OVERVIEW

The following is management's discussion and analysis of particular events or circumstances that have affected the Company's financial condition or results of operations during the periods presented in this filing.

Team Financial, Inc. is a bank holding company incorporated in the State of Kansas. The Company applied for and effective July 3, 2008, was granted certification as a bank holding company as a result of troubled condition letters received by the holding company and our subsidiary banks from our primary regulators. Our common stock is listed on the Nasdaq Global Market ("NASDAQ") under the symbol "TFIN".

We recorded net loss of $10.0 million, or $2.79 basic and diluted loss per share for the three months ended September 30, 2008, compared to net income of $908,000, or $0.25 basic and diluted income per share for the three months ended September 30, 2007. During the nine months ended September 30, 2008, we recorded a net loss of $23.5 million, or $6.53 basic and diluted loss per share. During the three months ended September 30, 2008, we recorded $5.6 million in provisions for loan losses as it was determined during the quarter that additional allowances for loan losses would be made to absorb losses in our loan portfolio related to the further decline in the real estate market in our areas of operation. The net loss during the three months ended September 30, 2008 was also driven by $3.7 million in other than temporary impairments on the investment portfolio and an adjustment to our deferred tax asset through the establishment of a valuation reserve. The net loss of $23.5 million during the nine months ended September 30, 2008 was primarily due to a non-cash $10.7 million impairment charge for the write-off of our goodwill associated with Colorado National Bank and TeamBank during prior quarters, coupled with $12.3 million in provisions for loan losses, $4.6 million in other than temporary impairments in the investment portfolio, and the adjustment to the abovementioned deferred tax asset adjustment of approximately $2.8 million.

The following table presents selected financial data for the three and nine months ended September 30, 2008 and 2007 (dollars in thousands, except per share data):

                                       As of and For            As of and For
                                     Three Months Ended       Nine Months Ended
                                        September 30            September 30
                                               (Dollars in thousands)
                                       2008         2007       2008        2007
Net income (loss)                  $    (10,022 )  $  908   $   (23,458 ) $ 3,487
Basic income (loss) per share      $      (2.79 )  $ 0.25   $     (6.53 ) $  0.97
Diluted income (loss) per share    $      (2.79 )  $ 0.25   $     (6.53 ) $  0.95
Return on average assets                  -5.03 %    0.47 %       -3.84 %    0.61 %
Return on average equity                 -76.61 %    6.93 %      -58.81 %    9.06 %
Average equity to average assets           6.57 %    6.73 %        6.53 %    6.72 %
Efficiency Ratio                         136.11 %   85.08 %      147.25 %   79.24 %

Our subsidiary banks are currently not in compliance with their Consent Orders with the OCC, but are working to achieve compliance. Additionally, we are currently in default on our $4 million line of credit with US Bank and we are under collateralized in our FHLB borrowing agreement (which we are in the midst of remedying). While neither US Bank nor the FHLB has demanded immediate payment of our borrowings from them as a result of these issues, if they do, we do not anticipate that we will have the means to comply with the immediate payoff provisions in those agreements. Accordingly, if either US Bank or the FHLB should demand immediate payment, or if our regulators initiate any further actions (which could include receivership of one or both of our Banks) our ability to continue operations would be extremely doubtful.

Critical Accounting Policies

Our accounting and reporting policies conform to U.S. generally accepted accounting principles. In preparing the consolidated financial statements and related notes, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statement of financial condition and revenues and expenses for the periods presented. Actual results could differ significantly from those estimates. The Company's significant accounting policies are more fully described in Note 1 to the consolidated financial statements contained in the Company's Annual Report on Form 10-K/A for the year ended December 31, 2007, and significant assumptions and estimates made by management are more fully described in "Management's Discussion and Analysis of Financial Condition and Results of Operations" under "Critical Accounting Policies" in the Form 10-K/A. As a result of a review of various national banking-related publications, as well as a pronouncement of, and discussions with, our primary banking regulator, the Office of the Comptroller of the Currency (the "OCC"), and in response to additional data becoming available, the assumptions and estimates of the allocations attributable to deteriorating market conditions in our allowance for loan loss calculation were significantly increased during the nine months ended September 30, 2008. We recorded a provision for loan losses of $5.6 million and $12.3 million during the three and nine months ended September 30, 2008, which was primarily related to the increased estimates of the allocations attributable to the foregoing regulatory guidance, weakening market conditions and deterioration of our loan portfolio.

The Company adheres to SFAS 142 Goodwill and Other Intangible Assets. Goodwill impairment tests were performed during the fourth quarter of 2007; however, due to the adverse changes in the business climate in which we operate, we performed additional goodwill impairment tests as of March 31, 2008 and June 30, 2008 relating to the financial statement carrying value of goodwill at the Banks, and used modified estimates of future cash flows that took into account the changes in the business climate - which included the Company's subsidiaries being deemed to be in "troubled condition" by their regulators. Through the valuations, the Company determined that the goodwill associated with Colorado National Bank was impaired by approximately $6.0 million as of March 31, 2008, and that the goodwill associated with TeamBank, N.A. was impaired by $4.7 million as of June 30, 2008. These impairments resulted in direct changes to earnings during their respective quarters of 2008 and had no associated tax benefits. See Note 15 - Goodwill and Other Intangible Assets.

The provisions of Statement of Financial Accounting Standards, No. 109, Accounting for Income Taxes (SFAS 109), establishes financial accounting and reporting standards for the effect of income taxes. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity's financial statements or tax returns related to deferred income. Judgment is required in assessing the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that a deferred tax asset will not be realized. SFAS 109 requires that when determining the need for a valuation allowance against a deferred tax asset, management must assess both positive and negative evidence with regard to the realizability of the tax losses represented by that asset. To the extent available sources of taxable income are insufficient to absorb tax losses, a valuation allowance is necessary. Sources of taxable income for this analysis include prior years' tax returns, the expected reversals of taxable temporary differences between book and tax income, prudent and feasible tax-planning strategies, and future taxable income.

The company has recorded a valuation allowance of $2.8 million against its deferred tax asset of $9.6 million as of September 30, 2008, after considering all available evidence related to the amount of the tax asset that is more likely than not to be realized.

The company's deferred tax asset resulted primarily from a significant increase in its loan loss allowance. To the extent the loan loss allowance is not allocable to specific loans, it represents future tax benefits which would be realized when actual charge-offs are made against the allowance. Given the company's recent operating losses, the valuation allowance recorded at September 30, 2008 reduces the deferred tax asset to the amount management deems more likely than not to be realized only through the carry back of tax losses to prior years' Federal tax returns.

As a result of the Company's net operating loss for the three and nine months ended September 30, 2008, the Company had an income tax expense of approximately $1.5 million for the three months and an income tax benefit of approximately $556,000 for the nine months ended September 30, 2008, compared to income tax expense of $226,000 for the three and $1.2 million for the nine months ended September 30, 2007. The effective tax rate is typically less than the statutory federal rate of 34.0% due primarily to municipal interest income and income from the investment in bank owned life insurance. The lower tax rate in 2008 is a result of impairment of goodwill which is not deducted in computing income tax expense, taxable income from the surrender of bank owned life insurance policies not reportable in book income as well as the establishment of a valuation allowance against deferred tax assets that management deems more likely than not will not be realized.

In accordance with FIN 48, the Company has performed an analysis and has taken the position that it is not more likely than not that certain state tax benefits will be recognized in the future. As of the nine months ended September 30, 2008, approximately $868,000 of unrecognized tax benefits related to certain state tax benefits, and approximately $7,000 of unrecognized tax benefits related to acquisition costs were included in other liabilities within the consolidated balance sheet. For the nine months ended September 30, 2008, a total of approximately $168,000 was added to these reserves. If recognized, all of the tax benefits would increase net income, decreasing the effective tax rate.

We have also modified our estimates surrounding our ability and intent to hold our investment securities until values recover. While management has the intent to hold these securities, our ability to hold them has been compromised by our current liquidity, regulatory, and capital environment. Accordingly, we have realized all of the losses present in our investment securities portfolio as of September 30, 2008.

There have been no other material changes to our critical accounting policies or the estimates made pursuant to those policies during our most recent quarter.

Regulatory Environment

As previously reported, on September 2, 2008 and September 3, 2008, respectively, both of the Company's subsidiary banks (the "Banks"), TeamBank and Colorado National Bank, each consented and agreed to the issuance of a Consent Order (the "Consent Orders") by the Office of the Comptroller of Currency (the "OCC"). Among other things, the Consent Orders require the Banks to appoint a compliance committee to monitor compliance with the Consent Orders; within 120 days develop a three year strategic plan establishing objectives for the Banks; within 120 days develop a capital plan and increase Tier 1 capital to at least 8% of adjusted total assets and Tier 1 capital to at least 10% of risk-weighted assets; appoint a new senior loan officer; develop within 30 days and maintain a liquidity management program that address the Banks' current and expected funding needs and ensure that sufficient funds or access to funds exists to meet those needs; take action to protect the Banks' interests in assets criticized by the OCC; implement and adhere to a written credit policy to improve the Banks' loan portfolios management; obtain current independent appraisals on any loan in excess of $500,000 in the case of TeamBank and $300,000 in the case of Colorado National Bank that is secured by real property where borrower has failed to comply with contractual terms of the loan agreement and an analysis of current financial information does not demonstrate the ongoing ability of the borrower or guarantor to perform in accordance with the contractual terms of the loan agreement; continue to employ an independent review annually of the lending function; establish a program designed to manage the risk of the Banks' commercial real estate loan portfolio, and establish a program for the maintenance of an adequate allowance for loan and lease losses. Also, the Banks may not declare a dividend to pay to the holding company unless the Bank is in compliance with its approved capital plan both before and after the payment of the dividend, the Bank is in compliance with traditional regulation regarding dividend declaration amounts, and the Bank has received a prior written determination of no supervisory objection by the OCC. The OCC staff has expressed its ongoing concern regarding liquidity issues and related matters of TeamBank, and has reiterated the need for ongoing comprehensive liquidity plans and strategies. Subsequent to the issuance of the Consent Orders, the OCC has requested daily liquidity reports in order to monitor the Banks' liquidity. TeamBank and Colorado National Bank neither admitted nor denied wrongdoing in consenting to their respective Consent Orders. The foregoing description of the Consent Order is qualified in its entirety by reference to the terms of the Consent Orders, which are attached as Exhibit 10.32 in the Company's Current Report filed on Form 8-K on September 8, 2008 and incorporated by reference.

The Consent Orders stem from an examination of the Banks, from which both of the Banks received a letter from the OCC, Kansas City South Field office on April 24, 2008, indicating that it believes the Banks are deemed to be in "troubled condition" for purposes of Section 914 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, and, as a result, the Banks are subject to specified restrictions on operations. On July 13, 2008, the Company also received a similar "troubled condition" letter from the Federal Reserve Bank of Kansas City with regard to the holding company. These letters were based upon the OCC staff's determination that the Banks had deficiencies in credit administration practices, loan risk rating systems, loan loss allowance methodologies, and levels of classified assets. The restrictions provide that:
(1) the Banks must notify the OCC 90 days before adding or replacing a member of their respective boards of directors or employing any, or promoting any existing employee as a senior executive officer, and (2) the Banks may not, except under certain circumstances, enter into any

agreements to make severance or indemnification payments or make any such payments to institution-affiliated parties. Similar restrictions also apply to the Company as a result of the "troubled condition" letter received by the Federal Reserve Bank of Kansas City.

The Company entered into a similar agreement (the "Written Agreement") with the Federal Reserve Bank of Kansas City (the "Reserve Bank") on November 21, 2008. Among other things, the Written Agreement provides that the Company will not declare or pay any dividends, take dividends from the Banks, distribute any interest principal or other sums on subordinated debentures or trust preferred securities, incur, increase, or guarantee any debt or purchase or redeem any shares of Company stock without prior written approval of the Reserve Bank. Within 60 days, the Company must also provide an acceptable written capital plan to maintain sufficient capital at the consolidated organization and at each of the Banks and a written statement of cash flow projections for 2009. The Written Agreement also stipulates that the Company shall not increase or materially modify any current service fee agreement or calculation between the Company and the Banks without prior written approval of the Reserve Bank. The Company must also submit quarterly progress reports to the Reserve Bank detailing the Company's actions and progress in complying with the Written Agreement.

Although the Company and its subsidiaries are working on complying with the Consent Orders and the Written Agreement and correcting the deficiencies identified by the OCC and the Reserve Bank, deficiencies still exist and the Company's subsidiaries are not currently in compliance with the Consent Orders, nor do we anticipate that they will be in compliance by December 31, 2008, particularly as it relates to compliance with minimum capital levels. The Company and its subsidiary banks expect to continue to work with the OCC and the Reserve Bank to address any regulatory concerns. However, should the Company or either of the Company's subsidiaries fail to meet the requirements of the Consent Orders or the Written Agreement, by the specified due dates, the OCC and/or the Reserve Bank, may in their sole discretion, grant written extensions of time to comply with any portions of the Consent Orders or Written Agreement, or the regulators may take further enforcement actions, which could include placing either bank into receivership in which case our ability to continue operations would be extremely doubtful.

A consequence of the above regulatory issues mentioned above, is that the Company no longer qualifies as a financial holding company under the Reserve Bank's guidelines. Since early 2005, the Company has not engaged in any activities permissible only to "financial holding companies," such as owning and operating a broker-dealer or an insurance-related business as defined in the Bank Holding Company Act. Effective July 3, 2008, the Company became a bank holding company under the Federal Bank Holding Company Act.

On May 5, 2008, the Company infused $1,750,000 and $250,000 in capital to TeamBank, N.A. and Colorado National Bank, respectively. The capital infusions were funded through the Company's existing line of credit. The Company has no remaining borrowing capacity under this line of credit. As a result of the Company's subsidiaries not being in compliance with their Consent Orders at this time, the Company is currently in default on the terms of this line of credit. US Bank has agreed in writing to forbear any action at this time; however, its future forbearance cannot be assured.

Corporate Governance Matters

On June 16, 2008, we entered into an agreement (the "Bicknell Agreement") with several stockholders known as the Bicknell Group, who are a "group" as defined in Rule 13d-5 promulgated by the Securities and Exchange Commission. The Bicknell Agreement addresses several corporate governance matters relating to the Company. Under the Agreement, the Company agreed to postpone or adjourn its 2008 Annual Meeting of Stockholders which was originally set for June 17, 2008, in order to resolicit proxies for a revised slate of Class III Director nominees to be elected at a reconvened meeting. The reconvened meeting was held on August 19, 2008. The Bicknell Group agreed to vote in favor of the revised slate nominated by the Company which included existing director, Robert Blachly; former chief financial officer and director of the Company, Richard J. Tremblay; and Jeffrey L. Renner, a non-management nominee to the Board of Directors.

In conjunction with the Bicknell Agreement, Carolyn Jacobs and Denis Kurtenbach declined to stand for nomination as Class III directors. In addition, independent director, Harold G. Sevy, Jr. tendered his resignation as a director on August 19, 2008, the date of the reconvened meeting so that the number of Board positions would be reduced to eight directors.

In addition, the Bicknell Agreement provides that the Company's Strategic Planning Committee of the Board will consist of Connie Hart, Jeffrey Renner and Richard Tremblay, with Ms. Hart serving as chairperson. Also the Audit Committee of the Board is to be composed of Greg Sigman, who will serve as chairperson, Connie Hart and Jeffrey Renner. The Nominating Committee is to be composed of Robert Blachly, who will be the chairperson, Gregory Sigman and Kenneth Smith. The Compensation Committee will be composed of Kenneth Smith, who will be chairperson, Connie Hart and Jeffrey Renner. Consistent with regulatory requirements and committee charters, all other directors have the right to participate in committee meetings as observers.

The Company also agreed to not extend its Rights Agreement with American Securities Transfer & Trust, Inc., as rights agent, beyond the expiration date of June 3, 2009 or adopt any similar agreement without stockholder approval. The Company further agreed to seek to eliminate its classification of the Board of Directors so that annually all directors will stand for re-election. This proposal to declassify the Board is to be presented to the stockholders at the 2009 Annual Meeting.

Pursuant to the Bicknell Agreement, the Company has named Connie Hart, an independent director, as chairperson of the Board.

The Bicknell Group, which owns 427,025 shares of common stock, or 11.9% of the outstanding shares, agreed to refrain from any tender offer, exchange offer, merger or business combination with the Company as well as to refrain from any solicitation of proxies until the earlier of the 2009 Annual Meeting or June 30, 2009. Also, prior to

the 2009 Annual Meeting, the Bicknell Group agreed not to propose any matter to submission to the Company's stockholders or to seek to amend any provision of the Company's Articles of Incorporation or bylaws.

On July 10, 2008 we entered into a settlement agreement (the "Edquist Agreement") with shareholder and former director Keith B. Edquist with respect to the Company's 2008 Annual Meeting of Shareholders and related matters. The 2008 Annual Meeting of Shareholders was originally scheduled for June 17, 2008, but was postponed.

Under the terms of the Edquist Agreement, Mr. Edquist has agreed to terminate his efforts to nominate persons for election as Class III directors at the Company's 2008 Annual Meeting of Shareholders, agreed to vote his shares in favor of the Company's nominees for director at the 2008 Annual Meeting (Robert M. Blachly, Jeffrey L. Renner and Richard J. Tremblay), and agreed to abide by certain standstill provisions until the earlier of June 30, 2010 or the Company's 2010 Annual Meeting. As part of the settlement, the parties executed a mutual release as well.

Additionally, under the terms of the Edquist Agreement, the Company agreed to reimburse Mr. Edquist for certain expenses related to his proxy solicitation efforts. Under the reimbursement arrangement, Mr. Edquist will receive approximately $22,572 monthly through January 1, 2009, for a total of approximately $158,000.

Mr. Edquist's obligations are contingent on the Bicknell Agreement remaining in full force and effect.

Effective September 1, 2008, Robert J. Weatherbie resigned as Chief Executive Officer and Director of Team Financial, Inc. (the "Registrant") and as President of TeamBank, N.A. and as Director of TeamBank, N.A. and Colorado National Bank and their affiliates. On September 19, 2008, the board of directors of TeamBank, N.A. appointed Sandra J. Moll as Interim President and Chief Executive Officer of TeamBank. Ms. Moll also serves as a Director and the Chief Operating Officer of the Company. The Company is actively searching for a permanent replacement for Mr. Weatherbie.

Effective November 4, 2008, the Board of Directors named Bruce R. Vance as Chief Financial Officer of the Company. Vance had served as interim Chief Financial Officer of the Company since April 28, 2008, and prior to that time he had served as the Company's Director of Internal Audit since May of 2006.

FINANCIAL CONDITION

Total assets at September 30, 2008, were $765.9 million compared to $827.5 million at December 31, 2007, a decrease of $61.6 million, or 7.4%. This decrease was primarily a result of a decrease in cash and cash equivalents of $15.3 million coupled with a decrease in investment securities of $16.8 million, a $10.2 million decrease in loans receivable, and the $10.7 million write-off of goodwill. Total deposits decreased $51.7 million to $577.7 million at September 30, 2008 compared to $629.4 million at December 31, 2007. The decrease in total deposits was primarily due to a decrease in checking deposits and money market deposits of $41.0 million and $21.7 million, respectively. The decrease in checking deposits and money market deposits, and the corresponding decrease in cash and cash equivalents, was primarily a result of the withdrawl of public funds deposits.

Investment Securities

Total investment securities were $158.6 million at September 30, 2008, compared to $175.3 million at December 31, 2007, a decrease of $16.8 million, or 9.6%.

During the three and nine months ended September 30, 2008 certain debt securities portfolio were determined to be impaired. During the three and nine months ended September 30, 2008, the Company recognized other than temporary impairments totaling approximately $3.7 million and $4.6 million, respectfully (see Note 6). Approximately $1.3 million of the reduction in fair value was the result of current market conditions related to trust preferred securities and corporate bond obligations issued by other financial institutions that the Company holds as investments. These securities are classified as Other debt securities in the tables that follow.

We also realized all of the remaining $3.3 million in losses in our investment portfolio due to changes in market rates from the date of purchase as a result our assessment of our ability to hold those impaired securities until values recover. We intend to hold these securities until values recover; however, our ability to hold these securities has been compromised by our current liquidity, regulatory and capital environment (see Notes 10, 11, 16 and 17); therefore, all remaining losses were recognized as of September 30, 2008.

The following tables set forth a summary of the amortized cost, gross unrealized gains and losses, and fair value of investment securities at September 30, 2008 and December 31, 2007.

                                                  September 30, 2008
                                                  Gross         Gross
                                  Amortized    Unrealized    Unrealized      Fair
                                     Cost         Gains        Losses        Value
                                                    (In thousands)
Debt securities:
Government-sponsored entities     $   20,710   $       152   $         -   $  20,862
Mortgage-backed securities            92,664           427             -      93,091
Nontaxable Municipal Securities       28,150           136             -      28,286
Taxable Municipal Securities           4,033            28             -       4,061
. . .