are not limited to, changes in: interest  rates,  general  economic  conditions,
legislative/regulatory  changes,  monetary  and  fiscal  policies  of  the  U.S.
Government,  including  policies of the U.S.  Treasury  and the Federal  Reserve
Board, the quality or composition of the loan or investment  portfolios,  demand
for loan products, deposit flows, competition,  demand for financial services in
the Company's market area, our  implementation of new technologies,  our ability
to develop and maintain  secure and reliable  electronic  systems and accounting
principles,  policies and guidelines.  These risks and  uncertainties  should be
considered in evaluating  forward-looking  statements and undue reliance  should
not be placed on such statements. Further information concerning the company and
its business,  including  additional  factors that could  materially  affect the
Company's  financial  results,  is included in the  Company's  filings  with the
Securities and Exchange Commission.


<PAGE>


                          Independent Auditors' Report

   The Board of Directors
   MNB Bancshares, Inc.:


   We  have  audited  the  accompanying   consolidated  balance  sheets  of  MNB
   Bancshares,  Inc. and subsidiaries  (the Company) as of December 31, 1999 and
   1998 and the  related  consolidated  statements  of  earnings,  stockholders'
   equity and comprehensive  income, and cash flows for each of the years in the
   three-year  period  ended  December 31, 1999.  These  consolidated  financial
   statements  are  the   responsibility  of  the  Company's   management.   Our
   responsibility  is to  express an  opinion  on these  consolidated  financial
   statements based on our audits.

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

   In our  opinion,  the  consolidated  financial  statements  referred to above
   present  fairly,  in all material  respects,  the  financial  position of the
   Company as of December  31,  1999 and 1998 and the results of its  operations
   and its cash  flows  for each of the  years in the  three-year  period  ended
   December  31,  1999,  in  conformity  with  generally   accepted   accounting
   principles.

                       (Insert Electronic Signature Here)

   January 27, 2000



<PAGE>

<TABLE>
<CAPTION>


                      MNB BANCSHARES, INC. AND SUBSIDIARIES
                                MANHATTAN, KANSAS
                           Consolidated Balance Sheets
                           December 31, 1999 and 1998

<S>                                                            <C>         <C>
                       ASSETS                                  1999         1998
                                                             ---------   ----------
Cash and cash equivalents:
   Cash                                                    $  2,952,527    1,172,229
   Interest-bearing deposits in other financial institutions  1,362,486    2,703,300
                                                             ---------    ----------

Total cash and cash equivalents                               4,315,013    3,875,529

Investment securities:
   Held-to-maturity                                           1,603,268    2,266,343
   Available-for-sale                                        43,402,200   48,384,518
Loans, net                                                   86,969,008   74,297,243
Loans held for sale                                             751,193      755,747
Premises and equipment, net of accumulated depreciation       2,288,028    2,231,850
Accrued interest and other assets                             3,933,590    4,019,000
                                                             ---------    ----------

        Total assets                                       $143,262,300  135,830,230
                                                            ===========  ===========

           LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
   Deposits:
    Noninterest bearing demand                             $ 10,124,653    9,307,879
    Money market and NOW                                     37,073,098   41,249,220
    Savings                                                  10,017,267   10,327,847
    Time, $100,000 and greater                               10,897,718    7,832,855
    Time, other                                              44,223,593   46,344,221
                                                             ---------    ----------

        Total deposits                                       112,336,329 115,062,022

   Federal Home Loan Bank borrowings                          15,655,010   4,607,150
   Other borrowings                                            1,043,847   1,922,351
   Accrued interest and expenses, taxes, and other liabilities   936,730     997,034
                                                               ---------  ----------
        Total liabilities                                    129,971,916 122,588,557
                                                             ---------   ----------

Stockholders' equity:
   Common stock, $.01 par; 3,000,000 shares authorized;
     1,449,303 and 1,367,976 shares issued and outstanding
     at 1999 and 1998                                            14,493       13,680
   Additional paid-in capital                                 9,011,899    8,199,525
   Retained earnings                                          4,821,937    5,021,547
   Unearned employee benefits                                  (173,847)    (222,351)
   Accumulated other comprehensive income                      (384,098)     229,272
                                                              ---------   ----------
        Total stockholders' equity                           13,290,384   13,241,673

Commitments and contingencies                                ---------    ----------

        Total liabilities and stockholders' equity         $143,262,300  135,830,230
                                                             =========  ==========

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


<PAGE>


<TABLE>
<CAPTION>


                      MNB BANCSHARES, INC. AND SUBSIDIARIES
                                MANHATTAN, KANSAS
                       Consolidated Statements of Earnings
                 Years ended December 31, 1999, 1998, and 1997



<S>                                                  <C>         <C>       <C>
                                                      1999       1998      1997
                                                     --------  ---------  -------
Interest income:
   Loans                                          $  6,846,202  7,326,727  5,879,204
   Investment securities                             2,691,003  2,714,558  1,944,663
   Other                                                13,329    248,150    105,003
                                                     --------   ---------  -------
        Total interest income                        9,550,534 10,289,435  7,928,870
                                                     --------  ---------   -------
Interest expense:
   Deposits                                          4,285,924  5,035,706  3,850,889
   Other borrowings                                    701,778    557,267    186,822
                                                     --------  ---------  -------
        Total interest expense                       4,987,702  5,592,973  4,037,711
                                                     --------  ---------  -------
        Net interest income                          4,562,832 4,696,46    3,891,159
Provision for loan losses                               15,000   90,000       60,000
                                                     --------  ---------  -------
        Net interest income after provision for
        loan losses                                 4,547,832 4,606,462  3,831,159
                                                    --------- ---------  ---------

Noninterest income:
   Fees and service charges                            805,616   735,459     506,899
   Gains on sales of loans                             141,501   384,427      99,381
   Other                                                55,392    92,402      83,829
                                                     --------  ---------    -------

        Total noninterest income                     1,002,509 1,212,288     690,109
                                                     --------  ---------    -------
Noninterest expense:
   Compensation and benefits                         2,083,502 2,043,450   1,429,665
   Occupancy and equipment                             597,807   632,727     431,110
   Amortization                                        226,113   245,958     106,816
   Professional fees                                  138,716    212,424     118,008
   Data processing                                    131,479    139,714     101,878
   Federal deposit insurance premiums                  45,293     51,342      47,116
   Other                                              959,875  1,032,965     742,988
                                                     --------  ---------  -------
        Total noninterest expense                   4,182,785  4,358,580   2,977,581
                                                     --------  ---------  -------
        Earnings before income taxes                1,367,556  1,460,170   1,543,687

Income taxes                                          463,317    478,142     471,143
                                                     --------  ---------  -------

        Net earnings                               $  904,239    982,028   1,072,544
                                                     ========  =========  =======

Earnings per share:
   Basic                                            $ 0.63       0.69      0.76
   Diluted                                            0.61       0.66      0.73
                                                     ========  =========  =======


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

                       MNB BANCSHARES, INC. AND SUBSIDIARIES
                                MANHATTAN, KANSAS
                       Consolidated Statements of Stockholders' Equity
                              and Comprehensive Income
                Years ended December 31, 1999, 1998, and 1997


<S>                       <C>         <C>          <C>       <C>      <C>            <C>

                                                                      ACCUMULATED
                                    ADDITIONAL             UNEARNED   OTHER
                          COMMON    PAID-IN    RETAINED    EMPLOYEE   COMPREHENSIVE
                          STOCK     CAPITAL    EARNINGS    BENEFITS   INCOME (LOSS)   TOTAL
                          -------   --------   ----------  --------   -------------   -----

Balance at December 31, 1996 $12,104  6,314,964   5,340,873   (315,020)  (18,756)   11,334,165

Comprehensive income:
Net earnings                      --         --   1,072,544        --         --     1,072,544
Change in fair value of
investment securities
available-for-sale,
  net of tax                      --         --         --         --      88,200       88,200
                             -------   --------    -------   -------- -----------     --------

Total comprehensive income        --         --   1,072,544        --      88,200    1,160,744
                             -------   --------    -------   -------- -----------     --------
Dividens paid ($.23 per share)    --         --    (319,866)       --          --     (319,866)
Reduction of unearned employee
   benefits                       --         --          --    43,833          --       43,833
Issuance of 13,488 shares
   under option plan             135     56,838          --        --          --       56,973
5% stock dividend (60,542 shares)606    750,993    (751,599)       --          --           --
                             -------   --------     -------  -------- -----------     --------
Balance at December 31, 1997  12,845  7,122,795   5,341,952  (271,187)     69,444   12,275,849
                             -------   --------    -------   --------    --------   ----------

Comprehensive income:
Net earnings                      --         --     982,028       --          --       982,028
Change in fair value of
  investment securities
  available-for-sale,
  net of tax                      --         --          --       --      159,828      159,828
                             -------   --------     ------- --------  -----------     --------

Total comprehensive income       --          --     982,028       --      159,828    1,141,856
                             -------   --------     ------- --------  -----------     --------

Dividends paid ($.24 per share)  --          --    (333,891)      --           --     (333,891)
Reduction of unearned employee
   benefits                      --          --          --   48,836           --       48,836
Issuance of 18,672 shares
   under stock
   compensation plans           187     108,836          --       --           --      109,023
5% stock dividend (64,844)
   shares)                      648     967,894    (968,542)      --           --          --
                            -------    --------     ------- --------   ----------     --------

Balance at December 31, 1998 13,680  8,199,525     5,021,547 (222,351)    229,272   13,241,673


Comprehensive income:
  Net earnings                   --        --        904,239       --          --       904,239
  Change in fair value of
    investment securities
    available-for-sale,
    net of tax                   --        --             --       --     (613,370)    (613,370)
                            -------  --------        ------- --------   -----------     --------
Total comprehensive income
  (loss)                         --        --        904,239       --      (613,370)     290,869
                            -------  --------        ------- --------   -----------    --------

Dividends paid ($.25 per share)  --        --       (353,544)      --           --     (353,544)
Reduction of unearned
   employee benefits             --        --             --   48,504           --       48,504
Issuance of 12,419 shares
   under stock
   compensation plans            124    62,758             --      --           --       62,882
5% stock dividend (68,908
   shares)                       689   749,616      (750,305)      --           --          --
                             -------  --------       -------  -------- -----------    --------
Balance at December 31, 1999 $14,493 9,011,899      4,821,937  (173,847)   (384,098)  13,290,384
                             ========  ========      =========   ======== ===========  ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                      MNB BANCSHARES, INC. AND SUBSIDIARIES
                                MANHATTAN, KANSAS
                      Consolidated Statements of Cash Flows
                  Years ended December 31, 1999, 1998, and 1997

<S>                                             <C>         <C>         <C>
                                                1999        1998        1997
                                                ----------  ----------  ----------

Cash flows from operating activities:

   Net earnings                               $   904,239     982,028   1,072,544
   Adjustments to reconcile net earnings to
   net cash
    provided by operating activities:
      Provision for loan losses                    15,000      90,000      60,000
      Depreciation and amortization               509,395     561,196     211,635
      Amortization of loan fees                   (35,343)    (55,232)    (67,873)
      Deferred income taxes                        47,400    (129,400)   (116,878)
      Net gain on sales of investment
       securities available-for-sale, premises
       and equipment, and other real estate       (7,147)    (11,068)     (9,907)
      Net gain on sales of loans                (141,501)   (384,427)    (99,381)
      Proceeds from sale of loans               12,397,598  33,323,344  14,260,381
      Origination of loans for sale            (12,251,543)(32,950,902)(14,725,572)
      Accretion of discounts and
       amortization of premiums
       on investment securities, net                78,119      43,173     (40,931)
      Changes in assets and liabilities:
       Accrued interest and other assets          (81,103)      94,175     100,857
       Accrued expenses, taxes, and other
       liabilities                                268,232     (121,929)   (755,333)
                                                 ----------  ----------  ----------
Net cash provided by (used in)
   operating activities                         1,703,346    1,440,958    (110,458)
                                                ----------   ----------  ----------

Cash flows from investing activities:
   Net (increase) decrease in loans             (12,756,422)10,368,287  (1,476,399)
   Maturities and prepayments of investment
    securities held-to-maturity                   552,959   4,344,489   4,583,747
   Proceeds from sale of investment
    securities held-to-maturity                   102,317          --          --
   Proceeds from sale of branch                        --     973,284          --
   Maturities and prepayments of investment
    securities available-for-sale               13,920,118  13,864,202  4,465,881
   Purchases of investment securities
    available-for-sale                         (15,895,185)(27,114,772)(9,340,259)
   Proceeds from sale of investment
   securities available-for-sale                 5,904,906     560,024   2,582,280
   Proceeds from sales of foreclosed assets         50,000     142,879      53,922
   Purchases of premises and equipment, net       (339,460)   (260,359)   (352,578)
   Improvements of other real estate                (4,600)         --         --
   Net cash paid in acquisitions                        --          --  (1,650,353)
                                                ----------  ----------  ----------
Net cash provided by (used in)
   investing activities                         (8,465,367)  2,878,034  (1,133,759)
                                                ----------  ----------  ----------
Cash flows from financing activities:
   Net increase (decrease) in deposits          (2,725,693) (4,396,004)  1,435,787
   Net increase (decrease) in securities
   sold under agreements to repurchase                  --    (549,615)    149,615
   Federal Home Loan Bank borrowings
    (repayment), net                            11,047,860    (821,427)   (800,000)
   Proceeds (repayments) from notes payable       (830,000) (1,150,000)  2,850,000
   Issuance of common stock under stock
    option plan                                     62,882     109,023      56,973
   Payment of dividends                           (353,544)   (333,891)    (319,866)
                                                ----------  ----------  ----------

Net cash provided by (used in)
   financing activities                         7,201,505  (7,141,914)   3,372,509
                                                ----------  ----------  ----------
Net increase (decrease) in cash and
    cash equivalents                              439,484  (2,822,922)   2,128,292

Cash and cash equivalents at beginning of year  3,875,529   6,698,451   4,570,159
                                                ----------  ----------  ----------
Cash and cash equivalents at end of year      $ 4,315,013   3,875,529   6,698,451
                                                ==========  ==========  ==========
Supplemental disclosure of cash flow information:

   Cash paid during the year for income taxes $   240,000     702,000     619,000
                                                ==========  ==========  ==========
   Cash paid during the year for interest     $ 4,978,000   5,623,000   3,949,000
                                                ==========  ==========  ==========
Supplemental schedule of noncash investing
and financing activities:
    Transfer of loans to real estate owned    $   105,000      39,000          --
    Bank acquisition:
      Liabilities assumed                              --          --   37,617,000
      Fair value of assets acquired                    --          --   39,267,000
                                                ==========  ==========  ==========
    Branch sale:
      Liabilities sold                        $        --   2,769,000          --
      Assets sold                                      --   3,742,000          --
                                                ==========  ==========  ==========


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

                      MNB BANCSHARES, INC. AND SUBSIDIARIES
                                 MANHATTAN, KANSAS
                  Notes to Consolidated Financial Statements
                      December 31, 1999, 1998, and 1997

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      (A)PRINCIPLES OF CONSOLIDATION

         The accompanying consolidated financial statements include the accounts
         of  MNB   Bancshares,   Inc.   (the   Company)  and  its  wholly  owned
         subsidiaries,  principally  Security National Bank (the Bank, including
         the merger with the former  Citizens  State Bank on December 31, 1997).
         Intercompany   balances  and  transactions   have  been  eliminated  in
         consolidation.

      (B)INVESTMENT SECURITIES

         The  Company   classifies  its  investment   securities   portfolio  as
         held-to-maturity,   which  are   recorded   at   amortized   cost,   or
         available-for-sale,  which are  recorded at fair value with  unrealized
         gains and losses  excluded  from  earnings  and  reported in a separate
         component  of  stockholders'   equity  until  realized.   Premiums  and
         discounts are  amortized  over the  estimated  lives of the  securities
         using a method which approximates the interest method. Gains and losses
         on sales are calculated using the specific identification method.

      (C)LOANS AND RELATED EARNINGS

         Management  determines at the time of origination whether loans will be
         held for the  portfolio  or sold in the  secondary  market.  Generally,
         fixed rate mortgage loans are originated and underwritten for resale in
         the secondary  mortgage  market.  That decision  depends on a number of
         factors,  including  the  yield on the  loan and the term of the  loan,
         market conditions, and the current gap position.

         Mortgage loans originated and intended for sale in the secondary market
         are  recorded at the lower of aggregate  cost or estimated  fair value.
         Fees  received on such loans are deferred and  recognized  in income as
         part of the gain or loss on sale. Net unrealized  losses are recognized
         in a valuation  allowance by charges to income.  Fees received on other
         loans  in  excess  of  amounts  representing  the  estimated  costs  of
         origination  are  deferred  and  credited to interest  income using the
         interest method.

         Accrual of interest on  nonperforming  loans is suspended  when, in the
         opinion of  management,  the collection of such interest or the related
         principal is less than  probable.  Any interest  received on nonaccrual
         loans is credited to principal.


<PAGE>


      (D)ALLOWANCE FOR LOAN LOSSES

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

      (E)STOCK IN FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK

         The Bank is a member  of the  Federal  Home Loan  Bank  (FHLB)  and the
         Federal  Reserve  Bank (FRB)  systems.  As a FHLB  member,  the Bank is
         required to purchase  and hold stock in the FHLB of Topeka in an amount
         equal to the greater of (a) 1% of unpaid  residential  loans, (b) 5% of
         outstanding  FHLB advances,  or (c) 0.3% of total assets.  FHLB and FRB
         stock are included in available-for-sale securities.

      (F)PREMISES AND EQUIPMENT

         Premises   and   equipment   are   stated  at  cost  less   accumulated
         depreciation.   Depreciation   is   provided   principally   using  the
         straight-line method over the estimated useful lives, ranging from 3 to
         31.5 years,  of the assets.  Major  replacements  and  betterments  are
         capitalized  while  maintenance and repairs are charged to expense when
         incurred.  Gains or losses on  dispositions  are  reflected  in current
         operations.

      (G)INTANGIBLE ASSETS

         The  Company's  core  deposit  intangible  asset and  goodwill is being
         amortized over ten  (accelerated)  and fifteen  (straight-line)  years,
         respectively.   When  facts  and   circumstances   indicate   potential
         impairment,  the Company evaluates the recoverability of asset carrying
         values,  including  intangible assets,  using estimates of undiscounted
         future  cash flows over  remaining  asset  lives.  When  impairment  is
         indicated,  any  impairment  loss is measured by the excess of carrying
         values over fair values. No impairment losses have been recorded during
         1999, 1998, or 1997.

         Goodwill and core deposit  amortization  was  $226,113,  $245,958,  and
         $106,816  in  1999,  1998,  and  1997,   respectively.   The  remaining
         unamortized  balances  of such  assets at  December  31,  1999 and 1998
         aggregated $2,298,997 and $2,533,443, respectively.


<PAGE>


      (H)INCOME TAXES

         The Company  files a  consolidated  federal  income tax return with its
         subsidiaries,  and records  deferred tax assets and liabilities for the
         future  tax  consequences   attributable  to  differences  between  the
         financial statement carrying amounts of existing assets and liabilities
         and  their  respective  income  tax  bases.  Deferred  tax  assets  and
         liabilities  are measured  using  enacted tax rates  applied to taxable
         income in the years in which those  temporary  differences are expected
         to be  recovered  or  settled.  The effect on  deferred  tax assets and
         liabilities  of a change  in tax rates is  recognized  in income in the
         period that includes the enactment date.

      (I)USE OF ESTIMATES

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

      (J)COMPREHENSIVE INCOME

         The  Company's  only  component  of other  comprehensive  income is the
         unrealized holding gains and losses on available-for-sale securities as
         shown below:
<TABLE>
<CAPTION>

                                          For the years ended
                                              December 31
                                       --------------------------
<S>                                      <C>       <C>     <C>
                                        1999      1998     1997
                                       --------  -------  -------

Unrealized holding gains (losses)     $ (982,160) 268,694  120,875
Less reclassification adjustment for gains
   included in net income                  7,147   10,795  (21,309)
                                        --------  -------  -------
     Net unrealized gains (losses)
       on securities                    (989,307) 257,899  142,184

Income tax expense (benefit)            (375,937)  98,071   53,984
                                        --------  -------  -------

     Other comprehensive income (loss)  (613,370) 159,828  88,200
                                        ========  =======  =======

</TABLE>

      (K)EARNINGS PER SHARE

         Basic  earnings  per share have been  computed  based upon the weighted
         average number of common shares  outstanding  during each year. Diluted
         earnings per share  include the effect of all  potential  common shares
         outstanding  during  each  year.  Earnings  per share  for all  periods
         presented  have been adjusted to give effect to the 5% stock  dividends
         paid by the Company annually since 1994 and the two-for-one stock split
         declared on January 21, 1998.

         The shares  used in the  calculation  of basic and  diluted  income per
         share,  which have been restated for the annual 5% stock  dividends and
         the 1998 stock split, are shown below:

<TABLE>
<CAPTION>

                                                 For the years ended
                                                      December 31
                                              -----------------------------
<S>                                            <C>         <C>      <C>
                                               1999       1998      1997
                                             --------  --------- ---------

Weighted average common shares outstanding  1,444,786  1,430,346  1,408,664
Stock options                                  41,973     55,342     57,758
                                              --------  --------- ---------
                                            1,486,759  1,485,688  1,466,422
                                             ========  =========  =========
</TABLE>

 (2)  ACQUISITIONS

      On December 31, 1997, the Company acquired 100% of the outstanding  common
      stock  of  Freedom  Bancshares,   Inc.  (Freedom)  and  its  wholly  owned
      subsidiary,  Citizens State Bank,  with branches in Osage City and Beloit,
      Kansas. Subsequently,  Security National Bank and Citizens State Bank were
      merged.  Freedom had consolidated assets of approximately $43 million. The
      purchase price, including related costs of acquisition,  consisted of cash
      of approximately $5.3 million. The acquisition, which was accounted for as
      a  purchase,  resulted  in goodwill of  approximately  $2.2  million.  The
      Company sold the Beloit  branch in 1998.  The sale of the branch  included
      approximately  $3.3  million  of loans and $2.8  million  of  deposits.  A
      premium of approximately $120,000, net of tax, was received from the buyer
      and offset against the goodwill recorded in the Freedom  acquisition.  Pro
      forma 1997 revenues, net earnings, and diluted earnings per share amounts,
      as if the Freedom acquisition had been consummated January 1, 1997, are as
      follows:

<TABLE>
<CAPTION>

        <S>                                           <C>
      Net interest income plus other income        $ 6,060,979
      Net earnings                                   1,002,733
      Diluted earnings per share                           .71
                                                    ==========
</TABLE>
<PAGE>

 (3)  INVESTMENT SECURITIES

      A summary of investment securities information is as follows:

<TABLE>
<CAPTION>

     <S>                     <C>          <C>          <C>      <C>
                                              Gross      Gross
                               Amortized  unrealized  unrealized Estimated
    December 31, 1999            cost       gains      losses    fair value
---------------------------    ---------- ----------  ---------  ----------

Held-to-maturity:
   Municipal obligations      $  1,506,837      1,000      4,000    1,504,000
   Mortgage-backed securities       96,431      2,000          -       98,000
                                ---------- ----------  ---------   ----------

         Total                $  1,603,268      3,000      4,000    1,602,000
                                ========== ==========  =========   ==========

Available-for-sale:
   U. S. government and agency
     obligations              $ 18,811,540      4,400    193,295   18,622,645
   Municipal obligations         7,453,267        810    100,178    7,353,899
   Mortgage-backed securities   16,323,006      1,396    332,646   15,991,756
   FHLB stock                    1,111,200          -          -    1,111,200
   Other investments               322,700          -          -      322,700
                                ---------- ----------  ---------  ----------

         Total                $ 44,021,713      6,606    626,119   43,402,200
                               ==========   ==========  =========   ==========

    December 31, 1998
---------------------------

Held-to-maturity:
   Municipal obligations      $ 2,143,997      26,000         -     2,169,997
   Mortgage-backed securities     122,346       4,000         -       126,346
                               ---------- ----------  ---------  ----------

         Total               $  2,266,343      30,000         -     2,296,343
                               ==========  ==========  =========  ==========

Available-for-sale:
   U. S. government and agency
     obligations           $   17,837,191    225,305          -    18,062,496
   Municipal obligations        6,502,706     56,572     12,925     6,546,353
   Mortgage-backed securities  20,899,389    103,714      4,757    20,998,346
   FHLB stock                   1,315,500          -          -     1,315,500
   Other investments            1,459,938       1,885         -     1,461,823
                               ----------  ----------  ---------  ----------

         Total               $ 48,014,724     387,476     17,682   48,384,518
                               ==========  ==========  =========   ==========

</TABLE>




<PAGE>


      Maturities of investment securities at December 31, 1999 are as follows:

<TABLE>
<CAPTION>

<S>                                           <C>         <C>
                                             Amortized  Estimated
                                               cost     fair value
                                             ---------  ----------
Held-to-maturity:
   Due in less than one year               $    672,478     673,000
   Due after one year but within five years     834,359     831,000
   Mortgage-backed securities                    96,431      98,000
                                              ---------  ----------
         Total                             $  1,603,268   1,602,000
                                              =========  ==========
Available-for-sale:
   Due in less than one year               $  9,327,894   9,314,293
   Due after one year but within five years  16,530,661  16,261,526
   Due after five years                         406,252     400,725
   Mortgage-backed securities and other
    investments                              17,756,906  17,425,656
                                             ---------  ----------
         Total                             $ 44,021,713  43,402,200
                                             =========   ==========

</TABLE>

      Except for U. S.  government and agency obligations,  no investment in a
      single issuer exceeded 10% of stockholders' equity.

      At December 31, 1999 and 1998,  securities  pledged to secure public funds
      on deposit  had a carrying  value of  approximately  $30  million  and $28
      million, respectively.


<PAGE>


 (4)  LOANS

      Loans consist of the following at December 31:

<TABLE>
<CAPTION>

<S>                                     <C>         <C>

                                       1999         1998
                                     ----------   ----------

Mortgage loans:
   One-to-four family residential   $27,125,681   25,058,459
   Commercial                        31,635,398   25,473,084
Commercial loans                     20,482,825   17,130,905
Consumer loans                        7,168,702    5,817,509
Student loans                         1,876,948    2,387,758
                                     ----------   ----------
         Total                       88,289,554   75,867,715

Less:
   Loans in process                       5,159      191,015
   Deferred loan fees                    66,629       87,556
   Allowance for loan losses          1,248,758    1,291,901
                                     ----------   ----------

         Loans, net                $ 86,969,008   74,297,243
                                     ==========   ==========

</TABLE>

      The Company is a party to financial  instruments  with  off-balance  sheet
      risk in the normal  course of business to meet customer  financing  needs.
      These financial  instruments  consist principally of commitments to extend
      credit.  The Company uses the same credit  policies in making  commitments
      and conditional  obligations as it does for on-balance sheet  instruments.
      The Company's  exposure to credit loss in the event of  nonperformance  by
      the  other  party  is  represented  by the  contractual  amount  of  those
      instruments.  The Company generally requires  collateral or other security
      on  unfunded  loan  commitments  and  irrevocable  letters of credit.  The
      Company's  outstanding   commitments  to  originate  and  sell  loans  are
      immaterial.

      The Company is exposed to varying risks associated with  concentrations of
      credit  relating  primarily to lending  activities in specific  geographic
      areas.  The  Company's  principal  lending area  consists of the cities of
      Manhattan,  Auburn,  Topeka,  and Osage City,  Kansas and the  surrounding
      communities, and substantially all of the Company's loans are to residents
      of or  secured  by  properties  located  in its  principal  lending  area.
      Accordingly,  the ultimate  collectibility of the Company's loan portfolio
      is  dependent  upon market  conditions  in those areas.  These  geographic
      concentrations  are  considered  in  management's   establishment  of  the
      allowance for loan losses.


<PAGE>


      A summary of the activity in the allowance for loan losses is as follows:

<TABLE>
<CAPTION>

<S>                                  <C>        <C>       <C>

                                        1999       1998      1997
                                      ---------  ---------  ---------
Balance at beginning of year         $1,291,901  1,335,024    819,660
Provision                                15,000     90,000     60,000
Allowance for loan loss of acquired bank      -          -    461,389
Charge-offs                            (114,101)  (170,977)   (17,398)
Recoveries                               55,958     37,854     11,373
                                      ---------  ---------  ---------
Balance at end of year               $1,248,758  1,291,901  1,335,024
                                      =========  =========  =========

</TABLE>

      At December 31, 1999 and 1998, impaired loans, including nonaccrual loans,
      aggregated approximately $466,000 and $144,000, respectively.

      The Bank  serviced  loans for others of $15.2 million and $18.7 million at
      December  31,  1999  and  1998,   respectively.   Because  the  Bank  sold
      substantially all loans originated for sale on a servicing released basis,
      no additional  gains on sales or related  mortgage  servicing  assets were
      recorded during 1999, 1998, or 1997.

      The Bank had loans to directors  and officers at December 31, 1999,  which
      carry terms  similar to those for other loans.  A summary of such loans is
      as follows:

<TABLE>
<CAPTION>

<S>                                      <C>
Balance at beginning of year         $1,032,044
New loans                                12,870
Payments                                (22,061)
                                      ---------
Balance at end of year              $ 1,022,853
                                      =========

</TABLE>

 (5)  PREMISES AND EQUIPMENT

      Premises and equipment consist of the following at December 31:

<TABLE>
<CAPTION>
<S>                                    <C>         <C>
                                        1999        1998
                                     ---------   ---------
Land                               $  353,412     353,412
Office buildings and improvements   2,131,167   2,043,942
Furniture and equipment             1,877,026   1,750,643
Automobiles                           171,760     142,520
                                     ---------   ---------
         Total                      4,533,365   4,290,517

Less accumulated depreciation       2,245,337   2,058,667
                                    ---------   ---------
         Total                    $ 2,288,028   2,231,850
                                    =========   =========

</TABLE>
<PAGE>


 (6)  TIME DEPOSITS

      Maturities of time deposits are as follows at December 31, 1999:

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

2000    $ 40,289,523
2001      11,049,407
2002       2,604,577
2003         610,985
2004         566,819
           ---------

Total   $ 55,121,311
          =========

 (7)  FEDERAL HOME LOAN BANK ADVANCES

      Short-term  advances  from the FHLB at December 31, 1999 were  $7,440,000,
      with rates ranging from 5.40% to 5.97%. There were no short-term  advances
      outstanding  at December 31,  1998.  Long-term  advances  from the FHLB at
      December  31,  1999  and  1998  amount  to  $7,250,010   and   $4,607,150,
      respectively.  Maturities  of such  advances  at  December  31,  1999  are
      summarized as follows:

<TABLE>
<CAPTION>

  <S>              <C>        <C>
 Year ending
December 31,      Amount       Rates
--------------   ---------    -------------

    2002       $ 2,428,576     6.24% - 6.95%
    2003           821,434     6.83% - 7.23%
    2004         4,000,000     5.62% - 6.44%
                 ---------

               $ 7,250,010
                 =========

</TABLE>

      The  Bank  has  a  $17,500,000  line  of  credit,  renewable  annually  in
      September,  with the FHLB under which there were outstanding borrowings of
      $965,000 and $0 at December 31, 1999 and 1998,  respectively.  Interest on
      any  outstanding  balances  on the line of credit  accrues at the  federal
      funds rate plus .15% (5.00% at December 31, 1999).

      Although no loans are specifically  pledged, the FHLB requires the Company
      to maintain eligible collateral that has a lending value at least equal to
      its  required   collateral.   Eligible   collateral  includes  single  and
      multifamily  first mortgage  loans,  stock in the FHLB, and FHLB overnight
      deposits.


<PAGE>


 (8)  OTHER BORROWINGS

      Other borrowings include a note payable relating to the Company's Employee
      Stock Ownership Plan (the ESOP) (see note 10) with an unrelated  financial
      institution  and a  $2,500,000  line  of  credit  with  another  unrelated
      financial institution.  The ESOP loan of $173,847 and $222,351 at December
      31, 1999 and 1998,  respectively,  bears interest at the prime rate (8.50%
      at  December  31,  1999),  is due in 2002,  and is  secured  by the 30,668
      unallocated shares of Company common stock held by the ESOP. The Company's
      line of credit had  outstanding  balances of $870,000  and  $1,700,000  at
      December 31, 1999 and 1998, respectively, bears interest at the prime rate
      less .5%,  is due  December  31,  2002,  and is secured by all of the Bank
      stock owned by the Company.

 (9)  INCOME TAXES

      Total income tax expense for 1999, 1998, and 1997 is allocated as follows:

<TABLE>
<CAPTION>
  <S>                      <C>       <C>      <C>
                          1999      1998     1997
                         --------  -------  --------

Operations             $ 463,317   478,142   471,143
StockholderS' equity    (375,937)   98,071    53,984
                         --------  -------  --------

                       $  87,380   576,213   525,127
                        ========   =======  ========

</TABLE>

      The components of income tax expense allocated to earnings are as follows:

<TABLE>
<CAPTION>

<S>          <C>       <C>      <C>
             1999     1998      1997
            -------  --------  --------
Current   $ 415,917   607,542   588,021
Deferred     47,400  (129,400) (116,878)
            -------  --------  --------
          $ 463,317   478,142   471,143
            =======  ========  ========
Federal   $ 392,917   429,736   434,143
State        70,400    48,406    37,000
            -------  --------  --------
          $ 463,317   478,142   471,143
            =======  ========  ========

</TABLE>

<PAGE>


      The  reasons  for the  difference  between  actual  income tax expense and
      expected  income tax expense  allocated to earnings  before  extraordinary
      loss at the 34% statutory federal income tax rate are as follows:

<TABLE>
<CAPTION>

<S>                                       <C>       <C>       <C>
                                           1999      1998     1997
                                        --------  -------  -------
Expected income tax expense at
   statutory rate                        464,969   496,458  524,854
Tax-exempt interest                     (108,974)  (63,000) (31,900)
Nondeductible amortization                40,182    59,565    9,406
State income taxes                        46,464    31,947   24,420
Other, net                                20,676   (46,828) (55,637)
                                        --------   -------  -------

                                       $ 463,317   478,142  471,143
                                        ========   =======  =======

</TABLE>

      The tax effects of temporary differences that give rise to the significant
      portions of the deferred tax assets and  liabilities  at December 31, 1999
      and 1998 are as follows:

<TABLE>

<S>                                                <C>     <C>

                                                  1999      1998
                                               --------  --------
Unrealized loss on investment securities
   available-for-sale                        $  235,400         -
Allowance for loan losses                       376,000   412,000
Other                                            23,000    20,300
                                               --------  --------
     Total deferred tax assets                  634,400   432,300
                                               --------  --------

</TABLE>
<TABLE>
<CAPTION>
<S>                                               <C>      <C>
Unrealized gain on investment securities
   available-for-sale                                -    140,500
Core deposit intangible                          47,000    64,800
FHLB stock dividends                            255,000   232,300
Premises and equipment                           15,500         -
State taxes                                       4,000     8,400
Other                                            95,500    97,800
                                               --------  --------
     Total deferred tax liabilities             417,000   543,800
                                               --------  --------
     Net deferred tax asset (liability)       $ 217,400  (111,500)
                                               ========  ========
</TABLE>


      A  valuation  allowance  for  deferred  tax  assets was not  necessary  at
      December 31, 1999 or 1998.

<PAGE>


(10)  EMPLOYEE BENEFIT PLANS

      Qualified  employees  of the  Company and the Bank may  participate  in an
      employee  stock  ownership  plan.  The  ESOP  borrowed  under a bank  loan
      agreement (note 8) with the proceeds used to acquire the Company's  common
      stock. Contributions, along with dividends on unallocated shares of common
      stock,  are used by the ESOP to make payments of principal and interest on
      the bank loan.  Because the Company has guaranteed  the ESOP's  borrowing,
      the outstanding note payable balance is recorded as unearned compensation,
      which  is  presented  as  a  reduction  of  stockholders'  equity  in  the
      accompanying consolidated balance sheets. Unearned compensation is reduced
      as the related note  payable is reduced.  ESOP  contributions  by the Bank
      charged to compensation  and benefits expense in 1999, 1998, and 1997 were
      approximately $45,000, $55,000, and $50,000, respectively.

      The Company has a stock option plan for  directors  and selected  officers
      and employees.  The exercise price of options granted under the plan is at
      least  equal to the fair  market  value on the date of grant.  The options
      vest over varying periods of time and are exercisable for up to ten years.
      Information  with  respect  to  option  activity  (as  adjusted  for stock
      dividends and split) is as follows:

<TABLE>
<CAPTION>
<S>                                       <C>           <C>
                                          Number    Weighted average
                                            of       exercise price
                                          shares       per share
                                         --------  -----------------
Outstanding at December 31, 1996           97,710      $        4.22
Effect of 5% stock dividend                 4,514                  -
Exercised                                 (13,488)              4.22
                                          --------

Outstanding at December 31, 1997           88,736               4.65
Effect of 5% stock dividend                 3,761                  -
Issued                                      4,071              13.13
Exercised                                 (17,192)              5.20
                                          --------

Outstanding at December 31, 1998           79,376               4.75
Effect of 5% stock dividend                 3,356                  -
Issued                                        250              13.00
Exercised                                 (12,419)              5.06
                                          --------
Outstanding at December 31, 1999           70,563               4.50
                                          ========  =================
Options exercisable at December 31, 1999   63,988    $          3.85
                                         ========  =================

</TABLE>

      Options  outstanding  at  December  31,  1999 were  exercisable  at prices
      ranging from $3.73 to $12.50.


<PAGE>


      In accordance with Statement of Financial  Accounting Standards (SFAS) NO.
      123, ACCOUNTING FOR STOCK-BASED  COMPENSATION,  the Company has chosen not
      to apply the  accounting  provision  of SFAS No.  123 in its  consolidated
      financial  statements but rather to disclose pro forma  amounts.  The fair
      value of the options granted in 1998 and 1999 were estimated utilizing the
      following  assumptions:  dividend  yields of 1.8% and 1.9%,  volatility of
      17.2% and 17.2%,  risk-free  interest rate of 6.5% and 7.0%,  and expected
      lives of five years, respectively. Pro forma net earnings and earnings per
      share for 1999, 1998, and 1997, applying the disclosure provisions of SFAS
      No. 123, would be the same as those amounts  reflected in the accompanying
      consolidated statements of earnings.

      The Company has adopted an incentive  program  whereby bonuses are awarded
      if certain annual  profitability  thresholds  are achieved.  The incentive
      program  also  allows for  discretionary  bonuses.  The  Company  recorded
      bonuses under the incentive programs of approximately $31,000, $6,000, and
      $75,000 in 1999, 1998, and 1997,  respectively.  In 1998,  accrued bonuses
      payable  were used to  purchase  1,480  shares of  common  stock  from the
      Company for $19,703.

(11)  FAIR VALUE OF FINANCIAL INSTRUMENTS

      Fair value estimates of the Company's financial instruments as of December
      31, 1999 and 1998,  including  methods and assumptions  utilized,  are set
      forth below:

<TABLE>
<CAPTION>
<S>                          <C>        <C>          <C>          <C>
                                   1999                     1998
                           ----------------------  -----------------------
                           Carrying    Estimated    Carrying    Estimated
                            amount     fair value    amount     fair value
                           ----------  ----------  -----------  ----------

Investment securities    $ 45,005,468  45,004,000  50,650,861   50,681,000
                           ==========  ==========  ===========  ==========
Loans, net of unearned fees
   and allowance for loan
   losses                $ 86,969,008  83,182,000  74,297,243   73,581,000
                           ==========  ==========  ===========  ==========
Noninterest bearing demand
   deposits              $ 10,124,653  10,125,000   9,307,879   9,308,000
Money market and NOW
   deposits                37,073,098  37,073,000  41,249,220   41,249,000
Savings deposits           10,017,267  10,017,000  10,327,847   10,328,000
Time deposits              55,121,311  54,981,000  54,177,076   54,548,000
                           ----------  ----------  -----------  ----------
         Total deposits  $ 112,336,329 112,096,000 115,062,022  115,433,000
                           ==========  ==========  ===========  ==========
FHLB advances            $ 15,655,010  15,456,000   4,607,150   4,761,000
                           ==========  ==========  ===========  ==========
Other borrowings         $ 1,043,847   1,044,000    1,922,351   1,922,000
                           ==========  ==========  ===========  ==========

</TABLE>


<PAGE>


      METHODS AND ASSUMPTIONS UTILIZED

      The  carrying  amount of cash and cash  equivalents,  loans held for sale,
      federal  funds  sold,  and  accrued  interest  receivable  and payable are
      considered to approximate fair value.

      The  estimated  fair  value  of  investment  securities,   except  certain
      obligations of states and political  subdivisions,  is based on bid prices
      published  in  financial   newspapers  or  bid  quotations  received  from
      securities  dealers.  The fair value of certain  obligations of states and
      political  subdivisions  is not readily  available  through market sources
      other  than  dealer  quotations,  so fair value  estimates  are based upon
      quoted  market  prices of similar  instruments,  adjusted for  differences
      between the quoted instruments and the instruments being valued.

      The estimated  fair value of the Company's  loan portfolio is based on the
      segregation of loans by collateral  type,  interest terms, and maturities.
      In  estimating  the fair value of each  category  of loans,  the  carrying
      amount of the loan is reduced by an  allocation  of the allowance for loan
      losses.  Such  allocation  is based on  management's  loan  classification
      system  which is  designed  to measure  the credit  risk  inherent in each
      classification  category.  The estimated fair value of performing variable
      rate loans is the carrying  value of such loans,  reduced by an allocation
      of the allowance for loan losses.  The estimated  fair value of performing
      fixed rate loans is calculated by discounting scheduled cash flows through
      the estimated  maturity using estimated market discount rates that reflect
      the interest rate risk  inherent in the loan,  reduced by an allocation of
      the  allowance  for loan losses.  The estimate of maturity is based on the
      Company's   historical   experience   with   repayments   for  each   loan
      classification,  modified,  as  required,  by an estimate of the effect of
      current  economic and lending  conditions.  The fair value for significant
      nonperforming  loans  is  the  estimated  fair  value  of  the  underlying
      collateral  based  on  recent  external   appraisals  or  other  available
      information,  which generally  approximates  carrying value, reduced by an
      allocation of the allowance for loan losses.

      The  estimated  fair value of deposits  with no stated  maturity,  such as
      noninterest bearing demand deposits,  savings,  money market accounts, and
      NOW accounts,  is equal to the amount payable on demand. The fair value of
      interest-bearing  time  deposits  is  based  on the  discounted  value  of
      contractual  cash flows of such  deposits.  The discount rate is estimated
      using the rates  currently  offered  for  deposits  of  similar  remaining
      maturities.

      The carrying  amounts of FHLB  advances and other  borrowings  approximate
      fair  value  because  such  borrowings  have  relatively  short  terms  or
      adjustable interest rates.


<PAGE>


      LIMITATIONS

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

(12)  REGULATORY CAPITAL REQUIREMENTS

      Current regulatory capital regulations  require financial  institutions to
      meet three different  regulatory  capital  requirements.  Institutions are
      required to have minimum  leverage  capital  equal to 4% of total  average
      assets,   minimum  Tier  1  risk-based   capital  equal  to  4%  of  total
      risk-weighted  assets,  and total qualifying  capital equal to 8% of total
      risk-weighted assets in order to be considered  "adequately  capitalized."
      Management  believes  that, as of December 31, 1999, the Company meets all
      capital adequacy  requirements to which it is subject.  The following is a
      comparison  of  the  Company's   regulatory  capital  to  minimum  capital
      requirements at December 31, 1999 (dollars in thousands):

<TABLE>
<CAPTION>

<S>                              <C>     <C>           <C>       <C>           <C>        <C>
                                                                               To be well-
                                                        For capital          capitalized under
                                                         adequacy            prompt corrective
                                    Actual               purposes            action provisions
                                ---------------       ----------------       -----------------
                                Amount   Ratio        Amount     Ratio       Amount     Ratio
                                -------- ------       --------   -----       --------   ------

As of December 31, 1999:
   Total capital
     (to risk-weighted assets  $13,535  14.84 %     => $7,297  =>  8.00 %   =>  $ 9,121  =>  10.00 %
   Tier 1 capital
     (to risk-weighted assets   12,395  13.59       =>  3,648  =>  4.00     =>    5,473  =>   6.00
   Tier 1 capital
     (to average assets)        12,395   8.88       =>  5,582  =>  4.00     =>    6,978  =>   5.00
                              ======== ======        ========     =====        ========     ======

As of December 31, 1998:
   Total capital
     (to risk-weighted assets  $13,201  17.35 %     => $6,085  =>  8.00 %   =>  $ 7,607   =>  10.00 %
   Tier 1 capital
     (to risk-weighted asset    12,250  16.10       =>  3,043  =>  4.00     =>    4,564   =>   6.00
   Tier 1 capital
     (to average assets)        12,250   9.14       =>  5,359  =>  4.00      =>   6,699   =>   5.00
                              ======== ======        ========     =====        ========      ======
</TABLE>




<PAGE>
<TABLE>
<CAPTION>


(13)  PARENT COMPANY CONDENSED FINANCIAL STATEMENTS

      Following is condensed financial  information of the Company as of and for
      the years ended December 31, 1999 and 1998:

                              CONDENSED BALANCE SHEETS
                             DECEMBER 31, 1999 AND 1998

  <S>                                        <C>          <C>
                 Assets                       1999        1998
                                            ----------  ---------
Cash                                      $    25,293      77,102
Investment securities                          17,500      17,500
Investment in subsidiary                   14,310,313  15,049,128
                                            ----------  ---------
         Total assets                    $ 14,353,106  15,143,730
                                            ==========  =========
  Liabilities and Stockholders' Equity
Borrowed funds                            $ 1,043,847   1,922,351
Other                                          18,875     (20,294)
Stockholders' equity                       13,290,384  13,241,673
                                            ----------  ---------
Total liabilities and stockholders'        14,353,106  15,143,730
                                            ==========  =========
</TABLE>
<TABLE>
<CAPTION>

                          CONDENSED STATEMENTS OF EARNINGS
                   YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

<S>                                          <C>         <C>         <C>
                                              1999        1998       1997
                                            ----------  ---------  ----------
Dividends from subsidiary                 $ 1,111,352   1,357,335    937,242
Interest income                                 3,187     10,400      86,582
Interest expense                              (86,048)  (209,485)          -
Other expense, net                           (102,180)   (98,998)    (69,898)
                                            ----------  ---------  ----------
Income before equity in undistributed
  earnings of subsidiary                      926,311   1,059,252    953,926
Increase (decrease) in undistributed equity
   of subsidiary                              (89,243)  (224,227)     43,000
                                            ----------  ---------  ----------
Earnings before income taxes                  837,068    835,025     996,926
Income tax benefit                             67,171    147,003      75,618
                                            ----------  ---------  ----------
Net earnings                              $   904,239    982,028   1,072,544
                                            ==========  =========  ==========
</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                         CONDENSED STATEMENTS OF CASH FLOWS
                   YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

<S>                                            <C>        <C>        <C>
                                              1999        1998       1997
                                            ----------  ---------  ----------
Cash flows from operating activities:
   Net earnings                           $   904,239    982,028   1,072,544
   (Increase) decrease in undistributed equity
     of subsidiary                             89,243    224,227     (43,000)
   Other                                       75,371     (8,683)     18,215
                                            ----------  ---------  ----------
Net cash provided by operating activities   1,068,853  1,197,572   1,047,759
                                            ----------  ---------  ----------
Cash flows from investing activities:
   Purchase of investment securities                -          -    (154,907)
   Maturity of investment securities                -    150,000     400,000
   Investment in subsidiary                         -    (25,589) (5,332,255)
                                            ----------  ---------  ----------
Net cash provided by (used in) investing
           activities                               -    124,411   (5,087,162)
                                            ----------  ---------  ----------
Cash flows from financing activities:
   Issuance of shares under stock option plan  62,882     109,023      56,973
   Proceeds (repayments) from note payable   (830,000) (1,150,000)  2,850,000
   Payment of dividends                      (353,544)   (333,891)   (319,866)
                                            ----------  ---------  ----------
Net cash provided by (used in) financing
           activities                      (1,120,662) (1,374,868)  2,587,107
                                            ----------  ---------  ----------
Net decrease in cash                          (51,809)    (52,885) (1,452,296)
Cash at beginning of year                      77,102     129,987   1,582,283
                                            ----------  ---------  ----------
Cash at end of year                       $    25,293     77,102      129,987
                                            ==========  =========  ==========

</TABLE>

      Dividends  paid  by the  Company  are  provided  through  subsidiary  Bank
      dividends. At December 31, 1999, the Bank could distribute dividends of up
      to $419,000 without regulatory approvals.


<PAGE>




CORPORATE INFORMATION

DIRECTORS OF MNB BANCSHARES, INC. AND SECURITY NATIONAL BANK

Brent A. Bowman, Chairman
President
Brent A. Bowman and Associates Architects, P.A.

Patrick L. Alexander
President and Chief Executive Officer
MNB Bancshares, Inc. and Security National Bank

WILLIAM F. CATON*
Broker, Senior Vice-President
Chapman Securities, Inc.

Joseph L. Downey
Retired Senior Consultant, Director and Executive
Dow Chemical Company

Charles D. Green
Retired Attorney
Arthur-Green LLP

Vernon C. Larson
Retired Assistant Provost and
Director of International Programs
Kansas State University

Jerry R. Pettle
Retired Dentist
Dental Associates of Manhattan, PA.

Susan E. Roepke
Retired Vice President, Secretary and Treasurer, MNB Bancshares, Inc.
Retired Senior Vice President/Secretary/Cashier, Security National Bank

Donald J. Wissman
Retired Chairman
DPRA Incorporated

*Bank Director only

EXECUTIVE OFFICERS OF SECURITY NATIONAL BANK

Patrick L. Alexander
President and Chief Executive Officer

Mark A. Herpich
Senior Vice President, Secretary and Cashier

Michael E. Scheopner
Executive Vice President, Credit Risk Manager

Dean R. Thibault
Executive Vice President

Dennis D. Wohler
Senior Vice President

STOCK PRICE INFORMATION
   The Company's  common stock trades on the Nasdaq Small-Cap Market tier of the
Nasdaq Stock Market under the symbol  "MNBB".  At December 31, 1999, the Company
had approximately  450 stockholders of record.  Set forth below are the reported
high and low bid prices of the common stock and  dividends  paid during the past
two years.  Information  presented below has been restated to give effect to the
5% stock dividends paid in 1999 and 1998.


<PAGE>
<TABLE>
<CAPTION>
<S>                         <C>          <C>       <C>

1999                         HIGH         LOW   DIVIDENDS
FIRST QUARTER              $12.50       11.00     $0.0625
SECOND QUARTER              12.38        8.75      0.0625
THIRD QUARTER               10.50        9.06      0.0625
FOURTH QUARTER               9.50        8.25      0.0625

1998                         HIGH         LOW   DIVIDENDS
FIRST QUARTER              $17.50      $12.00     $0.0595
SECOND QUARTER              16.25       14.00      0.0595
THIRD QUARTER               14.81       12.00      0.0595
FOURTH QUARTER              13.50       11.00      0.0595

</TABLE>

CORPORATE HEADQUARTERS

   800 Poyntz Avenue
   Manhattan, Kansas 66502

ANNUAL MEETING

   The  annual  meeting  of  stockholders  will  be  held  at the  Kansas  State
University Student Union, Room 212 Conference Room, Manhattan,  Kansas 66506, on
Wednesday, May 17, 2000 at 2:00 PM.

FORM 10-K

   A copy of the  Annual  Report  on Form 10-K  filed  with the  Securities  and
Exchange  Commission may be obtained by  stockholders  without charge on written
request to Patrick L.  Alexander,  President and Chief  Executive  Officer,  MNB
Bancshares,  Inc., PO Box 308, Manhattan,  Kansas 66505-0308. The report is also
available via the Internet at www.sec.gov.

REGISTRAR AND TRANSFER AGENT

   Registrar and Transfer Company
   10 Commerce Drive
   Cranford, NJ 07016-3572

INDEPENDENT ACCOUNTANTS

   KPMG LLP
   1000 Walnut, Suite 1600
   Kansas City, Missouri 64199













<PAGE>


                                                                    EXHIBIT 21.1

                      SUBSIDIARIES OF MNB BANCSHARES, INC.

      The only  subsidiaries  of the  Company  are  Security  National  Bank,  a
national banking association with its main office located in Manhattan,  Kansas,
and with branch offices  located in Auburn,  Osage City, and Topeka,  Kansas and
MNB Acquisition Corporation, Inc., a Kansas Corporation.


<PAGE>
                                                                    EXHIBIT 23.1

The Board of Directors
MNB Bancshares, Inc.:

We consent to  incorporation  by reference in the  registration  statement  (No.
33-51710) on Form S-8 of MNB Bancshares,  Inc. of our report,  dated January 27,
2000,  relating to the consolidated  balance sheets of MNB  Bancshares, Inc. and
subsidiaries  as of  December  31,  1999 and 1998 and the  related  consolidated
statements of earnings,  stockholders' equity and comprehensive income, and cash
flows for each of the years in the  three-year  period ended  December 31, 1999,
which report  appears in the December 31, 1999 annual report of Form 10-K of MNB
Bancshares, Inc.

                        (insert electronic signature)


Kansas City, Missouri
March 27, 2000