**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C.  20549**

 

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**FORM 10-Q**

 

| **(Mark One)**                     |
|------------------------------------|
|                               |
| **ý**                         |   | **QUARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|                               |
|                               |   | **For the quarterly period ended March 31, 2003** |
|                               |
| **or**                             |
|                               |
| **o**                              |   | **TRANSITION REPORT UNDER SECTION 13  OR 15(D) OF THE EXCHANGE ACT** |
|                               |
|                               |   | **For the transition period from                   to                 ** |
|                               |
| **Commission file number 0-28936** |

 

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**GOLD BANC CORPORATION, INC.**

(Exact name of registrant as specified in its charter)

 

| **Kansas**                                                      |   | **48-1008593**                       |
|-----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation or  organization) |   | (I.R.S. Employer Identification No.) |
|                                                            |   |                                 |
| **11301 Nall Avenue, Leawood, Kansas**                          |   | **66211**                            |
| (Address of principal executive offices)                        |   | (Zip code)                           |
|                                                            |   |                                 |
| **(913) 451-8050**                                              |
| (Registrant’s telephone number, including area code)       |

 

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Indicate bycheck mark whether the registrant: (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepast 12 months (or for such shorter period that the registrant was required tofile such reports), and (2) has been subject to such filing requirements forpast 90 days. Yes ý  No o

 

Indicate bycheck mark whether the registrant is an accelerated filer (as defined in Rule12b-2 of the Exchange Act). Yes ý  No o

 

Indicate thenumber of shares outstanding of each of the issuer’s classes of common stock,as of the latest practical date.

 

| **Class**                     |   | **Outstanding at April 28, 2003** |
|-------------------------------|--------|-----------------------------------|
|                          |   |                              |
| Common Stock, $1.00 par value |   | 39,495,382                        |

 

 

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**GOLD BANC CORPORATION, INC.**

**INDEX TO 10-Q FOR THE QUARTERLY**

**PERIOD ENDED MARCH 31, 2003**

 
| **PART I  FINANCIAL INFORMATION** |
|---------------------------------------------|
|                                        |   |
| ITEM 1:                                     | FINANCIAL STATEMENTS |
|                                        | Consolidated Balance Sheets at March 31, 2003, and December 31, 2002  (unaudited) |
|                                        | Consolidated Statements of Earnings—Three  Months ended March 31, 2003 and March 31, 2002 (unaudited) |
|                                        | Consolidated Statements of Stockholders’  Equity and Comprehensive Income—Three Months ended March 31, 2003 and March  31, 2002 (unaudited) |
|                                        | Consolidated Statement of Cash Flows—Three  months ended March 31, 2003 and March 31, 2002 (unaudited) |
|                                        | Notes to Consolidated Financial Statements |
|                                        |   |
| ITEM 2:                                     | MANAGEMENT’S DISCUSSION AND ANALYSIS OF  FINANCIAL  CONDITION AND RESULTS OF  OPERATIONS |
|                                        |   |
| ITEM 3:                                     | QUANTITATIVE AND QUALITATIVE DISCLOSURES  ABOUT MARKET RISK |
|                                        |   |
| ITEM 4:                                     | CONTROLS AND PROCEDURES |
|                                        |   |
| **PART II OTHER INFORMATION**               |
|                                        |   |
| ITEM 1:                                     | LEGAL PROCEEDINGS |
|                                        |   |
| ITEM 2:                                     | CHANGES IN SECURITIES AND USE OF PROCEEDS |
|                                        |   |
| ITEM 3:                                     | DEFAULTS UPON SENIOR SECURITIES |
|                                        |   |
| ITEM 4:                                     | SUBMISSION OF MATTERS TO A VOTE OF  SECURITY-HOLDERS |
|                                        |   |
| ITEM 5:                                     | OTHER INFORMATION |
|                                        |   |
| ITEM 6:                                     | EXHIBITS AND REPORTS ON FORM 8-K |
|                                        |   |
|                                        | SIGNATURES |
|                                        |   |
|                                        | CERTIFICATIONS |

 

i

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**PARTI   FINANCIAL INFORMATION**

 

***ITEM 1:                FINANCIALSTATEMENTS***

 

**GOLD BANC CORPORATION, INC. AND SUBSIDIARIES**

**CONSOLIDATEDBALANCE SHEETS**

**(In thousands)**

**(unaudited)**

 
|                                                                                                                                         |   | **March 31,  2003** |      | **December  31, 2002** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|-----------|------------------------|--------|
| **Assets**                                                                                                                                   |   |                |      |                   |   |
|                                                                                                                                         |   |                |      |                   |   |
| Cash and due from banks                                                                                                                      |   | $                   | 84,299    |                   | $      | 96,215 |   |
| Federal funds sold and interest-bearing  deposits                                                                                            |   | 29,193              |      | 193                    |   |
| Total cash and cash equivalents                                                                                                              |   | 113,492             |      | 96,408                 |   |
|                                                                                                                                         |   |                |      |                   |   |
| Investment securities:                                                                                                                       |   |                |      |                   |   |
| Held-to-maturity                                                                                                                             |   | 193,662             |      | 201,563                |   |
| Available-for sale                                                                                                                           |   | 670,247             |      | 531,037                |   |
| Trading                                                                                                                                      |   | 4,237               |      | 3,485                  |   |
| Total investment securities                                                                                                                  |   | 868,146             |      | 736,085                |   |
|                                                                                                                                         |   |                |      |                   |   |
| Mortgage loans held for sale, net                                                                                                            |   | 24,597              |      | 25,134                 |   |
| Loans, net                                                                                                                                   |   | 2,778,936           |      | 2,705,217              |   |
| Allowance for loan losses                                                                                                                    |   | (32,705             | )         | (33,439                | )      |
| Premises and equipment, net                                                                                                                  |   | 69,359              |      | 69,587                 |   |
| Goodwill, net                                                                                                                                |   | 35,643              |      | 35,643                 |   |
| Intangible assets, net                                                                                                                       |   | 6,648               |      | 6,835                  |   |
| Cash surrender value of bank owned life  insurance                                                                                           |   | 77,430              |      | 56,501                 |   |
| Accrued interest and other assets                                                                                                            |   | 49,418              |      | 113,752                |   |
| Total assets                                                                                                                                 |   | $                   | 3,990,964 |                   | $      | 3,811,723 |   |
|                                                                                                                                         |   |                |      |                   |   |
| **Liabilities and Stockholders’ Equity**                                                                                                |   |                |      |                   |   |
|                                                                                                                                         |   |                |      |                   |   |
| Liabilities:                                                                                                                                 |   |                |      |                   |   |
| Deposits                                                                                                                                     |   | $                   | 2,804,222 |                   | $      | 2,716,569 |   |
| Securities sold under agreements to  repurchase                                                                                              |   | 142,352             |      | 153,595                |   |
| Federal funds purchased and other  short-term borrowings                                                                                     |   | 568                 |      | 25,658                 |   |
| Subordinated debt and guaranteed preferred  beneficial interests in Company’s debentures                                                |   | 113,279             |      | 113,137                |   |
| Long-term borrowings                                                                                                                         |   | 679,461             |      | 548,848                |   |
| Accrued interest and other liabilities                                                                                                       |   | 19,386              |      | 26,142                 |   |
| Total liabilities                                                                                                                            |   | 3,759,268           |      | 3,583,949              |   |
|                                                                                                                                         |   |                |      |                   |   |
| Stockholders’ equity:                                                                                                                   |   |                |      |                   |   |
| Preferred stock, no par value; 50,000,000  shares authorized, no shares issued                                                               |   | —              |      | —                 |   |
| Common stock, $1.00 par value; 50,000,000  shares authorized 44,216,692 issued at March 31, 2003 and 44,188,384 issued  at December 31, 2002 |   | 44,217              |      | 44,188                 |   |
| Additional paid-in capital                                                                                                                   |   | 118,407             |      | 118,257                |   |
| Retained earnings                                                                                                                            |   | 112,917             |      | 107,392                |   |
| Accumulated other comprehensive income, net                                                                                                  |   | 2,707               |      | 3,489                  |   |
| Unearned compensation                                                                                                                        |   | (13,432             | )         | (12,432                | )      |
|                                                                                                                                         |   | 264,816             |      | 260,894                |   |
| Less treasury stock - 4,721,510 shares at  March 31, 2003 and at December 31, 2002                                                           |   | (33,120             | )         | (33,120                | )      |
|                                                                                                                                         |   | 231,696             |      | 227,774                |   |
| Total liabilities and stockholders’ equity                                                                                              |   | $                   | 3,990,964 |                   | $      | 3,811,723 |   |

 

See accompanying notes to consolidated financial statements

 

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**GOLD BANC CORPORATION, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF EARNINGS**

**For the Three Months ended March 31, 2003 and2002**

**(In thousands, except per share data)**

**(unaudited)**

 
|                                                 |   | **March 31,  2003** |   | **March 31,  2002** |   |
|------------------------------------------------------|--------|---------------------|--------|---------------------|--------|
|                                                 |   |                |   | **(Restated)**      |   |
| Interest Income:                                     |   |                |   |                |   |
| Loans, including fees                                |   | $                   | 42,464 |                | $      | 38,866 |   |
| Investment securities                                |   | 9,936               |   | 8,337               |   |
| Other                                                |   | 469                 |   | 595                 |   |
|                                                 |   | 52,869              |   | 47,798              |   |
|                                                 |   |                |   |                |   |
| Interest Expense:                                    |   |                |   |                |   |
| Deposits                                             |   | 15,485              |   | 15,397              |   |
| Borrowings and other                                 |   | 7,847               |   | 8,441               |   |
|                                                 |   | 23,332              |   | 23,838              |   |
|                                                 |   |                |   |                |   |
| Net interest income                                  |   | 29,537              |   | 23,960              |   |
|                                                 |   |                |   |                |   |
| Provision for loan losses                            |   | 3,550               |   | 5,035               |   |
| Net interest income after provision for  loan losses |   | 25,987              |   | 18,925              |   |
|                                                 |   |                |   |                |   |
| Other income:                                        |   |                |   |                |   |
| Service fees                                         |   | 4,197               |   | 3,970               |   |
| Investment trading fees and commissions              |   | 1,477               |   | 1,396               |   |
| Net gains on sale of mortgage loans                  |   | 744                 |   | 695                 |   |
| Net securities gains (losses)                        |   | (3                  | )      | 600                 |   |
| Information technology services                      |   | 2,252               |   | 4,815               |   |
| Other                                                |   | 2,020               |   | 2,354               |   |
|                                                 |   | 10,687              |   | 13,830              |   |
|                                                 |   |                |   |                |   |
| Other expense:                                       |   |                |   |                |   |
| Salaries and employee benefits                       |   | 14,740              |   | 11,948              |   |
| Net occupancy expense                                |   | 1,873               |   | 1,478               |   |
| Depreciation expense                                 |   | 1,745               |   | 1,509               |   |
| Core deposit intangible amortization                 |   | 188                 |   | 125                 |   |
| Information technology services                      |   | 1,565               |   | 3,171               |   |
| Losses resulting from misapplication of  bank funds  |   | —              |   | 25                  |   |
| Other                                                |   | 7,687               |   | 6,512               |   |
|                                                 |   | 27,798              |   | 24,768              |   |
| Earnings before income tax                           |   | 8,876               |   | 7,987               |   |
|                                                 |   |                |   |                |   |
| Income tax expense                                   |   | 2,167               |   | 1,930               |   |
|                                                 |   |                |   |                |   |
| Net earnings                                         |   | $                   | 6,709  |                | $      | 6,057 |   |
|                                                 |   |                |   |                |   |
| Net earnings per share-basic and diluted             |   | $                   | 0.18   |                | $      | 0.18 |   |

 

See accompanying notes to consolidated financial statements.

 

2

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**GOLD BANC CORPORATION, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF STOCKHOLDERS’EQUITY AND COMPREHENSIVE INCOME**

**For the Three Months Ended March 31, 2003,and March 31, 2002 (Restated)**

**(Dollars in thousands)**

 
|                                                                  |   | **Preferred  Stock** |   | **Common  Stock** |   | **Additional  Paid-in  Capital** |    | **Retained  Earnings** |    | **Accumulated  Other  Comprehensive  Income (loss)** |   | **Unearned  Compensation** |    | **Treasury  Stock** |    | **Total** |   |
|-----------------------------------------------------------------------|--------|----------------------|--------|-------------------|--------|----------------------------------|---------|------------------------|---------|------------------------------------------------------|--------|----------------------------|---------|---------------------|---------|-----------|--------|
|                                                                  |   |                 |   |              |   |                             |    |                   |    |                                                 |   |                       |    |                |    |      |   |
| Balance at December 31,2001                                           |   | $                    | — |              | 38,352 |                             | 76,584  |                   | 83,987  |                                                 | (8     | )                          | (3,440  | )                   | (30,935 | )         | $      | 164,540 |   |
| Net earnings for the three months ended  March 31, 2002               |   | —               |   | —            |   | —                           |    | 6,057                  |    | —                                               |   | —                     |    | —              |    | 6,057     |   |
| Change in unrealized gain on available  for-sale securities           |   | —               |   | —            |   | —                           |    | —                 |    | (196                                                 | )      | —                     |    | —              |    | (196      | )      |
| Total comprehensive income for the three  months ended March 31, 2002 |   | —               |   | —            |   | —                           |    | 6,057                  |    | (196                                                 | )      | —                     |    | —              |    | 5,811     |   |
| Exercise of 51,927 stock options                                      |   | —               |   | 52                |   | 56                               |    | —                 |    | —                                               |   | —                     |    | —              |    | 108       |   |
| Purchase of 304,500 shares of treasury  stock                         |   | —               |   | —            |   | —                           |    | —                 |    | —                                               |   | —                     |    | (2,185              | )       | (2,185    | )      |
| Increase in unearned compensation                                     |   | —               |   | —            |   | —                           |    | —                 |    | —                                               |   | (5,350                     | )       | —              |    | (5,350    | )      |
| Dividends paid ($0.02 per common share)                               |   | —               |   | —            |   | —                           |    | (771                   | )       | —                                               |   | —                     |    | —              |    | (771      | )      |
| Balance at March 31, 2002                                             |   | $                    | — |              | 38,404 |                             | 76,640  |                   | 89,273  |                                                 | (204   | )                          | (8,790  | )                   | (33,120 | )         | $      | 162,203 |   |
|                                                                  |   |                 |   |              |   |                             |    |                   |    |                                                 |   |                       |    |                |    |      |   |
| Balance at December 31, 2002                                          |   | $                    | — |              | 44,188 |                             | 118,257 |                   | 107,392 |                                                 | 3,489  |                       | (12,432 | )                   | (33,120 | )         | $      | 227,774 |   |
| Net earnings for the three months ended  March 31, 2003               |   | —               |   | —            |   | —                           |    | 6,709                  |    | —                                               |   | —                     |    | —              |    | 6,709     |   |
| Change in unrealized gain on available  for-sale securities           |   | —               |   | —            |   | —                           |    | —                 |    | (782                                                 | )      | —                     |    | —              |    | (782      | )      |
| Total comprehensive income for the three  months ended March 31, 2003 |   | —               |   | —            |   | —                           |    | 6,709                  |    | (782                                                 | )      | —                     |    | —              |    | (5,927    | )      |
| Exercise of 28,308 stock options                                      |   | —               |   | 29                |   | 150                              |    | —                 |    | —                                               |   | —                     |    | —              |    | 179       |   |
| Increase in unearned compensation                                     |   | —               |   | —            |   | —                           |    | —                 |    | —                                               |   | (1,000                     | )       | —              |    | (1,000    | )      |
| Dividends paid ($0.03 per common share)                               |   | —               |   | —            |   | —                           |    | (1,184                 | )       | —                                               |   | —                     |    | —              |    | (1,184    | )      |
| Balance at March 31, 2003                                             |   | $                    | — |              | 44,217 |                             | 118,407 |                   | 112,917 |                                                 | 2,707  |                       | (13,432 | )                   | (33,120 | )         | $      | 231,696 |   |

 

See accompanying notes to consolidated financial statements.

 

3

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**GOLD BANC CORPORATION, INC. AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**For the Three Months ended March 31, 2003 and2002**

**(In thousands)**

**(unaudited)**

 
|                                                                                           |   | **March 31,  2003** |     | **March 31,  2002** |   |
|------------------------------------------------------------------------------------------------|--------|---------------------|----------|---------------------|--------|
|                                                                                           |   |                |     | **(Restated)**      |   |
| Cash flows from operating activities:                                                          |   |                |     |                |   |
| Net earnings                                                                                   |   | $                   | 6,709    |                | $      | 6,057 |   |
| Adjustments to reconcile net earnings to  net cash provided by (used in) operating activities: |   |                |     |                |   |
| Provision for loan losses                                                                      |   | 3,550               |     | 5,035               |   |
| (Gains) losses on sales of securities                                                          |   | 3                   |     | (600                | )      |
| Amortization of investment securities  premiums, net of accretion                              |   | 866                 |     | (19                 | )      |
| Depreciation                                                                                   |   | 1,745               |     | 1,509               |   |
| Amortization of intangible assets                                                              |   | 188                 |     | 125                 |   |
| Gain on sale of mortgage loans held for  sale                                                  |   | (744                | )        | (695                | )      |
| Increase in cash surrender value of bank  owned life insurance                                 |   | (929                | )        | (1,103              | )      |
| Net decrease (increase) in trading  securities                                                 |   | (752                | )        | 3,896               |   |
| Proceeds from sale of loans held for sale                                                      |   | 56,165              |     | 28,154              |   |
| Origination of loans held for sale, net of  repayments                                         |   | (54,884             | )        | (55,623             | )      |
| Other changes:                                                                                 |   |                |     |                |   |
| Accrued interest receivable and other  assets                                                  |   | 63,327              |     | 6,153               |   |
| Accrued interest payable and other  liabilities                                                |   | (6,004              | )        | 2,697               |   |
| Net cash provided by (used in) operating  activities                                           |   | $                   | 69,240   |                | $      | (4,414 | ) |
| Cash flows from investing activities:                                                          |   |                |     |                |   |
| Net increase in loans                                                                          |   | $                   | (78,003  | )                   | $      | (157,363 | ) |
| Principal collections and proceeds from  sales and maturities of available-for-sale securities |   | 103,314             |     | 232,646             |   |
| Purchases of available-for-sale securities                                                     |   | (244,462            | )        | (211,527            | )      |
| Principal collections and proceeds from  sales and maturities of held-to-maturity securities   |   | 10,529              |     | 200                 |   |
| Purchases of held-to-maturity securities                                                       |   | (3,087              | )        | (9,306              | )      |
| Purchase of bank owned life insurance  policy                                                  |   | (20,000             | )        | —              |   |
| Net additions to premises and equipment                                                        |   | (1,517              | )        | (11,313             | )      |
| Net cash used in investing activities                                                          |   | $                   | (233,226 | )                   | $      | (156,663 | ) |
| Cash flows from financing activities:                                                          |   |                |     |                |   |
| Increase in deposits                                                                           |   | $                   | 87,653   |                | $      | 216,465 |   |
| Net decrease in short-term borrowings                                                          |   | (36,333             | )        | (28,999             | )      |
| Proceeds from FHLB & long-term  borrowings                                                 |   | 130,755             |     | 25,863              |   |
| Proceeds from issuance of common stock                                                         |   | 179                 |     | 108                 |   |
| Purchase of treasury stock                                                                     |   | —              |     | (2,185              | )      |
| Dividends paid                                                                                 |   | (1,184              | )        | (771                | )      |
| Net cash provided by financing activities                                                      |   | 181,070             |     | 210,481             |   |
| Increase in cash and cash equivalents                                                          |   | 17,084              |     | 49,404              |   |
| Cash and cash equivalents, beginning of  period                                                |   | 96,408              |     | 73,773              |   |
| Cash and cash equivalents, end of period                                                       |   | $                   | 113,492  |                | $      | 123,177 |   |
|                                                                                           |   |                |     |                |   |
| **Supplemental disclosure of cash flow  information:**                                         |   |                |     |                |   |
| Cash paid for interest                                                                         |   | $                   | 25,525   |                | $      | 24,071 |   |
| Cash paid for income taxes                                                                     |   | 4,560               |     | 1,717               |   |

 

See accompanying notes to consolidated financial statements

 

4

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**GOLD BANC CORPORATION, INC. AND SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

 

**1.             Basisof Presentation**

 

The accompanyingconsolidated financial statements have been prepared in accordance with theinstructions for Form 10-Q. The consolidated financial statements should beread in conjunction with the audited financial statements included in AmendmentNo. 1 to our 2002 Annual Report on Form 10-K/A filed with the Securities andExchange Commission on April 15, 2003 (the “2002 Annual Report”).

 

Theconsolidated financial statements include the accounts of Gold BancCorporation, Inc. and its subsidiary banks and companies. All significantintercompany balances and transactions have been eliminated.

 

Theconsolidated financial statements as of March 31, 2003 and for the three monthsended March 31, 2003 and 2002 are unaudited but include all adjustments(consisting only of normal recurring adjustments) which we consider necessaryfor a fair presentation of our financial position and results of our operationsand cash flows for those periods. The consolidated statements of earnings forthe three months ended March 31, 2003 are not necessarily indicative of theresults to be expected for the entire year.

 

**2.             Restatement and Impact on Earnings**

 

As disclosedin our 2002 Annual Report, we have restated our financial statements for theyears ended December 31, 2001 and 2000. The 2002 Annual Report included all of the adjustments relating to therestatement for such prior periods including those required by Staff AccountingBulletin 99.  We will also file amendedForm 10-Qs with respect to the first three quarters of 2002 to reflect therestatement of the financial information presented therein.  Based on discussions with the staff of theSEC, we do not plan to file amended Form 10-Ks or Form 10-Qs for 2001 or 2000.  The accompanying consolidated financialstatements for the three months ended March 31, 2002 are also restated for theeffect of the adjustments described above.

 

Therestatement principally related to certain transactions totaling approximately$136,000, $1.1 million and $1.3 million in 2002, 2001 and 2000, respectively,in which Michael W. Gullion, our former Chief Executive Officer, diverted fundsof Gold Bank-Kansas for personal use, as well as the use of his company creditcard for personal use and improper reimbursement of personal expenses chargedto his personal credit card. The transactions were discovered by an internalinvestigation conducted by our Audit Committee, with assistance from itsindependent legal counsel and forensic accountants.  For a detailed discussion of the internal investigation and thetransactions discovered therefrom, see “Item 13 — Certain Relationships andRelated Transactions” in the 2002 Annual Report.

 

The effect ofthe restatement is as follows:

 
| **Restatements  to Net Earnings  as Previously Reported  for the Three Months Ended  March 31, 2002** |   |
|-------------------------------------------------------------------------------------------------------|--------|
| **Pre-Tax**                                                                                           |   | **Tax  Effect** |   | **After Tax** |   | **% Change  to Reported** |   |
| **(Dollars  in thousands)**                                                                           |   |
| $                                                                                                     | (133)  |   | $ | (183 | ) | $ | 50 |   | 0.80 | % |
|                                                                                                       |        |  |  |  |  |  |  |  |  |  |

 

5

----

 

The impact ofthese amounts is as follows:

 
| **For the  Three Months Ended March 31, 2002** |   |
|------------------------------------------------|--------|
| **Basic  Earnings (Loss) Per  Share**          |   | **Diluted  Earnings (Loss) Per  Share** |   |
| **As reported**                                |   | **As  restated** |   | **As  reported** |   | **As  restated** |   |
|                                           |   |   |   |   |   |   |   |
| $                                              | 0.18   |   | $ | 0.18 |   | $ | 0.18 |   | $ | 0.18 |   |
|                                                |        |  |  |  |  |  |  |  |  |  |  |

 

**3.             Earnings per Common Share**

 

Basic earningsper share is based upon the weighted average number of common sharesoutstanding during the periods presented. Diluted earnings per share includesthe effects of all potentially dilutive common shares outstanding during eachperiod. Employee stock options are our only potential common share equivalent.

 

The sharesused in the calculation of basic and diluted income per share for the threemonths ended March 31, 2003 and March 31, 2002 are shown below (in thousands):

 
|                                                      |   | **For the  three  months ended  March 31** |   |
|-----------------------------------------------------------|--------|--------------------------------------------|--------|
|                                                      |   | **2003**                                   |   | **2002** |   |
|                                                      |   |                                       |   | **(Restated)** |   |
| Weighted average common shares outstanding                |   | 39,477                                     |   | 33,798 |   |
| Unallocated ESOP Shares                                   |   | (1,488                                     | )      | (809 | ) |
| Total basic average common shares  outstanding            |   | 37,989                                     |   | 32,989 |   |
| Stock options                                             |   | 197                                        |   | 65 |   |
| Total diluted weighted average common  shares outstanding |   | 38,186                                     |   | 33,054 |   |

 

We account foremployee options under the intrinsic-value method prescribed by AccountingPrinciples Board Opinion No. 25 “Accounting for Stock Issued to Employees” withpro forma disclosures of net earnings and earnings per share, as if the fairvalue method of accounting defined in SFAS No. 123 “Accounting for Stock BasedCompensation” had been applied.  SFASNo. 123 establishes a fair value based method of accounting for stock basedemployee compensation plans.  Under thefair value method, compensation cost is measured at the grant date based on thevalue of the award and is recognized over the service period, which is usuallythe vesting period.  Under SFAS No. 123,our net income and net income per share would have decreased as reflected inthe following pro forma amounts:

 
|                                                                                                                                                 |   | **March 31,  2003** |   | **March 31,  2002** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|---------------------|--------|
| Net earnings as reported                                                                                                                             |   | $                   | 6,709  |                | $      | 6,057 |   |
| Deduct:   Total stock based employee compensation expense determined under fair  valued based method for all awards, net of related tax effects |   | 75                  |   | 75                  |   |
| Pro forma net earnings                                                                                                                               |   | 6,634               |   | 5,982               |   |
| Earnings per share:                                                                                                                                  |   |                |   |                |   |
| Basic-as reported                                                                                                                                    |   | 0.18                |   | 0.18                |   |
| Basic-pro forma                                                                                                                                      |   | 0.18                |   | 0.18                |   |
| Diluted-as reported                                                                                                                                  |   | 0.18                |   | 0.18                |   |
| Diluted-pro forma                                                                                                                                    |   | 0.18                |   | 0.18                |   |
|                                                                                                                                                      |        |                     |        |                     |        |  |  |

 

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**4.             Intangible Assets and Goodwill**

 

The followingtable presents information about our intangible assets which are beingamortized in accordance with Statement of Financial Accounting Standards (SFAS)No. 142.

 
|                                                       |   | **March 31,  2003**         |   | **March 31,  2002**           |   |
|------------------------------------------------------------|--------|-----------------------------|--------|-------------------------------|--------|
|                                                       |   |                        |   |                          |   | **(Restated)** |   |
|                                                       |   | **Gross  Carrying  Amount** |   | **Accumulated  Amortization** |   | **Gross  Carrying  Amount** |   | **Accumulated  Amortization** |   |
|                                                       |   | **(In  thousands)**         |   |
|                                                       |   |                        |   |                          |   |   |   |   |   |
| Amortized intangible assets:                               |   |                        |   |                          |   |   |   |   |   |
| Core deposit premium                                       |   | $                           | 7,508  |                          | $      | 860 |   | $ | 4,156 |   | $ | 199 |   |
| Aggregate amortization expense for the  three months ended |   |                        |   | $                             | 188    |   |   |   | $ | 125 |   |
|                                                            |        |                             |        |                               |        |  |  |  |  |  |  |  |  |

 

Estimatedamortization expense (in thousands) for the years ending December 31:

 
| 2003 |   | $ | 751 |   |
|------|--------|---|-----|--------|
| 2004 |   | $ | 751 |   |
| 2005 |   | $ | 751 |   |
| 2006 |   | $ | 751 |   |
| 2007 |   | $ | 751 |   |

 

Goodwill atMarch 31, 2003 was $35.6 million, which was also the same amount at December31, 2002. There was no impairment to goodwill recorded for the three monthsended March 31, 2003.

 

During 2002,CompuNet Engineering did not earn a majority of its revenue from providingservices to financial institutions.  Asa result, we may be required under the Bank Holding Company Act to divest ourinterest in ComputNet Engineering.  Inthe event that CompuNet Engineering is sold for less than the carrying value ofits associated assets and goodwill, we will be required to record a goodwillimpairment charge.  The goodwillassociated with CompuNet Engineering was $4.6 million at March 31, 2003.

 

**5.             Comprehensive Income**

 

Comprehensiveincome was $5.9 million and $5.8 million for the three months ended March 31,2003 and March 31, 2002, respectively. The difference between comprehensiveincome and net earnings presented in the consolidated statements of earnings isattributed solely to unrealized gains and losses on available-for-salesecurities. During the three months ended March 31, 2003 and March 31, 2002, werecorded reclassification adjustments of ($1,000) and $342,000, respectively,associated with gains (losses) included in net earnings for such periods.

 

**6.             Mergers, Acquisitions, Dispositionsand Consolidations**

 

Pursuant toour strategy to increase our presence in higher growth metropolitan areas, wehave agreed to sell some of our rural branches and redeploy such assets toacquire deposits in metropolitan areas.

 

**Sale of Guymon Branch.**  On December 24, 2002, Gold Bank-Oklahomaentered into an agreement for the sale of its Guymon, Oklahoma branch locationto City National Bank and Trust Company of Guymon, Oklahoma.  The deposits and loans of this branch areapproximately $36 million and $8 million, respectively, as of March 31,2003.  The sale of this branch closed onApril 11, 2003, following receipt of regulatory approvals.  We believe the sale of this branch will nothave a significant impact on our capital and liquidity or operations.

 

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**Sale of Wakita & Helena Branches.**  On March 4, 2003, Gold Bank-Oklahoma enteredinto an agreement for the sale of its Helena and Wakita, Oklahoma branchlocations to Farmers Exchange Bank of Cherokee, Oklahoma.   The aggregate deposits and loans of theseGold Bank-Oklahoma branches are approximately $18 million and $3 million,respectively, as of March 31, 2003.  Thesale of these branches is expected to close in the second quarter of 2003 uponreceipt of regulatory approvals.  Webelieve the sale of these branches will not have a significant impact on ourcapital and liquidity or operations.

 

**7.             Treasury Stock**

 

In August2001, we completed a common stock repurchase program whereby we acquired1,839,000 shares of common stock, or approximately 5% of the shares outstandingas of March 7, 2001. In September 2001, we announced the approval of anothercommon stock repurchase program whereby we were authorized to acquire up to1,750,336 additional shares of our common stock, or approximately 5% of theshares outstanding as of September 17, 2001. On July 24, 2002, we terminatedthe share repurchase programs. We acquired 3,216,110 shares under theseprograms at prices ranging from $6.55 to $7.85 per share.

 

**8.             Derivative Instruments**

 

In August2002, we entered into three interest rate swap agreements with an aggregatenotional amount of $82.5 million. The swaps effectively converted our fixedinterest rate obligations under our three outstanding series of trust preferredsecurities to variable interest rate obligations, decreasing the assetsensitivity of our balance sheet by more closely matching our variable rateassets with variable rate liabilities. Each swap has a notional amount equal tothe outstanding principal amount of the related trust preferred securities,together with the same payment dates, maturity date and call provisions as therelated trust preferred securities. Under each of the swaps, we pay interest ata variable rate equal to a spread over 90-day LIBOR, adjusted quarterly, and wereceive a fixed rate equal to the interest that we are obligated to pay on therelated trust preferred securities. The interest rate swaps are derivativefinancial instruments and have been designated as fair value hedges of thetrust preferred securities. Because the critical terms of the interest rateswaps match the terms of the trust preferred securities, the swaps qualify for“short-cut method” accounting treatment under SFAS No. 133.

 

During thequarter ended March 31, 2003, we received net cash flows of $1.0 million underthese agreements, which was recorded as a reduction of interest expense on thetrust preferred securities.

 

The $28.7million notional amount swap agreement was called by the counter-party andterminated on April 7, 2003.  Under theswap agreement, no payments were due between the parties and no gain or losswas recognized by us.  We do not expectto replace this terminated agreement. The remaining swap agreements are also callable by the counterpartyprior to their respective maturity dates.

 

**9.             Legal proceedings**

 

**InternalInvestigation and Regulatory Examination and Inquiries**

 

On March 14,2003, we issued a press release and filed a Current Report on Form 8-Kindicating that as of March 17, 2003, Malcolm M. Aslin would replace Michael W.Gullion as our Chief Executive Officer and as the President and Chief ExecutiveOfficer of Gold Bank-Kansas.  Thisreplacement resulted from the improper conduct that was discovered in aninternal investigation which was conducted in close cooperation with theFederal Reserve Bank of Kansas City (“FRB-KC”) and the Office of the KansasState Bank Commissioner (the “Commissioner”) as part of their regularlyscheduled examinations of Gold Bank-Kansas. See the 2002 Annual Report for additional information relating to Mr.Gullion’s misconduct.

 

The jointexamination of Gold Bank-Kansas and the examination of us are complete, and weare awaiting the results of the final examination reports.  On April 9, 2003, the Audit Committee metwith the FRB-KC and the Commissioner to discuss the preliminary results oftheir joint examination of Gold Bank-Kansas and the FRB-KC’s examination ofus.  At the meeting, we were advised bythe bank regulators of the violations of law and the CAMELS ratings that willlikely be included in the forthcoming report of their joint examination.  The regulators

 

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identified noncompliance ordeficiencies in regard to Regulation H (information technology), Regulation O(loans to officers and directors), Section 23A of the Federal Reserve Act(transactions with affiliates) and the Bank Secrecy Act.  Based upon the discussions during thismeeting, we expect that Gold Bank-Kansas will lose its “well–managed” ratingand formal supervisory actions by the regulators will be taken against GoldBank-Kansas and us.  The formalsupervisory actions may include formal written agreements with us and GoldBank-Kansas, or cease and desist orders issued against us and Gold Bank-Kansas,intended to address and remediate the deficiencies identified by the regulatoryauthorities.  These formal supervisoryactions may include restrictions or prohibitions on the payment of dividends byGold Bank-Kansas and us.

 

Writtenreports of examinations have not yet been issued.  Although we anticipate the results of the examinations to be asdescribed above, the decision of the regulatory authorities regarding theformal supervisory actions to be taken is not final, and we cannot predict withcertainty what formal supervisory actions will be taken against us, GoldBank-Kansas or any other person as a result of the examinations.

 

As a financialholding company under the BHC Act, each of our depository institutionsubsidiaries must remain both “well-capitalized” and “well–managed” for us toretain our status as a financial holding company with authority to engage inthe expanded financial activities described under “Item 1 — Business —Supervision and Regulation — Limitation on Activities” in the 2002 AnnualReport.  If Gold Bank-Kansas loses its“well–managed” status as anticipated, we will not be in compliance with therequirements of the BHC Act regarding financial holding companies and will berequired to take the following actions:

 

•                                          promptlyprepare and submit, within approximately 20 days after the receipt of noticefrom the Federal Reserve Board (the “FRB”) of the loss of its “well–managed”status, a written corrective action plan to the FRB detailing the specific actions,and a timetable for each action, that we will take to restore Gold Bank-Kansasto a well–managed condition within 180 days after receipt of such notice; and

 

•                                          ifthe corrective action plan is acceptable to the FRB, within approximately 45days after the receipt of such notice, we may sign a formal action with the FRBin which we will agree to take the action steps listed in the action plan tocorrect the management deficiencies.

 

As part of theexamination process, the FRB will issue a formal notice (the “Notice”) statingthe conclusions of its examination and any conditions that must be met beforeGold Bank-Kansas can regain the rating as “well–managed.”  Until the FRB determines that we havecorrected the conditions described in the Notice, we may not, directly orindirectly, or through any of our subsidiaries that are not banks orsubsidiaries of banks, engage in any financial activities other than those wewere engaged in prior to receipt of the Notice or activities authorized forbank holding companies without financial holding company status, without priorwritten approval of the FRB.  We willnot be considered to be in compliance with the statutes and regulations relatedto financial holding companies until the management rating of Gold Bank-Kansashas been upgraded to “well–managed” (which includes a “satisfactory” compositerating) by the FRB.  After issuing theNotice and during any period of noncompliance, the FRB may also impose otherlimitations or conditions on our conduct or activities, or the conduct oractivities of our affiliates.

 

If GoldBank-Kansas does not become “well–managed” within 180 days after receipt of theNotice, the FRB may take additional actions against us, including requiring usto divest our ownership of our subsidiary banks or cease engaging, directly orindirectly, in all activities other than those permissible for a bank holdingcompany without financial holding company status.  We do not expect to be required to divest ownership of oursubsidiary banks.

 

As an alternativeto proposing a plan and entering into an agreement to correct the managementdeficiencies, we may determine to forego any attempt to remedy the managementdeficiencies and instead voluntarily terminate any and all financial activitiesthat are authorized only for financial holding companies (“Financial HoldingCompany Activities”).  Financial HoldingCompany Activities include financial activities in the areas of merchantbanking, securities underwriting and dealing, and insurance underwriting andinsurance agency.  However, we do notbelieve this alternative is a desirable course of action.

 

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Either of thealternatives described above could involve divestiture of certain financialsubsidiaries and certain assets related to our financial activities.  Based on a preliminary evaluation, any suchrequired or voluntary termination of Financial Holding Company Activities couldinvolve the following:

 

•                                          oursubsidiary, Gold Merchant Banc, Inc., and other subsidiaries could be requiredto cease conducting merchant banking activities and divest existing merchantbanking investments;

 

•                                          oursubsidiary, Gold Capital Management, could be required to cease underwritingand distributing mutual funds;

 

•                                          oursubsidiary, CompuNet Engineering, Inc., would be unable to become a subsidiaryof Gold Merchant Banc, Inc., which would result in us having to divest of it;

 

•                                          oursubsidiary, Gold Title Agency, LLC, could be required to cease conducting titleinsurance agent activities;

 

•                                          oursubsidiary, Gold Insurance Agency, Inc., and other subsidiaries that are notbanks or subsidiaries of banks could be required to cease conducting otherinsurance agency activities, except that Gold Insurance Agency, Inc. couldexercise limited insurance agency activities which are authorized forsubsidiaries of bank holding companies which are not financial holdingcompanies; and

 

•                                          wecould be required to divest our ownership of subsidiaries that conductFinancial Holding Company Activities, including Gold Merchant Banc, Inc., GoldTitle Agency, LLC, and, possibly, Gold Insurance Agency, Inc.

 

Management andthe Board are evaluating the implications of the loss of the “well–managed”status of Gold Bank-Kansas and any consequential divestiture requirements ifGold Bank-Kansas cannot regain “well–managed” status (which includes a“satisfactory” composite rating). However, based on a preliminary review we have conducted, if we arerequired to sell these financial subsidiaries or assets, we do not believe itwill have a material adverse impact on our financial condition or results ofoperations.

 

**CUNATrademark Lawsuit**

 

The partieshave agreed to settle the case by mutual releases.  We filed this action against the Credit Union NationalAssociation, Inc. (“CUNA”) on July 26, 2001, in the United States DistrictCourt for the District of Kansas to defend the “MORE THAN MONEY” service mark.The lawsuit alleged CUNA had infringed our service mark MORE THAN MONEY byusing the service mark WHERE PEOPLE ARE WORTH MORE THAN MONEY in

 

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its national brand campaignpromoting credit unions throughout the country. After completing discovery,management concluded that the case did not warrant the on-going expense oftrial and the inevitable appeal.

 

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***ITEM 2:******                                                MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS***

 

The followingfinancial review presents management’s discussion and analysis of ourconsolidated financial condition and results of operations.  This review highlights the major factorsaffecting results of operations and any significant changes in financialcondition for the three month period ended March 31, 2003. This review shouldbe read in conjunction with the consolidated financial statements and relatednotes appearing elsewhere in this report as well as Amendment No. 1 to our 2002Annual Report on Form 10-K/A (the “2002 Annual Report”). Results of operationsfor the three month period ended March 31, 2003 are not necessarily indicativeof results to be attained for any other period.

 

**Summary**

 

Net earningsfor the three months ended March 31, 2003 was $6.7 million compared with $6.1million for the three months ended March 31, 2002. Earnings per share were$0.18 for the quarter ended March 31, 2003 compared to $0.18 for the quarterended March 31, 2002. The return on average assets and equity was 0.70% and11.74%, respectively, for the three months ended March 31, 2003 compared to0.79% and 14.79%, respectively, for the three months ended March 31, 2002.  The stockholders’ equity to total assetsratio was 5.81% and 5.05% at March 31, 2003 and March 31, 2002, respectively.  The dividend to net earnings ratio for thethree months ended March 31, 2003 and March 31, 2002, respectively was 17.65%and 12.73%.

 

**RecentEvents and Restatement**

 

As disclosedin our 2002 Annual Report, we have restated our financial statements for theyears ended December 31, 2001 and 2000. The 2002 Annual Report included all of the adjustments relating to therestatement for such prior periods including those required by Staff AccountingBulletin 99.  We will also file amendedForm 10-Qs with respect to the first three quarters of 2002 to reflect therestatement of the financial information for such periods.  Based on discussions with the staff of theSEC, we do not plan to file amended Form 10-Ks or Form 10-Qs for 2001 or2000.  The consolidated financialstatements included elsewhere in this report restate our financial statementsfor the three months ended March 31, 2002.

 

Therestatement principally related to certain transactions totaling approximately$136,000, $1.1 million and $1.3 million in 2002, 2001 and 2000, respectively,in which Michael W. Gullion, our former Chief Executive Officer, diverted fundsof Gold Bank-Kansas for personal use, as well as the use of his company creditcard for personal use and improper reimbursement of personal expenses chargedto his personal credit card. The transactions were discovered by an internalinvestigation conducted by our Audit Committee, with assistance from itsindependent legal counsel and forensic accountants.  For a detailed discussion of the internal investigation and thetransactions discovered therefrom, see “Item 13 — Certain Relationships andRelated Transactions” in the 2002 Annual Report.

 

The effect ofthe restatement (as described in Note 2 “Restatement and Impact on Earnings” ofthe consolidated financial statements) is as follows:

 
| **Restatements  to Net Earnings  as Previously Reported  for the Three Months Ended  March 31, 2002** |   |
|-------------------------------------------------------------------------------------------------------|--------|
| **Pre-Tax**                                                                                           |   | **Tax  Effect** |   | **After Tax** |   | **% Change  to Reported** |   |
| **(Dollars  in thousands)**                                                                           |   |
| $                                                                                                     | (133   | ) | $ | (183 | ) | $ | 50 |   | 0.80 | % |
|                                                                                                       |        |  |  |  |  |  |  |  |  |  |

 

The impact ofthese amounts (as described in Note 2 “Restatement and Impact on Earnings” tothe consolidated financial statements) to reported basic and diluted earnings(loss) per share is as follows:

 

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| **For the  Three Months Ended March 31, 2002** |   |
|------------------------------------------------|--------|
| **Basic Earnings  Per Share**                  |   | **Diluted  Earnings Per Share** |   |
| **As reported**                                |   | **As  restated** |   | **As  reported** |   | **As  restated** |   |
|                                           |   |   |   |   |   |   |   |
| $                                              | 0.18   |   | $ | 0.18 |   | $ | 0.18 |   | $ | 0.18 |   |
|                                                |        |  |  |  |  |  |  |  |  |  |  |

 

**Resultsof Operations**

 

*Net Interest Income*

 

Total interestincome for the three months ended March 31, 2003 was $52.9 million compared to$47.8 million for the three months ended March 31, 2002 or an increase of $5.1million. This increase resulted from a $3.6 million increase in loan interestand a $1.6 million increase in investment security interest.  Average loans increased to $2.8 billion forthe three months ended March 31, 2003 compared to $2.2 billion for the threemonths ended March 31, 2002, or a 23.5% increase. This increase in loan volumewas also accompanied by a decrease in our net yield on interest earning assetsfrom 6.80% for the three months ended March 31, 2002 to 6.01% for the threemonths ended March 31, 2003 on a tax equivalent basis.

 

Averageearning assets were $3.6 billion for the three months ended March 31, 2003compared with $2.9 billion for the three months ended March 31, 2002.

 

Total interestexpense for the three months ended March 31, 2003 was $23.3 million; a$506,000, or 2.1%, decrease over the three months ended March 31, 2002. Thedecrease was the result of a $88,000 increase in interest on deposits and a$594,000 decrease in interest expense on other borrowings. For the three monthsended March 31, 2003, our average cost of funds was 2.83%, a decrease from3.60% for the three months ended March 31, 2002.  The decrease in the average cost of funds primarily relates tothe reduced rates paid on deposits.

 

Net interestincome was $29.5 million for the three months ended March 31, 2003, compared to$24.0 million for the same period in 2002, an increase of 23.3%.  Our net interest margin decreased from 3.47%for the three months ended March 31, 2002 to 3.38% for the three months endedMarch 31, 2003 on a tax equivalent basis. This decrease in our net interest margin was the result of a decrease inthe average yield on our loans.  Notwithstandingthe decrease in our net interest margin, our net interest income increased as aresult of the combination of a significant increase in the volume of our loansand a decrease in the interest rates paid on our deposits.  For the three months ended March 31, 2003,average interest bearing liabilities increased $426.2 million compared to anincrease of $490.8 million in average interest earning assets.  The difference between the increase inaverage interest bearing liabilities and the increase in average interestearning assets is due to an increase in non-interest bearing deposits duringthe quarter.

 

*Provision/Allowance for Loan Losses*

 

The success ofa bank depends to a significant extent upon the quality of its assets,particularly loans. This is highlighted by the fact that net loans were 69% ofour total assets as of March 31, 2003. Credit losses are inherent in thelending business. The risk of loss will vary with general economic conditions,the type of loan being made, the creditworthiness of the borrower over the termof the loan and the value of the collateral in the case of a collateralizedloan, among other things.

 

The allowancefor loan losses totaled $32.7 million and $33.4 million at March 31, 2003 andDecember 31, 2002, respectively, and represented 1.18% and 1.23% of total loansat each date. The provision for loan losses for the three months ended March31, 2003 was $3.6 million compared to $5.0 million for the three months endedMarch 31, 2002. The provision for loan losses was recorded in support of theincrease in non-performing loans as well as significant new loan growthgenerated during the first three months of 2003. Net charge-offs for the threemonths ended March 31, 2003 were $4.3 million compared to $3.0 million for the threemonths ended March 31, 2002. Management has continued to review the loanportfolios of the banks, to make appropriate provisions and to charge-off thosecredits when collection is considered to be doubtful.

 

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The allowancefor loan losses is comprised of specific allowances assigned to certainclassified loans and a general allowance. We continuously evaluate ourallowance for loan losses to maintain an adequate level to absorb loan lossesinherent in the loan portfolio. Factors contributing to the determination ofspecific allowances include the credit worthiness of the borrower, changes inthe expected future receipt of principal and interest payments and/or changesin the value of pledged collateral. An allowance is recorded when the carryingamount of the loan exceeds the discounted cash flows using the loan’s initialeffective interest rate or the fair value of the collateral for certaincollateral dependent loans. For purposes of determining the general allowance,the portfolio is segregated by product types to recognize differing riskprofiles among categories, and then further segregated by credit grades. Eachcredit grade is assigned a risk factor, or allowance allocation percentage.These risk factors are multiplied by the outstanding principal balance andrisk-weighted by product type to calculate the required allowance.

 

The allowanceallocation percentages assigned to each credit grade have been developed basedon an analysis of historical loss rates at our individual banks, adjusted forcertain qualitative factors and on our management’s experience. Qualitativeadjustments for such things as general economic conditions, changes in creditpolicies and lending standards, and changes in the trend and severity ofproblem loans, can cause the estimation of future losses to differ from pastexperience. The unallocated portion of the general allowance serves tocompensate for additional areas of uncertainty and considers industrycomparable reserve ratios.

 

Themethodology used in the periodic review of allowance adequacy, which isperformed at least quarterly, is designed to be responsive to changes in actualcredit losses. The changes are reflected in the general allowance and inspecific allowances as the collectibility of larger classified loans iscontinuously recalculated with new information. As our portfolio matures,historical loss ratios are being closely monitored.

 

We activelymanage our past due and non-performing loans in each bank subsidiary in aneffort to minimize credit losses, and monitors asset quality to maintain anadequate loan loss allowance. Although management believes our allowance forloan losses is adequate for each bank and on an aggregate basis, the allowancemay not prove sufficient to cover future loan losses. Further, althoughmanagement uses the best information available to make determinations withrespect to the allowance for loan losses, future adjustments may be necessaryif economic conditions differ substantially from the assumptions used, oradverse developments arise with respect to non-performing or performing loans.Accordingly, the allowance for loan losses may not be adequate to cover loanlosses, and significant increases to the allowance may be required in thefuture if economic conditions should worsen. Material additions to theallowance for loan losses would result in a decrease of the our net earningsand capital.

 

We considernon-performing assets to include all non-accrual loans, other loans past due 90days or more as to principal and interest and still accruing, other real estateowned and repossessed assets. Total non-performing loans were $24.7 million and$15.9 million at March 31, 2003 and December 31, 2002, respectively. The $8.9million increase in non-performing loans can generally be attributed to anOklahoma agricultural loan of $1.1 million (which was paid off subsequent toMarch 31, 2003), a $2.3 million loan to a road contractor that may requireforeclosure by us on the assets securing the loan, and a real estatedevelopment loan of $3.7 million that is underperforming.  Total non-performing loans were 0.88% and0.58% of gross loans at March 31, 2003 and December 31, 2002, respectively.Total non-performing assets were $31.1 million and $22.2 million at March 31,2003 and December 31, 2002, respectively. The increase in non-performing assetsof $9.0 million can be generally attributed to the above captionednon-performing loans. Total non-performing assets were 0.78% and 0.58% of totalassets at March 31, 2003 and December 31, 2002, respectively.

 

*Other Income*

 

For the threemonths ended March 31, 2003, other income was $10.7 million compared to $13.8million for the three months ended March 31, 2002. This equated to a decreaseof $3.1 million, or 22.7%. The net decrease resulted from a decrease in salesfrom information technology sales, which decreased from $4.8 million in thefirst quarter of 2002 to $2.3 million in the first quarter of 2003. Thisdecrease was the result of decreased sales revenue principally in the hardwaresales area.  This decrease was partiallyoffset by an increase in service fees of $227,000 and a $81,000 increase ininvestment trading fees and commissions compared with the first quarter of2002.  Net securities gains fromsecurities sales decreased $603,000 due to sales of Blue Rhino stock beingcompleted during 2002.

 

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*Other Expense*

 

For the firstthree months of 2003, other expense was $27.8 million compared to $24.8 millionfor the same period of 2002. Salaries and employee benefits increased from$11.9 million in the first three months of 2002 to $14.7 million in the firstthree months of 2003, or an increase of $2.8 million. Adding additional branchlocations and expansion of our current operations caused this increase. Netoccupancy expense increased from $1.5 million for the quarter ended March 31,2002 to $1.9 million for the quarter ended March 31, 2003 as a result ofopening new offices.  Depreciationexpense increased from $1.5 million to $1.7 million from the quarter periodended March 2002 to March 2003, respectively. Core deposit intangible amortization expense was $188,000 during thefirst three months of 2003, compared to $125,000 for the same period of 2002. A$1.6 million decrease in information technology services expenses resulted fromthe decline in cost of sales component for hardware and software sold byCompuNet. This directly relates to the $2.5 million decrease in informationtechnology sales described above in the Other Income section. The remainingexpenses classified as other expense increased from $6.5 million to $7.7million. This increase in Other expense of $1.2 million was derived from a$600,000 increase in legal and consulting expense and an increase of $540,000in software and data processing expense. The increase in legal and consulting expense was primarily attributableto the investigation into Mr. Gullion’s misconduct discussed elsewhere in thisreport.  The increase in software and dataprocessing expenses was caused by adding locations and conversion to one dataprocessing platform for our loan and deposit processing for our Kansas andFlorida banks.

 

*Income Tax Expense*

 

Income taxexpense for the three months ended March 31, 2003 and 2002 was $2.2 million and$1.9 million, respectively. The effective tax rate for each time period was24.4% and 24.2%, respectively. Our effective tax rate is less than thestatutory federal rate of 35% due primarily to municipal interest income and incomegenerated from our investment in bank owned life insurance.

 

**FinancialCondition**

 

From December31, 2002 to March 31, 2003, total assets grew from $3.8 billion to $4.0billion. Net loans increased from $2.7 billion to $2.8 billion. Investmentsecurities were $868.1 million at March 31, 2003, compared to $736.1 million atDecember 31, 2002; an increase of $132.0 million or 17.9%. Mortgage loans heldfor sale decreased from $25.1 million to $24.6 million. Net premises andequipment decreased from $69.6 million to $69.4 million. Cash surrender valueof BOLI life insurance increased from $56.5 million to $77.4 million. Totalliabilities increased from $3.6 billion to $3.8 billion. Deposits increasedfrom $2.7 billion to $2.8 billion, from December 31, 2002 to March 31, 2003.Securities sold under agreements to repurchase decreased from $153.6 million to$142.4 million. Total long and short-term borrowings increased $105.7 million,or 15.4%, from December 31, 2002. Accrued interest and other liabilities decreasedfrom $26.1 million to $19.4 million.

 

During thefirst three months of 2003, loans increased $298.2 million, or 10.9%, overbalances at December 31, 2002.  Mortgageloans held for sale decreased $537 thousand over the balance at December 31,2002. The decrease was due to a decrease in fixed rate single-family mortgageloans originated during the three-month period ended March 31, 2003.

 

Investmentsecurities at March 31, 2003, increased $132.0 million compared to the balanceat December 31, 2002. This increase resulted from an increase of $57.1 millionin US agency mortgage-backed securities and an increase of $65.7 million in USagency securities. The total investment securities portfolio amounted to $868.1million at March 31, 2003, and was comprised mainly of U.S. government andagencies (16.4%), mortgage-backed (63.6%), and other asset-backed (20.0%)investment securities.

 

Bank ownedlife insurance at March 31, 2003, increased $20.9 million compared to thebalance sheet amount at December 31, 2002. The increase in the balanceprimarily resulted from the purchases made in the first quarter and earningsrecorded on our investment in bank owned life insurance.

 

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Total depositsincreased $87.7 million at March 31, 2003, compared to December 31, 2002,mainly due to an increase of $85.9 million in time deposits, a $60.8 milliondecrease in money market accounts and a $62.6 million increase in otherdeposits.

 

Compared to2002 year-end balances, borrowings at March 31, 2003, increased $105.7 million.Our short-term borrowings of federal funds purchased and securities sold underagreements to repurchase vary depending on daily liquidity requirements. Theseborrowings decreased $25.1 million during the first three months of 2003 to abalance of $568,000 at March 31, 2003. Long term borrowings, consisting mainlyof FHLB borrowings and other long term borrowings from LaSalle Bank, increased$130.6 million to $679.5 million outstanding at March 31, 2003.

 

During thefirst three months of 2003, accrued interest and other liabilities decreased$6.7 million, or 25.7%, due to a $5.4 million decrease in federal taxes payabledue to tax payments made during the first quarter of 2003 and some reduction inthe amount of accrued interest payable.

 

*Contractual Obligations and CommercialCommitments*

 

The followingtable presents our contractual cash obligations, defined as operating leaseobligations, principal payments due on non-deposit obligations and guaranteeswith maturities in excess of one year, as of March 31, 2003 for the periodsindicated.

 
|                             |   | **Payments  Due by Period**        |      |
|----------------------------------|--------|------------------------------------|-----------|
| **Contractual Cash Obligations** |   | **Total  interest  and principal** |      | **One Year  and Less** |   | **One to  Three Years** |   | **Four to  Five Years** |   | **More than  Five Years** |   |
|                             |   | **(dollars in  thousands)**        |      |
|                             |   |                               |      |   |   |   |   |   |   |   |   |
| Operating leases                 |   | $                                  | 36,952    |   | $ | 3,689 |   | $ | 7,127 |   | $ | 4,762 |   | $ | 21,374 |   |
| FHLB advances(1)                 |   | 711,077                            |      | 91,278 |   | 94,495 |   | 127,505 |   | 395,799 |   |
| Subordinated debt(1)             |   | 79,784                             |      | 1,734 |   | 3,468 |   | 3,468 |   | 71,114 |   |
| Trust preferred securities       |   | 269,632                            |      | 7,321 |   | 14,642 |   | 4,642 |   | 233,027 |   |
| Total contractual obligations    |   | $                                  | 1,097,445 |   | $ | 104,022 |   | $ | 121,732 |   | $ | 150,377 |   | $ | 721,314 |   |

 

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(1)           For floating interest rateobligations, based upon interest rate in effect on March 31, 2003.

 

*Liquidity and Capital Resources*

 

Liquiditydefines the ability of us and the Banks to generate funds to support assetgrowth, satisfy other disbursement needs, meet deposit withdrawals and otherfund reductions, maintain reserve requirements and otherwise operate on anongoing basis. The immediate liquidity needs of the Banks are met primarily byFederal Funds sold, short-term investments, deposits and the generallypredictable cash flow (primarily repayments) from each Bank’s assets.Intermediate term liquidity is provided by the Banks’ investment portfolios.Each of the Banks has established a credit facility with the FHLB, under whichit is eligible for short-term advances and long-term borrowings secured by realestate loans or mortgage-related investments. As described in the “Federal Home Loan Bank of Des Moines” section, GoldBank-Kansas may be in default under their credit line agreement with the FHLBof Des Moines. Our liquidity needs and funding are provided throughnon-affiliated bank borrowings, cash dividends and tax payments from oursubsidiary Banks.  As a result ofpossible regulatory actions, the ability of our subsidiary Banks to paydividends may be restricted by the Bank’s regulators.  Total loans increased $73.2 million compared to December 31, 2002,while total deposits increased $87.7 million compared to the same period. Themajority of our deposits consist of time deposits which mature in less than oneyear. If we are unsuccessful in rolling over these deposits, then we will haveto replace these funds with alternative sources of funding, mainly othershort-term borrowings.

 

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Cash and cashequivalents and investment securities totaled $981.6 million, or 24.6%, oftotal assets at March 31, 2003 compared to $832.5 million, or 21.8%, atDecember 31, 2002. Cash provided by operating activities for the three monthsended March 31, 2003 was $50.2 million, consisting primarily of net earningsand proceeds from the sale of loans. Cash used by investing activities was$213.2 million, consisting of an increase in loans of $78.0 million and thepurchase of fixed assets of $1.5 million, the reduction of held to maturitysecurities of $7.4 million, and the net increase in available for salesecurities of $141.1 million. Cash provided by financing activities was $180.1million, consisting primarily of an increase in deposits of $87.7 million andof an increase in net borrowings of $94.4 million.

 

We and oursubsidiaries actively monitor our compliance with regulatory capitalrequirements. The elements of capital adequacy standards include strictdefinitions of core capital and total assets, which include off-balance sheetitems such as commitments to extend credit. Under the risk-based capital methodof capital measurement, the ratio computed is dependent on the amount andcomposition of assets recorded on the balance sheet and the amount andcomposition of off-balance sheet items, in addition to the level of capital.Historically, the Banks have increased core capital through retention ofearnings or capital infusions. To be “well capitalized” a company’s totalrisk-based capital ratio, tier 1 risk-based capital ratio and tier 1 leverageratio would be at least 10.0%, 6.0% and 5.0%, respectively. Our total risk-basedcapital ratio, tier 1 risk-based capital ratio and tier 1 leverage ratio atMarch 31, 2003 were 10.64%, 8.47% and 6.87%, respectively. These same ratios atDecember 31, 2002 were 11.02%, 8.61% and 6.96%, respectively. Total loansincreased $73.2 million compared to December 31, 2002 while total depositsincreased $87.7 million compared to the same period. Even with this increase inthe balance sheet, our ratios exceed the necessary levels to be considered wellcapitalized.

 

The principalsource of funds at the holding company level is dividends from the Banks. Thepayment of dividends is subject to restrictions imposed by federal and statebanking laws and regulations. At March 31, 2003, our subsidiary banks could pay$57.7 million in dividends to us and still remain well capitalized. Managementbelieves funds generated from the dividends from our subsidiaries and ourexisting line of credit will be sufficient to meet our current cashrequirements. However, if we continue at our current rate of internal growth,we will need to raise additional equity to remain “well capitalized”.  As discussed below, as a result of themisappropriation of funds by Mr. Gullion and the requirement that we restateour financial statements, we may be in default under our credit facility withLaSalle Bank and Gold Bank-Kansas may be in default under its credit facilitywith the FHLB.  In addition, asdiscussed in more detail in Note 9 to our consolidated financial statementsincluded elsewhere in this report, we anticipate and expect that the bankregulatory authorities will take formal supervisory actions against us and GoldBank-Kansas as a result of events surrounding Mr. Gullion’s misappropriation ofbank funds. The formal supervisory actions may include formal written agreementswith us and Gold Bank-Kansas, or cease and desist orders issued against us andGold Bank-Kansas, intended to address and remediate the deficiencies identifiedby the regulatory authorities.  Theseformal supervisory actions may include restrictions or prohibitions on thepayment of dividends by Gold Bank-Kansas and us.  It is not anticipated at this time that restrictions orprohibitions on the payment of dividends will be imposed on Gold Bank-Floridaor Gold Bank-Oklahoma.

 

*LaSalle Line of Credit.*

 

Under ourAmended and Restated Loan Agreement dated as of December 1, 1998 (“LaSalleCredit Line”) with LaSalle Bank National Association (“LaSalle Bank”), we mayborrow up to approximately $25 million at a rate of interest equal to thegreater of 3.5% per annum or LIBOR plus 1.25% per annum.  We draw on the LaSalle Credit Line from timeto time to fund various corporate matters including making contributions to ourbank subsidiaries to help them maintain their “well-capitalized” status.  As of March 31, 2003, we have nothingoutstanding under this line of credit as we used $23 million of theapproximately $47 million of net proceeds raised in our equity offeringconducted in October, 2002 to pay down the LaSalle Credit Line.

 

As a result ofthe misappropriation of funds by Mr. Gullion and the requirement that werestate our financial statements, we may be in default under the LaSalle CreditLine.  In addition, the pending formalsupervisory actions against us and Gold Bank-Kansas, which are likely to resultin loss of Gold Bank-Kansas’ “well–managed” status (and a loss of its“satisfactory” composite rating) and the issuance of formal written agreementsor cease and desist orders, may be further breaches under the LaSalle CreditLine.  If the FRB or the

 

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Commissioner takes formalsupervisory action, which we expect that they will, against us or GoldBank-Kansas, such action would be an additional default under the LaSalleCredit Line.

 

We haveapproached LaSalle Bank to request that it waive any existing defaults.  Although we anticipate that we will besuccessful in securing such a waiver, a written agreement granting this waiverhas not been obtained as of the date of this report.  We may not be able to obtain a written waiver from LaSalle Bankuntil the FRB and the Commissioner have issued final reports regarding theresults of the examinations of us and Gold Bank-Kansas.  If LaSalle Bank does not waive thesedefaults or refuses to permit us to borrow additional funds under the LaSalleCredit Line, we anticipate that we will be able to find alternative financingon reasonable terms and conditions.  Ifwe are unable to replace this line of credit with alternative financing onreasonable terms or conditions, this could have a material adverse affect onour liquidity and restrict our ability to make contributions to our banksubsidiaries to fund additional loan growth while maintaining sufficientcapital levels.

 

*ESOP Loan Agreement.*

 

Under theAmended and Restated Loan Agreement dated as of February 8, 2002 (“ESOP LoanAgreement”) of our Employees’ Stock Ownership Plan (the “ESOP”) with LaSalleBank, the ESOP may borrow up to $15 million. Loans under the ESOP Loan Agreement bear interest, at the ESOP’s option,at either LaSalle Bank’s Prime Base Rate or LIBOR plus 1.75%.  As of March 31, 2003, the ESOP hasapproximately $13.4 million outstanding under the ESOP Loan Agreement, which itborrowed to purchase our common stock. We guarantee the ESOP’s obligations under the ESOP Loan Agreement. Wecurrently do anticipate that the ESOP will need to borrow any further amountsunder the ESOP Loan Agreement.

 

The ESOP maybe in default under the ESOP Loan Agreement as a result of the misappropriationof funds by Mr. Gullion and the requirement that we restate our financialstatements.  The pending formalsupervisory actions against us and Gold Bank-Kansas, which are likely to resultin loss of Gold Bank-Kansas’ “well–managed” status (and a loss of its“satisfactory” composite rating) and the issuance of formal written agreementsor cease and desist orders, may be further breaches of the ESOP LoanAgreement  If the FRB or theCommissioner takes formal supervisory action, which we expect that they will,against us or Gold Bank-Kansas, such action would be an additional defaultunder the ESOP Loan Agreement.

 

The ESOP hasapproached LaSalle Bank to request that it waive any existing defaults.  Although we anticipate that the ESOP will besuccessful in securing such a waiver, a written agreement granting this waiverhas not been obtained as of the date of this report.  The ESOP may not be able to obtain a written waiver from LaSalleBank until the FRB and the Commissioner have issued final reports regarding theresults of the examinations of us and Gold Bank-Kansas.

 

If LaSalleBank does not waive these defaults, we anticipate that the ESOP will be able tofind alternative financing on reasonable terms and conditions.  In addition, at the current market price ofour common stock, the ESOP owns 1,498,267 unallocated shares of our commonstock which would be available to satisfy a substantial portion of the amountcurrently due under the ESOP Loan Agreement.

 

If the ESOPcannot sell the shares at a high enough price to repay the loan and the ESOP isunable to find alternative financing on reasonable terms or conditions, or atall, we would be required, as guarantor of the loan, to repay the loan.  This could have a material adverse affect onour liquidity and restrict our ability to make contributions to our banksubsidiaries to fund their additional loan growth while maintaining sufficientcapital levels.

 

*Federal Home Loan Bank of Des Moines.*

 

As of March31, 2003, Gold Bank-Kansas had approximately $16.0 million outstanding underthe Agreement for Advances, Pledge and Security Agreement dated as of January24, 1989, as amended (“FHLB-Des Moines Credit Line”) between Gold Bank-Kansasand Federal Home Loan Bank of Des Moines (“FHLB-Des Moines”).  As a result of the misappropriation of fundsby Mr. Gullion and the requirement that we restate our financial statements,Gold Bank-Kansas may be in default under the FHLB-Des Moines Credit Line.  In addition, the

 

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pending formal supervisory actionsagainst us and Gold Bank-Kansas, which are likely to result in loss of GoldBank-Kansas’ “well–managed” status (and a loss of its “satisfactory” compositerating) and in the issuance of formal written agreements or cease and desistorders, may be further breaches under the FHLB-Des Moines Credit Line.

 

We plan toapproach FHLB-Des Moines to request that it waive the defaults.  However, if FHLB-Des Moines does not waivethese defaults or refuses to permit Gold Bank-Kansas to borrow additional fundsunder the FHLB-Des Moines Credit Line, we anticipate that Gold Bank-Kansas willbe able to find alternative financing on reasonable terms and conditions.  If Gold Bank-Kansas is unable to replacethis line of credit with alternative financing on reasonable terms orconditions this could have a material adverse affect on its liquidity.

 

*Purchase of Gullion Stock.*

 

We are in theprocess of negotiating through Mr. Gullion’s attorney the purchase of all orpart of Mr. Gullion’s shares of our common stock at an appropriate price topartially satisfy his restitution obligations to us and to avoid the sale byhis secured lender of his shares in order to satisfy his indebtedness to thatlender.  See “Item 1 — Business —Summary of Recent Events and Restatement of Financial Statements  — Recent Events” in the 2002 AnnualReport.  A significant portion of Mr.Gullion's shares are subject to a right of first refusal in favor of Mr. AllenPeterson, one of our directors, and Mr. William Wright, one of our formerdirectors.  We would not be able topurchase Mr. Gullion's shares until the time period for exercising the right offirst refusal has expired or been waived. Although this purchase would use our capital resources, the Board believeshaving us purchase the shares is preferable to the alternative of Mr. Gullion,or his secured lender, liquidating a large block of shares by selling into themarket and possibly depressing our stock price.  We believe that we have adequate sources of internal capital topay for such purchase.  Although theseshares would initially be held as treasury shares, we may in the future resellall or part of these shares.

 

*BOLI Policies*

 

Our Banksubsidiaries have purchased bank-owned life insurance (“BOLI”) policies withdeath benefits payable to the Banks on the lives of certain officers. Thesesingle premium, whole-life policies provide favorable tax benefits, but areilliquid investments. Federal guidelines limit a bank’s aggregate investment inBOLI to 25% of the bank’s capital and surplus, and its aggregate investment inBOLI policies from a single insurance company to 15% of the Bank’s capital andsurplus. All of the Banks’ BOLI investments comply with federal guidelines. Asof March 31, 2003, Gold Bank-Kansas had $43.3 million of BOLI (equal to 24.4%of its capital and surplus), Gold Bank-Oklahoma had $20.8 million of BOLI(equal to 24.5% of its capital and surplus) and Gold Bank-Florida had $13.2million of BOLI (equal to 24.4% of its capital and surplus). In January 2003,Gold Bank-Kansas, Gold Bank-Oklahoma and Gold Bank-Florida increased their BOLIinvestments by $14 million, $4 million and $2 million, respectively.  The aggregate BOLI investment of each Bankis now just below the maximum regulatory limit.  The Banks monitor the financial condition and credit rating ofeach of the three life insurance companies that issued the BOLI policies. Webelieve that these BOLI investments will not have any significant impact on thecapital or liquidity of our Bank subsidiaries.

 

*CompuNet Activities*

 

CompuNetEngineering, Inc., which was acquired in March 1999, provides informationtechnology, e-commerce services and networking solutions for banks and otherbusinesses. Under current Federal Reserve regulations, the data processingactivities of a bank holding company and its subsidiaries must be doneprimarily for financial companies, and non-financial data processing activitiesmust be limited to 30% of the bank holding company’s total consolidated annualdata processing revenues. When we acquired CompuNet, the aggregate dataprocessing activities of us and CompuNet complied with this 30% limitation.

 

On December21, 2000, the Federal Reserve published a proposed regulation that would permita financial holding company to generate up to 80% of its consolidated dataprocessing revenue from non-financial data processing activities. The proposedregulation limits the investment of a financial holding company in such dataprocessing activities to 5% of the financial holding company’s tier 1 capital.The comment period on the proposed regulation expired on February 16, 2001.

 

In 2001,CompuNet acquired the assets of Information Products, Inc., which providestechnology services, including LAN, WAN, product support, telecommunicationline monitoring, hardware, maintenance and systems design and installationacross all industry sectors. This acquisition significantly increased theamount of

 

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CompuNet’s non-financial dataprocessing activities. For the quarter ended March 31, 2003 approximately 60%of CompuNet’s revenues were non-financial in nature, and thus not in compliancewith the Federal Reserve’s current 30% limitation. This will require us to takecorrective action to bring CompuNet’s activities within federal regulatoryrequirements.

 

This could beaccomplished by increasing CompuNet’s revenues from financial data processingactivities, decreasing CompuNet’s revenues from non-financial data processingactivities, converting CompuNet into a merchant banking investment (which maynot be available if we are required to divest our merchant bankinginvestments), or selling part or all of CompuNet’s business to an unaffiliatedthird party, or other curative action. Due to the uncertainty involved in our continued ownership of CompuNet,we currently intend to negotiate with potential buyers of ComputNet.

 

**Impactof Recently Issued Accounting Standards**

 

In June 2002,the Financial Accounting Standards Board (the “FASB”) issued Statement No. 146,“Accounting for Costs Associated with Exit or Disposal Activities”.  The provisions of this Statement areeffective for exit or disposal activities initiated after December 31,2002.  We do not believe that theadoption of Statement No. 146 will have a significant impact on ourconsolidated financial statements.

 

In October2002, the FASB issued Statement No. 147, “Acquisitions of Certain FinancialInstitutions”.  This Statement providesguidance on the accounting for the acquisition of a financial institution andapplies to all acquisitions except those between two or more mutualenterprises.  Those transitionprovisions were effective on October 1, 2002. The scope of Statement No. 147 was amended to include long-termcustomer-relationship intangible assets such as depositor- andborrower-relationship intangible assets and credit cardholder intangibleassets.  The adoption of Statement No.147 did not have a significant impact on our consolidated financial statements.

 

In November2002, the FASB issued Interpretation No. 45, “Requirements for GuaranteesIncluding Indirect Guarantees of Indebtedness of Others”.  This Interpretation elaborates on thedisclosures to be made by a guarantor in its interim and annual financialstatements about its obligations under certain guarantees that it hasissued.  It also clarifies that aguarantor is required to recognize, at the inception of a guarantee, aliability for the fair value of the obligation undertaken in issuing theguarantee.  The disclosure requirementsin this Interpretation are effective for financial statements of interim orannual periods ending after December 15, 2002. The adoption of Interpretation No. 45 did not have a significant impacton our consolidated financial statements.

 

In December2002, the FASB issued Statement No. 148, “Accounting for Stock-BasedCompensation - Transition and Disclosure”. This Statement, which amends Statement No. 123, “Accounting forStock-Based Compensation”, provides alternative methods of transition for avoluntary change to the fair value based method of accounting for stock-basedemployee compensation.  In addition, itrequires more prominent and more frequent disclosure in financial statementsabout the effects of stock-based compensation.

 

In January2003, the FASB issued Interpretation No. 46, “Consolidation of VariableInterest Entities”.  This Interpretationof Accounting Research Bulletin No. 51, Consolidated Financial Statements,elaborates on the financial statement disclosures to be made by enterprisesinvolved with variable interest entities, including requiring consolidation ofentities in which an enterprise has a controlling financial interest that isnot controlled through voting interests. The requirements in this Interpretation are effective for variableinterest entities created after January 31, 2003 and the first fiscal orinterim period beginning after June 15, 2003 for variable interest entitiesacquired before that date.  We do notbelieve that the adoption of Interpretation No. 46 will have a significantimpact on our consolidated financial statements.

 

We adoptedSFAS No. 144 “Accounting for the Impairment of Disposal of Long-Lived Assets”on January 1, 2002. The Statement established a single accounting model for alllong-lived assets to be disposed of by sale, which is to measure a long-livedasset classified as held for sale at the lower of its carrying amount or fairvalue less cost to sell and to cease depreciation. The Statements alsoestablishes criteria to determine when a long-lived

 

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asset is held for sale andprovides additional guidance on accounting for such specific circumstances. Theadoption of the new Statement did not have a significant effect on our earningsor financial position.

 

**CriticalAccounting Policies**

 

Our accountingpolicies are fundamental to understanding management’s discussion and analysisof results of operations and financial condition. Many of our accountingpolicies require significant judgment regarding valuation of assets and liabilities.A summary of significant accounting policies is listed in the first note to theconsolidated financial statements in the 2002 Annual Report. Criticalaccounting policies are both important to the portrayal of our financialcondition and results, and require management’s most difficult, subjective orcomplex judgments, often as a result of the need to make estimates about theeffect of matters that are inherently uncertain.

 

*Allowance for Loan Losses*

 

Our mostcritical accounting policy relates to the allowance for loan losses andinvolves significant management valuation judgments. We perform periodic andsystematic detailed reviews of our lending portfolio to assess overallcollectability. The level of the allowance for loan losses reflects our estimateof the collectability of the loan portfolio. Further discussion of themethodologies used in establishing this reserve is contained in theProvision/Allowance for Loan Losses section of this report.

 

We makevarious assumptions and judgments about the collectability of our loanportfolio and provide an allowance for losses based on a number of factors. Ifour assumptions are wrong, our allowance for loan losses may not be sufficientto cover loan losses. We may have to increase the allowance in the future.Material additions to our allowance for loan losses would have a materialadverse effect on our net earnings.

 

*Impairment of Goodwill Analysis*

 

As required bythe provisions of SFAS 142, we completed our initial valuation analysis todetermine whether the carrying amounts of our reporting units were impaired.Our initial impairment review indicated that there was no impairment ofgoodwill as of December 31, 2002. However, as required by SFAS 142, we will berequired to review the goodwill for impairment at least annually or morefrequently based upon facts and circumstances related to a particular reportingunit.

 

The fair valueof our non-bank financial subsidiaries (Gold Capital Management and CompuNetEngineering) fluctuates significantly based upon, among other factors, the netoperating income of these subsidiaries. If these subsidiaries experience asustained deterioration in their cash flow from operations then we may have torecord a goodwill impairment charge in the future.

 

During 2002,CompuNet Engineering did not earn a majority of its revenue from providingservices to financial institutions.  Asa result, we may be required under the Bank Holding Company Act to divest ourinterest in CompuNet Engineering. See “— Financial Condition—Liquidity andCapital Resources – CompuNet Activities” below.   In the event that CompuNet Engineering were sold for less thanthe carrying value of its associated assets and goodwill, we would be requiredto record a goodwill impairment charge. The goodwill associated with CompuNet Engineering was $4.6 million atMarch 31, 2003.

 

In addition,if we were to lose our “well–managed” status or our composite rating is not“satisfactory”, as discussed in Note 9 “ Proceedings — Internal Investigationand Regulatory Examination and Inquiries” in the accompanying financialstatements included elsewhere in this report, we may be required to ceaseengaging, directly or indirectly, in all activities other than thosepermissible for a bank holding company without financial holding companystatus.  We currently do not have anygoodwill recorded with respect to any of our subsidiaries that are conductingsuch activities.  However, if we wererequired to cease engaging in such activities, we might incur a loss inconnection with the liquidation or sale of the subsidiaries conducting suchactivities.  We are unable at this timeto estimate the magnitude of such potential losses.  The carrying value of the assets in these businesses as of March31, 2003 was approximately $12.6 million.

 

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*Deferred Income Taxes*

 

SFAS 109,Accounting for Income Taxes, establishes financial accounting and reportingstandards for the effect of income taxes. The objectives of accounting forincome taxes are to recognize the amount of taxes payable or refundable for thecurrent year and deferred tax liabilities and assets for the future taxconsequences of events that have been recognized in an entity’s financialstatements or tax returns. Judgement is required in assessing the future taxconsequences of events that have been recognized in our financial statements ortax returns. Fluctuations in the actual outcome of these future taxconsequences could materially impact our financial position or our results ofoperations.

 

**ForwardLooking Information and Statements**

 

Theinformation included or incorporated by reference in this report containscertain forward-looking statements with respect to the financial condition,results of operations, plans, objectives, future financial performance andbusiness of us and our subsidiaries, including, without limitation:

 

•                                          statementsthat are not historical in nature

 

•                                          statementspreceded by, followed by or that include the words “believes,” “expects,”“may,” “will,” “should,” “could,” “anticipates,” “estimates,” “intends” orsimilar expressions

 

•                                          statementsregarding the timing of the closing of the branch sales

 

Forward-lookingstatements are not guarantees of future performance or results. They involverisks, uncertainties and assumptions. Actual results may differ materially fromthose contemplated by the forward-looking statements due to, among others, thefollowing factors:

 

•                                          resultsof the joint regulatory examination of Gold Bank-Kansas and the examination ofus

 

•                                          inabilityto obtain waivers of defaults under our credit facilities or find alternativefinancing

 

•                                          transitionand strategies of new management

 

•                                          changesin interest margins on loans

 

•                                          changesin allowance for loan losses

 

•                                          changesin the interest rate environment

 

•                                          theeffect of a change in the management rating of Gold Bank-Kansas

 

•                                          competitivepressures among financial services companies may increase significantly

 

•                                          generaleconomic conditions, either nationally or in our markets, may be less favorablethan expected

 

•                                          legislativeor regulatory changes may adversely affect the business in which we and oursubsidiaries are engaged

 

•                                          technologicalchanges may be more difficult or expensive than anticipated

 

•                                          changesmay occur in the securities markets

 

We havedescribed under “Factors That May Affect Future Results of Operations,Financial Condition or Business” additional factors that could cause actualresults of operations, business or financial condition to be

 

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materially different from thosedescribed in the forward-looking statements. Other factors that we have notidentified in this report could also have this effect. You are cautioned not toput undue reliance on any forward-looking statement which speaks only as of thedate it was made.

 

**FactorsThat May Affect Future Results of Operations, Financial Condition or Business**

 

We haveidentified important risks and uncertainties that could affect the our resultsof operations, business or financial condition and that could cause them todiffer materially from our historical results of operations, financialcondition or business, or those contemplated by forward-looking statements madeherein or elsewhere, by, or on behalf of, us. Factors that could cause orcontribute to such differences include, but are not limited to, those factorsdescribed below.

 

***InternalInvestigations and Regulatory Examinations.***  On March 17, 2003, Malcolm M. Aslin replacedMichael W. Gullion as our Chief Executive Officer due to an on-goinginvestigation into certain improper conduct that is summarized in “Item 1 —Business — Summary of Recent Events and Restatement of Financial Statements”and described more fully in “Item 13 — Certain Relationships and Related Transactions”in the 2002 Annual Report.  The FRB-KCand the Commissioner have completed an investigation into these transactions aspart of their regularly scheduled examinations.  See Note 9 of the consolidated financial statements included inthis report.  In addition, the SEC isconducting an informal investigation and Nasdaq is conducting an inquiry intothese matters.

 

On April 9,2003, the Audit Committee met with the bank regulators to discuss theanticipated results of their examinations. At the meeting, we were advised by the bank regulators of the violationsof law and the CAMELS ratings that will likely be included in the forthcomingreports of examinations.  The regulatorsidentified noncompliance or deficiencies in regard to Regulation H (informationtechnology), Regulation O (loans to directors and officers), Section 23A of theFederal Reserve Act (transactions with affiliates) and the Bank SecrecyAct.  Based upon the discussions duringthis meeting, we expect that Gold Bank-Kansas will lose its “well–managed”status (and its “satisfactory” composite rating) and formal supervisory actionsby the regulators will be taken against Gold Bank-Kansas and us.  The formal supervisory actions may includeformal written agreements with us and Gold Bank-Kansas, or cease and desistorders issued against us and Gold Bank-Kansas, intended to address andremediate the deficiencies identified by the regulators.

 

Until theFRB-KC determines that we have corrected the conditions that resulted in theloss of the Gold Bank-Kansas’ “well–managed” status, we may not, directly orindirectly, or through any of our subsidiaries that are not banks orsubsidiaries of banks, engage in any additional financial activities other thanthose authorized for bank holding companies without financial holding companystatus, without prior written approval of the FRB-KC.  If Gold Bank-Kansas does not become “well–managed” or itscomposite rating does not become “satisfactory” within 180 days after receiptof the Notice from the FRB-KC, the FRB-KC may take additional actions againstus, including requiring us to divest our ownership of our subsidiary banks orcease engaging, directly or indirectly, in all activities other than thosepermissible for a bank holding company without financial holding companystatus.  We do not expect to be requiredto divest ownership of our subsidiary banks.

 

***Loss of keypersonnel could have an adverse effect on our operations.***  The loss of certain key personnel couldadversely affect our operations. Our success depends in large part on theretention of a limited number of key persons, including: Malcolm M. Aslin, ourPresident and Chief Executive Officer, and Rick J. Tremblay, our Executive VicePresident and Chief Financial Officer. We will likely undergo a difficult transition period if we lose theservices of these individuals.  Inrecognition of this risk, we own, and are the beneficiary of, insurancepolicies on the lives of these key employees and have entered into anemployment agreement with Mr. Aslin.

 

We also placegreat value on the experience of the presidents of our subsidiary banks and thecommunity bank presidents in each of our markets and on their relationshipswith the communities they serve.  Theloss of these key persons could negatively impact the affected bankinglocations.  We may not be able to retainour current key personnel or attract additional qualified key persons asneeded.

 

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***We may not be ableto maintain our growth rate.***  It may be difficult for us to maintain ourrapid rate of growth.  The rural marketareas we now serve offer more limited opportunities for growth than ourmetropolitan markets.  We believe futuregrowth in our revenues and net earnings will depend primarily on our internalgrowth in the metropolitan markets where we are located.  Other financial institutions in thesemetropolitan markets also compete intensely for assets and deposits.  This competition may adversely affect ourability to profitably grow our asset and deposit base.

 

During theperiod from 1996 to 2000, we grew significantly through acquisitions.  While in the future we may supplement ourinternal growth through future acquisitions in metropolitan markets, primarilyin the Midwest and the west coast of Florida, there is great competition forsuch acquisition candidates. We may not be successful in identifying, orevaluating risks inherent in, any such acquisition candidates or be able toacquire such acquisition candidates on terms we feel are favorable.

 

Our objectivesfor earnings growth, return on equity and return on assets have been achievedprimarily through extensive growth in loans in Kansas and Florida. Satisfyingthese objectives in the future will require increasing amounts of capital tomeet regulatory requirements.  We maynot be able to obtain such capital in adequate amounts or on attractive terms.

 

***Our allowance forloan losses may not be adequate.***  Our allowance for loan losses may not beadequate to cover actual loan losses. As a lender, we are exposed to the risk that our customers will beunable to repay their loans according to their terms and that any collateralsecuring the payment of their loans may not be sufficient to coverrepayment.  Credit losses are inherentin the lending business and could have a material adverse effect on ouroperating results.  Additionally,approximately 88.1% of our loan portfolio on March 31, 2003 consisted ofconstruction loans, agricultural loans, loans secured by commercial realestate, and commercial business loans. These loans generally involve a greaterdegree of risk of nonpayment or late payment than home equity loans orresidential mortgage loans and carry higher loan balances.  The risk of loss will vary with generaleconomic conditions, the type of loan being made, the creditworthiness of theborrower over the term of the loan and the quality and value of the collateralin the case of collateralized loans, among other things. Our credit risk withrespect to our real estate and construction loan portfolio relates principallyto the general creditworthiness of individuals and the value of real estateserving as security for the repayment of such loans. Our credit risk withrespect to our commercial and consumer installment loan portfolio relates principallyto the general creditworthiness of businesses and individuals within our localmarkets.  Our credit risk with respectto our agricultural loan portfolio relates, among other factors, to commodityprices and weather patterns.

 

As we havecompleted numerous acquisitions from 1996 through 2000 that significantlyenhanced our growth, a significant portion of our existing loan portfolio wasnot originally underwritten by us, but was added through these acquisitions.While we had the opportunity to review the loan portfolios of the banks weacquired before completing the transactions and have conformed the credit andunderwriting policies and procedures of these banks to ours following theacquisitions, these loans may not have undergone the same level of rigorousanalysis and review at inception as loans that we originate, and may not havethe level and quality of supporting documentation in the loan files as ourpolicies require. Therefore, these acquired loans are subject to greater riskthan if we had originally underwritten these loans ourselves.

 

We makevarious assumptions and judgments about the collectability of our loanportfolio and provide an allowance for losses based on a number offactors.  If our assumptions are wrong,our allowance for loan losses may not be sufficient to cover our loanlosses.  We may have to increase theallowance in the future. Material additions to our allowance for loan losseswould have a material adverse effect on our net earnings.

 

***Changes in interestrates could adversely affect profitability.***  We may be unable to manage interest raterisk that could reduce our net interest income.  Like other financial institutions, our results of operations areimpacted principally by net interest income, which is the difference betweeninterest earned on loans and investments and interest expense paid on depositsand other borrowings.  We cannot predictor control changes in interest rates. Regional and local economic conditionsand the policies of regulatory authorities, including monetary policies of theFederal Reserve, affect interest income and interest expense.  Interest rate cuts by the Federal Reservethroughout 2002 and 2001 have generally reduced our net interest income.  While we continually take

 

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measures intended to manage therisks from changes in market interest rates, including interest rate swapagreements, changes in interest rates can still have a material adverse effecton our profitability.

 

Although thishas not been the case to date, the recently discovered defalcations by Mr.Gullion may result in a reputational or credibility risk that could require ourbanks to pay higher rates for deposits.

 

***Funding oursubstantial cash requirements with dividends from our bank subsidiaries willreduce the capital levels of the banks and thus their ability to grow.***  We are a separate legal entity from oursubsidiaries and do not have significant operations of our own. We dependprimarily on dividends we receive from our subsidiaries, which may be limitedby statute and regulations, and our cash and liquid investments to paydividends on our common stock and to pay our operating expenses. In addition,we had an aggregate outstanding amount of $113.3 million in subordinated debtand trust preferred securities, as compared to total equity of $231.7 millionoutstanding, as of March 31, 2003.  Ourannual interest payments due on these borrowings were approximately $9.1million as of March 31, 2003.  In thecurrent interest rate environment, the effect of our interest rate swapagreements will be to reduce such interest payments, although one of the swapagreements has been called and terminated by our counterparty.  We are also dependent on dividends from ourbank subsidiaries to service these borrowings, and ultimately for principalrepayment at maturity, as well as to service our line of credit.  The FRB-KC and the Commissioner have theauthority to prohibit or limit the payment of dividends by our bankingsubsidiaries to us and the FRB-KC has the authority to prohibit or limit thepayment of dividends by us to our stockholders.  The formal regulatory actions that we anticipate will be taken byregulatory authorities as a result of the recent examination of GoldBank-Kansas may include restrictions or prohibitions on the payment ofdividends by Gold Bank-Kansas to us or by us to our shareholders.

 

Even if oursubsidiaries are able to generate sufficient earnings to pay dividends to us,their boards of directors may decide to retain a greater portion of theirearnings to maintain existing capital or achieve additional capital necessaryin light of the financial condition, asset quality or regulatory requirementsof the subsidiaries or other business considerations. The extent to which ourbank subsidiaries pay us a significant portion of their retained earnings asdividends to fund our substantial cash requirements may also reduce the abilityof the bank subsidiaries to grow while maintaining regulatory capital ratios at“well capitalized” standards set by federal regulators.

 

***Loss of liquiditydue to breaches under our credit facilities.***  In connection with the pending formalsupervisory actions against us and Gold Bank-Kansas and the requirement that werestate our financial statements as a result of misappropriation of funds byMr. Gullion, we may be in default under our LaSalle Credit Line and ourFHLB-Des Moines Credit Line.  As ofMarch 31, 2003, Gold Bank-Kansas owed approximately $16.0 million under theFHLB-Des Moines Credit Line.  Our ESOPmay also be in default under its credit facility with LaSalle Bank, which weguarantee.  As of March 31, 2003, theESOP owed approximately $13.4 million under its credit facility.  See “— Capital and Liquidity.”

 

If we areunable to replace these lines of credit with alternative financing onreasonable terms or conditions or if the unallocated shares of common stockowned by the ESOP are not sufficient to repay the ESOP’s loan and we must payoff the ESOP’s loan, this could have a material adverse affect on our liquidityand restrict our ability to make contributions to our bank subsidiaries to fundadditional loan growth while maintaining sufficient capital levels.

 

***Local economicconditions could adversely affect our operations.***  Changes in the local economic conditionscould adversely affect our loan portfolio and results of operations. Oursuccess depends to a certain extent upon the general economic conditions of thelocal markets that we serve.  Unlikelarger banks that are more geographically diversified, we provide banking andfinancial services to customers in those markets in Kansas, Oklahoma, Missouriand Florida, including a number of rural markets, where our subsidiary banksoperate or are expected to operate.  Ourcommercial, agricultural, real estate and construction loans, and the abilityof the borrowers to repay these loans and the value of the collateral securingthese loans, are impacted by the local economic conditions. Favorable economicconditions may not continue in such markets.

 

***Our ability to paydividends on our common stock is limited by the ability of our subsidiary banksto pay dividends under applicable law and by contracts relating to our trustpreferred securities.***  Our ability to pay dividends on our common stock largely dependson our receipt of dividends from our subsidiary banks.  The

 

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amount of dividends that oursubsidiary banks may pay to us is limited by federal and state banking laws andregulations.  As a financial holdingcompany, our subsidiary banks are required to maintain capital sufficient tomeet the “well capitalized” standard set by the regulators and will be able topay dividends to us only so long as their capital continues to exceed these levels.  We or our banks may decide to limit thepayment of dividends even when we or they have the legal ability to pay them inorder to retain earnings for use in our or our banks’ business.  Under contracts relating to our trustpreferred securities, we are prohibited from paying dividends on our commonstock if we have not made required payments on, or have elected to deferpayments of interest on, the junior subordinated debentures that support ourtrust preferred securities or if an event of default has occurred and iscontinuing with respect to such debentures. Substantially similar contractualprovisions related to the trust preferred securities for Gold Bank-Floridalimit the payment of dividends by our Florida intermediate holding company.

 

***Our shareholderrights plan and provisions in our articles of incorporation and our bylaws maydelay or prevent an acquisition of us by a third party.***  Our board of directors has implemented ashareholder rights plan.  The rights,which are attached to our shares and trade together with our common stock, havecertain anti-takeover effects.  The planmay discourage or make it more difficult for another party to complete a mergeror tender offer for our shares without negotiating with our board of directorsor to launch a proxy contest or to acquire control of a larger block of ourshares.  If triggered, the rights willcause substantial dilution to a person or group that attempts to acquire uswithout approval of our board of directors, and under certain circumstances, therights beneficially owned by the person or group may become void. In addition,our executive officers may be more likely to retain their positions with us asa result of the plan, even if their removal would be beneficial to shareholdersgenerally.

 

Our articlesof incorporation and our bylaws contain provisions, including a staggered boardand advance notice of stockholder proposals and board nominees, that make itmore difficult for a third party to gain control or acquire us without theconsent of our board of directors. These provisions also could discourage proxycontests and may make it more difficult for dissident shareholders to electrepresentatives as directors and take other corporate actions. These provisionsof our governing documents may also have the effect of delaying, deferring orpreventing a transaction or a change in control that might be in the bestinterest of our shareholders.

 

***ITEM 3:                QUANTITATIVE AND QUALITATIVEDISCLOSURES ABOUT MARKET RISK***

 

Asset/liabilitymanagement refers to management’s efforts to minimize fluctuations in netinterest income caused by interest rate changes. This is accomplished bymanaging the repricing of interest rate sensitive interest-earning assets andinterest-bearing liabilities. An interest rate sensitive balance sheet item isone that is able to reprice quickly, through maturity or otherwise. Controllingthe maturity or repricing of an institution’s liabilities and assets in orderto minimize interest rate risk is commonly referred to as gap management. Closematching of the repricing of assets and liabilities will normally result inlittle change in net interest income when interest rates change. A mismatchedgap position will normally result in changes in net interest income as interestrates change.

 

While we havenot historically used interest rate swaps or other derivative instruments tomanage interest rate exposure, in August 2002 we entered into three interestrate swap agreements with an aggregate notional amount of $82.5 million.  The swaps effectively converted our fixedinterest rate obligations under our three outstanding series of trust preferredsecurities to variable interest rate obligations, decreasing the assetsensitivity of our balance sheet by more closely matching our variable rate assetswith variable rate liabilities.  Eachswap has a notional amount equal to the outstanding principal amount of therelated trust preferred securities, together with the same payment dates,maturity date and call provisions as the related trust preferredsecurities.  Under each of the swaps, wepay a variable rate equal to a spread over 90-day LIBOR, adjusted quarterly,and receive a fixed rate equal to the interest we are obligated to pay on therelated trust preferred securities.

 

The $28.7million notional amount swap agreement was called by the counter-party andterminated on April 7, 2003.  Under theswap agreement, no payments were due between the parties and no gain or losswas recognized by us.  We do not expectto replace this terminated agreement. The remaining swap agreements are also callable by the counterpartyprior to their respective maturity dates.

 

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Along withinternal gap management reports, we and our subsidiary banks use an asset/liabilitymodeling service to analyze each bank’s current gap position. The systemsimulates the banks’ asset and liability base and projects future net interestincome results under several interest rate assumptions. We strive to maintainan aggregate gap position such that each 100 basis point change in interestrates will not affect net interest income by more than 10%.

 

The followingtable indicates that, at March 31, 2003, in the event of a sudden and sustainedincrease in prevailing market rates, our net interest income would be expectedto increase, while a decrease in rates would indicate a decrease in netinterest income.

 
| **Changes in Interest Rates** |   | **Net  Interest Income** |        | **Actual  Change** |   | **Percent  Change Actual** |   |
|-------------------------------|--------|--------------------------|-------------|--------------------|--------|----------------------------|--------|
|                          |   |                     |        |               |   |                       |   |
| 200 basis point rise          |   | $                        | 143,514,000 |               | $      | 9,594,000                  |   | 7.16 | % |
| 100 basis point rise          |   | $                        | 139,307,000 |               | $      | 5,387,000                  |   | 4.02 | % |
| Base Rate Scenario            |   | $                        | 133,920,000 |               | — |                       | — |   |
| 50 basis point decline        |   | $                        | 132,458,000 |               | $      | (1,462,000                 | )      | (1.09% | ) |
| 100 basis point decline       |   | $                        | 129,988,000 |               | $      | (3,932,000                 | )      | (2.94% | ) |

 

***ITEM 4:                CONTROLSAND PROCEDURES***

 

Within the90-day period prior to the filing of this report, an evaluation was carried outunder the supervision and with the participation of our management, includingour Chief Executive Officer and Chief Financial Officer, of the effectivenessof the design and operation of our disclosure controls and procedures (asdefined in Rule 13a-14(c) under the Securities Exchange Act of 1934). Basedupon that evaluation, the Chief Executive Officer and Chief Financial Officerconcluded that the design and operation of these disclosure controls andprocedures were effective. No significant changes were made in our internalcontrols or in other factors that could significantly affect these controlssubsequent to the date of their evaluation.

 

**PARTII    OTHER INFORMATION**

 

***ITEM 1:                LEGALPROCEEDINGS***

 

For adiscussion of legal proceedings, see Note 9 “Legal Proceedings” to theconsolidated financial statements contained in Part I, Item I of this report.

 

***ITEM 2:                CHANGESIN SECURITIES AND USE OF PROCEEDS***

 

None

 

***ITEM 3:                DEFAULTSUPON SENIOR SECURITIES***

 

None

 

***ITEM 4:                SUBMISSIONOF MATTERS TO A VOTE OF SECURITY-HOLDERS***

 

None

 

***ITEM 5:                OTHERINFORMATION***

 

None

 

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***ITEM 6                 EXHIBITSAND REPORTS ON FORM 8-K***

 

(a)           Exhibits Required tobe Filed by Item 601 of Regulation S-K

 
| **Exhibit  Number** |   | **Description**                                                                                                                                                                                                                                                                                                                  |
|---------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                                                                                                                                                                                                                                             |
| *10.1               |   | Amended and  Restated Employment Agreement between Gold Banc Corporation, Inc. and Malcolm  M. Aslin dated March 28, 2003. (Previously filed as Exhibit 10.1 to our  Annual Report on Form 10-K filed with the SEC on March 31, 2003 for the  period ended December 31, 2002 and the same is incorporated herein by  reference.) |
|                |   |                                                                                                                                                                                                                                                                                                                             |
| 99.1                |   | Certification  of Chief Executive Officer of Gold Banc Corporation, Inc. dated May 15, 2003,  which is accompanying this Quarterly Report on Form 10-Q for the three months  ended March 31, 2003 and is not treated as filed in reliance on the SEC’s  Interim Guidance Regarding Filing Procedures.                       |
|                |   |                                                                                                                                                                                                                                                                                                                             |
| 99.2                |   | Certification  of Chief Financial Officer of Gold Banc Corporation, Inc. dated May 15, 2003,  which is accompanying this Quarterly Report on Form 10-Q for the three months  ended March 31, 2003 and is not treated as filed in reliance on the SEC’s  Interim Guidance Regarding Filing Procedures.                       |
|                |   |                                                                                                                                                                                                                                                                                                                             |
|                |   | (b)                                                                                                                                                                                                                                                                                                                              | Reports on  Form 8-K |
|                |   |                                                                                                                                                                                                                                                                                                                             |   |
|                |   | We filed the  following Current Reports on Form 8-K during the first quarter of 2003:                                                                                                                                                                                                                                            |
|                |   |                                                                                                                                                                                                                                                                                                                             |
| •              |   | On March 5,  2003, we filed a Current Report on Form 8-K announcing the execution of an  agreement for the sale of the two Gold Bank-Oklahoma branch locations.                                                                                                                                                                  |
|                |   |                                                                                                                                                                                                                                                                                                                             |
| •              |   | On March 14,  2003, we filed a Current Report on Form 8-K announcing that Malcolm M. Aslin  replaced Michael W. Gullion as our Chief Executive Officer, effective March  17, 2003 due to irregularities in his personal bank account.                                                                                            |

 

**SIGNATURES**

 

Pursuant tothe requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 
|                | **GOLD BANC CORPORATION, INC.**                       |
|---------------------|-------------------------------------------------------|
|                |                                                  |
|                |                                                  |
|                | By:                                                   | /s/ Rick J.  Tremblay |   |
|                | Rick J.  Tremblay                                     |
|                | Executive  Vice President and Chief Financial Officer |
|                |                                                  |
|                |                                                  |
| Date: May  15, 2003 |                                                  |

 

(Authorized officer andprincipal financial officer of the registrant)

 

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**CERTIFICATION PURSUANT TORULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934,AS ADOPTED PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

 

I, Malcolm M.Aslin, Chief Executive Officer of Gold Banc Corporation, Inc. (the“registrant”) certify that:

 

2.                                       I have reviewedthe registrant’s Quarterly Report on Form 10-Q for the three months ended March31, 2003 (this “report”);

 

3.                                       Based on myknowledge, this report does not contain any untrue statement of a material factor omit to state a material fact necessary to make the statements made, inlight of the circumstances under which such statements were made, notmisleading with respect to the period covered by this report;

 

4.                                       Based on myknowledge, the financial statements, and other financial information includedin this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this report;

 

5.                                       The registrant’sother certifying officers and I are responsible for establishing andmaintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

 

(a)                                  designed suchdisclosure controls and procedures to ensure that material information relatingto the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which thisreport is being prepared;

 

(b)                                 evaluated theeffectiveness of the registrant’s disclosure controls and procedures as of adate within 90 days prior to the filing date of this report (the “EvaluationDate”); and

 

(c)                                  presented in thisreport our conclusions about the effectiveness of the disclosure controls andprocedures based on our evaluation as of the Evaluation Date;

 

6.                                       The registrant’sother certifying officers and I have disclosed, based on our most recentevaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

 

(a)                                  all significantdeficiencies in the design or operation of internal controls which couldadversely affect the registrant’s ability to record, process, summarize andreport financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

(b)                                 any fraud, whether ornot material, that involves management or other employees who have asignificant role in the registrant’s internal controls; and

 

7.                                       The registrant’sother certifying officers and I have indicated in this report whether or notthere were significant changes in internal controls or in other factors thatcould significantly affect internal controls subsequent to the date of our mostrecent evaluation, including any corrective actions with regard to significantdeficiencies and material weaknesses.

 
|                | By:                                    | /s/ Malcolm  M. Aslin |   |
|---------------------|----------------------------------------|-----------------------|--------|
|                | Malcolm M.  Aslin                      |
| Date: May  15, 2003 | President  and Chief Executive Officer |

 

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**CERTIFICATION PURSUANT TO**

**RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF1934,AS ADOPTED PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

 

I, Rick J. Tremblay, ExecutiveVice President and Chief Financial Officer of Gold Banc Corporation, Inc. (the“registrant”) certify that:

 

1.                                       I have reviewedthis Quarterly Report on Form 10-Q for the three months ended March 31, 2003(this “report”);

 

2.                                       Based on myknowledge, this report does not contain any untrue statement of a material factor omit to state a material fact necessary to make the statements made, inlight of the circumstances under which such statements were made, notmisleading with respect to the period covered by this report;

 

3.                                       Based on myknowledge, the financial statements, and other financial information includedin this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this report;

 

4.                                       The registrant’sother certifying officers and I are responsible for establishing andmaintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

 

(a)                                  designed suchdisclosure controls and procedures to ensure that material information relatingto the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which thisreport is being prepared;

 

(b)                                 evaluated theeffectiveness of the registrant’s disclosure controls and procedures as of adate within 90 days prior to the filing date of this report (the “EvaluationDate”); and

 

(c)                                  presented in thisreport our conclusions about the effectiveness of the disclosure controls andprocedures based on our evaluation as of the Evaluation Date;

 

5.                                       The registrant’sother certifying officers and I have disclosed, based on our most recentevaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

 

(a)                                  all significantdeficiencies in the design or operation of internal controls which couldadversely affect the registrant’s ability to record, process, summarize andreport financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

(b)                                 any fraud, whether ornot material, that involves management or other employees who have asignificant role in the registrant’s internal controls; and

 

6.                                       The registrant’sother certifying officers and I have indicated in this report whether or notthere were significant changes in internal controls or in other factors thatcould significantly affect internal controls subsequent to the date of our mostrecent evaluation, including any corrective actions with regard to significantdeficiencies and material weaknesses.

 
|                | By:                                                    | /s/ Rick J.  Tremblay |   |
|---------------------|--------------------------------------------------------|-----------------------|--------|
|                | Rick J.  Tremblay                                      |
| Date: May  15, 2003 | Executive  Vice President and  Chief Executive Officer |

 

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