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Southern Missouri Bancorp, Inc. (NASDAQ: SMBC) is the holding company for Southern Missouri Bank ∓ Trust Company (Southern Missouri Bank). While the company's history goes back
116 years, the past 4 years have truly marked a significant change in company focus and performance.

**New Growth**

In recent years, the bank's management team has succeeded in generating increased growth and improved profitability by building the bank's core businesses, while successfully
introducing new, higher-margin products.

This new growth represents a marked departure from past practices.

Table of Contents

|2  | Letter to Shareholders                                          
|-- | ----------------------------------------------------------------
|8  | Common Share Data                                               
|9  | Financial Review                                                
|21 | Report from Kraft, Miles ∓ Tatum, LLC    Independent Auditors
|22 | Consolidated Financial Statements                               
|27 | Notes to Consolidated Financial Statements                      
|48 | Corporate and Investor Information                              
|49 | Directors and Officers                                          

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|                                                         | 2003      | 2002      | change(%)
|-------------------------------------------------------- | --------- | --------- | ---------
|EARNINGS *(dollars in thousands)*                        |           |           |          
|Net interest income                                      | $9,284    | $8,854    | 4.9      
|                                                         |           |           |          
|Provision for possible loan losses                       | 330       | 350       | (5.7)    
|Other income                                             | 1,415     | 874       | 61.9     
|Other expense                                            | 6,165     | 5,872     | 5.0      
|Income taxes                                             | 1,466     | 1,197     | 22.5     
|Net income                                               | 2,738     | 2,309     | 18.6     
|                                                         |           |           |          
|PER COMMON SHARE                                         |           |           |          
|Net income:                                              |           |           |          
|Basic                                                    | $2.35     | $1.94     | 21.1     
|Diluted                                                  | 2.28      | 1.90      | 20.0     
|Shareholders' equity (diluted book value)                | 21.24     | 20.34     | 4.4      
|Closing market price                                     | 25.40     | 19.25     | 31.9     
|Cash dividends declared                                  | .56       | .50       | 12.0     
|                                                         |           |           |          
|AT YEAR-END *(dollars in thousands)*                     |           |           |          
|Total assets                                             | $279,455  | $266,288  | 4.9      
|Earning assets                                           | 262,024   | 252,596   | 3.7      
|Loans                                                    | 222,840   | 211,212   | 5.5      
|Nonperforming assets                                     | 307       | 719       | (57.3)   
|Reserves as a percent of nonperforming loans             | 2062.59%  | 466.2%    |          
|Deposits                                                 | $194,532  | $188,947  | 3.0      
|Shareholders' equity                                     | 25,108    | 24,511    | 2.4      
|                                                         |           |           |          
|FINANCIAL RATIOS                                         |           |           |          
|Return on shareholders' equity                           | 11.08%    | 9.77%     |          
|Return on assets                                         | 1.00      | .91       |          
|Net interest margin                                      | 3.57      | 3.67      |          
|Efficiency ratio                                         | 57.52     | 60.37     |          
|Allowance for possible loan losses to loans              | .81       | .73       |          
|Equity to average assets at year-end                     | 9.02      | 9.29      |          
|OTHER DATA(1)                                            |           |           |          
|Common shares outstanding                                | 1,803,201 | 1,803,201 |          
|Average common and equivalent
        shares outstanding | 1,199,180 | 1,215,009 |          
|Shareholders of record                                   | 301       | 314       |          
|Full-time equivalent employees                           | 88        | 87        |          
|Assets per employee (in thousands)                       | $3,176    | $3,061    |          
|Banking offices                                          | 8         | 8         |          
|                                                         |           |           |          

(1) Other data is as of year-end, except for average shares.

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Dear Shareholder,

2003 was a year of new sources
of revenue growth.

|Earnings increased 18.6% from $2,309,000 to $2,738,000, with diluted earnings per share rising 20.0%, from $1.90 to $2.28.
We confirmed our core business growth strategies by managing to increase loans and deposits during a challenging economic year. However, the most important news was the successful launch of several
new high-margin products that significantly increased our non-interest income this year, and will |  | continue to contribute to the Bank's income in the future.
The combination of these new revenue sources, and the bank posting its fourth year of stable core business growth, gave the board the confidence to authorize the largest
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|                                                                                                                                                                                                                                                                                                                                                                                                                                  

|dividend increase in the company's history. The quarterly dividend will increase 28.6%, from $0.14 to $0.18.**Strengthening Our Earnings Foundation**Our core business remains attracting deposits and then lending those funds to the creditworthy homeowners and businesses we serve in Southeast Missouri.
We were especially pleased to increase total loans 5.7%, from $211 million to $223 million, during a year when two economic conditions were curtailing loan growth throughout the banking industry.
First, slow economic activity kept business owners cautious. Second, the lowest home loan rates in more than 40 years motivated more |  | homeowners to refinance their home loans, moving those loans from bank balance sheets to the balance sheets of secondary market investors.
Consistent with our lending philosophy, the percentage of commercial loans continued to increase from 34.2% to 38.5% of the loan portfolio. With the increase in commercial loans, it is important to
note that Jim Duncan's leadership has improved the overall quality of the loan portfolio. During challenging economic conditions, non-performing assets continued to decline and remain well below peer average.
We were also able to grow deposits 3.2%, from $189 million to $195 million, even though historically low interest rates made it difficult to attract new customers.
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|Customers responded enthusiastically to our new Premier Checking account. Premier Checking truly defines the future for checking accounts by combining several new technologies -
check imaging, e-mail delivery of statements and Check Card purchases. It will continue to contribute to deposit growth, non-interest income and operational efficiencies for many years to come.Adding New Growth To Our Earnings FoundationThe way we earn income must continue to evolve.
Traditional bank business is becoming more commodity based, with declining margins. To make up for that decline and keep our company on its established trajectory of |  | annual earnings increases, non-interest income from new growth sources will need to contribute an increasing percentage of the company's overall revenue.
This year non-interest income increased 61.9%, from $874,000 to $1,415,000. What gives us cause for even more optimism is the fact that the new products that generated these non-interest revenue
increases were launched mid-year and only had four to six months to contribute incremental revenue.
Five products accounted for most of this non-interest income and they all exemplify the win-win scenario we seek for our shareholders and our customers. All five products are highly valued by our
customers and contribute attractive profit margins for our shareholders.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Leading the new product list is Overdraft Privilege, a supplementary service for checking account customers.
For homeowners, we added fixed-rate home loans sold to the secondary market and credit life and disability insurance. In addition to contributing significant non-interest income, secondary market
loans will help us enhance our home loan leadership role in Southeast Missouri.
For depositors, Premier Checking with Check Card and Overdraft Privilege convenience help make it easier to manage everyday household finances.
For business owners, our new Internet-based cash management system gives them greater |  | control over their companies' payables, receivables and investments.
Management pursued these five products for two reasons. First, they all have proven track records of high profit-margin success at banks in other parts of the country. Second, all of them broaden our
services to our three principal customer bases - homeowners, business owners and retail depositors.Using Technology To Control CostsWhile new non-interest income products fueled strong revenue growth, new technology-based systems reduced operating costs.
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|Checking accounts have always been one of the most labor-intensive accounts banks offer. Over the past two years, we have introduced Internet Cash Management, Internet Banking,
Telephone Banking, E-Mail Delivered Statements, Check Images and Check Cards to address checking costs.
Once again, this investment has resulted in a win-win situation for our shareholders and our customers. Our checking accounts have increased 8.4%, proving that our customers value the account
enhancements. In addition, our overall efficiency ratio has improved from 60.4% to 57.5%, with much of that savings due to lower checking account operating costs.
In 2004, we will address one of our more costly non-personnel expenses - voice and |  | data transmission. We plan to convert from phone and data landlines to lower-cost wireless communications.**In Conclusion**The year 2003 may be accurately characterized as a highly noteworthy one for Southern Missouri Bancorp, Inc. We proved we could continue growing our core businesses during difficult
economic times and create important new growth with several new non-interest income products.
The early success of those new revenue sources has us excited about our new growth prospects for 2004. At the same time, we will seek opportunities to expand our office network by purchasing other
institutions, or building new branches.
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|Our sincere thanks go out to you, our shareholders, and our customers, whose trust in us makes it possible to pursue new opportunities.
We were pleased to have finished a challenging year with an 18.6% increase in earnings, a stock price increase of 31.9%, |  | and a balance sheet that is well-positioned for the future. I particularly want to commend our fine staff for their enthusiasm and excellent performance throughout the year.          Greg Steffens
         President
         Southern Missouri Bancorp, Inc.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|PLEASE JOIN US . . .. . .at our 2003 Annual Meeting where shareholders and those considering investing in Southern Missouri Bancorp, Inc. will hear management cover this year's performance in detail and
discuss our plans for continued growth. |  | ANNUAL MEETING
MONDAY, OCTOBER 20 AT 9 AM
CHAMBER OF COMMERCE BUILDING
POPLAR BLUFF
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The common stock of the Company is listed on the NASDAQ Stock Market under the symbol "SMBC".  The following bar graph sets forth the high, low and closing trade prices of the common stock, cash dividends and other information for the last three years.

The following table sets forth per share market price and dividend information for the Company's common stock. As of August 1, 2003, there were approximately 301 stockholders of
record. This does not reflect the number of persons or entities who hold stock in nominee or "street name."

|**2003**               | High   | Low    | Close  | Book
Value At
End Of
Period | Market Price
To Book Value | Dividends
Declared
|---------------------- | ------ | ------ | ------ | --------------------------- | -------------------------- | ------------------
|                      
|4th Quarter (6-30-03)  | $25.75 | $24.00 | $25.40 | $21.87                      | 116.14%                    | $0.140            
|3rd Quarter (3-31-03)  | $25.00 | $20.95 | $24.00 | $21.38                      | 112.25%                    | $0.140            
|2nd Quarter (12-31-02) | $22.25 | $18.24 | $20.90 | $21.18                      | 98.68%                     | $0.140            
|1st Quarter (9-30-02)  | $19.10 | $17.45 | $19.00 | $20.77                      | 91.48%                     | $0.140            
|                       |        |        |        |                             |                            |                   
|**2002**               |        |        |        |                             |                            |                   
|                      
|4th Quarter (6-30-02)  | $19.93 | $16.94 | $19.25 | $20.34                      | 94.64%                     | $0.125            
|3rd Quarter (3-31-02)  | $17.22 | $15.75 | $17.00 | $19.77                      | 85.99%                     | $0.125            
|2nd Quarter (12-31-01) | $16.45 | $14.70 | $16.20 | $19.30                      | 83.94%                     | $0.125            
|1st Quarter (9-30-01)  | $15.75 | $13.75 | $15.25 | $19.12                      | 79.76%                     | $0.125            
|                       |        |        |        |                             |                            |                   
|**2001**               |        |        |        |                             |                            |                   
|                      
|4th Quarter (6-30-01)  | $14.15 | $13.00 | $14.00 | $18.53                      | 75.55%                     | $0.125            
|3rd Quarter (3-31-01)  | $14.00 | $13.00 | $13.88 | $18.25                      | 76.05%                     | $0.125            
|2nd Quarter (12-31-00) | $13.63 | $12.25 | $13.63 | $18.02                      | 75.64%                     | $0.125            
|1st Quarter (9-30-00)  | $13.25 | $12.50 | $12.65 | $17.55                      | 72.08%                     | $0.125            

Any future dividend declarations and payments are subject to the discretion of the Board of Directors of the Company. The ability of the Company to pay dividends depends primarily
on the ability of the Bank to pay dividends to the Company. For a discussion of the restrictions on the Bank's ability to pay dividends, see Note 14 of Notes to Consolidated Financial Statements
included elsewhere in this report.

|                                   | At Or For The Years Ended
June 30
|---------------------------------- | ---------------------------------
|                                   | 2003                             
|                                   |                                  
|                                   |                                  
|Average common shares outstanding  | 1,199,180                        
|Year-end common shares outstanding | 1,803,201                        
|Shareholders of record             | 301                              

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|**BUSINESS OF THE COMPANY AND THE BANK** Southern Missouri Bancorp, Inc. (Southern Missouri or Company) is a Missouri corporation and owns all of the outstanding stock of Southern Missouri Bank ∓ Trust Co. (SMBT or the Bank).
The Company's earnings are primarily dependent on the operations of the Bank. As a result, the following discussion relates primarily to the operations of the Bank.****       The Bank was originally chartered by the State of Missouri in 1887 and converted from a state-chartered stock savings and loan association to a Federally-chartered stock savings bank
effective June 20, 1995. Then, effective February 17, 1998, the Bank converted its charter to a state-chartered stock savings bank. The Bank's deposit accounts are insured up to a maximum of $100,000
by the Savings Association Insurance Fund (SAIF), which is administered by the Federal Deposit Insurance Corporation (FDIC). |  | The Bank's primary business is the origination of mortgage loans secured by one-to four-family residences. The Bank currently conducts its business through its home office located
in Poplar Bluff and seven full service branch facilities in Poplar Bluff, Van Buren, Dexter, Kennett, Doniphan, and Qulin, Missouri. Lending activities are funded through the attraction of deposit
accounts consisting of certificate accounts with terms of 60 months or less, passbook accounts, money market deposit accounts and advances from the Federal Home Loan Bank of Des Moines. The Bank also
originates mortgage loans on commercial real estate, construction loans on single-family residences and commercial properties, commercial business loans, consumer loans, and loans secured by deposit
accounts.
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*(dollars in thousands)*

|                                                              | At June 30
|------------------------------------------------------------- | ----------
|**Financial Condition Data:**                                 | 2003      
|                                                              |           
|Total assets                                                  | $ 279,455 
|Loans receivable, net                                         | 222,840   
|Mortgage-backed securities                                    | 25,019    
|Cash, interest-bearing deposits
    and investment securities | 13,602    
|Deposits                                                      | 194,532   
|Borrowings                                                    | 58,734    
|Stockholders' equity                                          | $ 25,108  

*(dollars in thousands)*

|                                                        | For The Year Ended June 30
|------------------------------------------------------- | --------------------------
|**Operating Data:**                                     | 2003                      
|                                                        |                           
|Interest income                                         | $16,404                   
|Interest expense                                        | 7,120                     
|                                                        |                           
|                                                        |                           
|Net interest income                                     | 9,284                     
|Provision for loan losses                               | 330                       
|                                                        |                           
|                                                        |                           
|Net interest income after
    provision for loan losses | 8,954                     
|                                                        |                           
|Noninterest income                                      | 1,415                     
|Noninterest expense                                     | 6,165                     
|                                                        |                           
|                                                        |                           
|Income before income taxes                              | 4,204                     
|Income tax expense                                      | 1,466                     
|                                                        |                           
|Net income                                              | $2,738                    
|                                                        |                           
|                                                        |                           
|Basic earnings per common share                         | $2.35                     
|Diluted earnings per common share                       | $2.28                     
|Dividends per share                                     | $ .56                     

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|                                                                                                                                          | At June 30                      
|----------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------
|**Other Data:**                                                                                                                           | 2003                            
|                                                                                                                                          |                                 
|Number of:                                                                                                                                |                                 
|Real estate loans                                                                                                                         | 2,842                           
|Deposit accounts                                                                                                                          | 16,455                          
|Full service offices                                                                                                                      | 8                               
|                                                                                                                                          | At Or For The Year Ended June 30
|**Key Operating Ratios:**                                                                                                                 | 2003                            
|                                                                                                                                          |                                 
|Return on assets (net income
    divided by average assets)                                                                               | 1.00%                           
|                                                                                                                                          |                                 
|Return on average equity (net
    income divided by average equity)                                                                       | 11.08                           
|                                                                                                                                          |                                 
|Average equity to average assets                                                                                                          | 9.02                            
|                                                                                                                                          |                                 
|Interest rate spread (spread between
    weighted average rate on all interest-
    earning assets and all interest-
bearing liabilities) | 3.29                            
|                                                                                                                                          |                                 
|Net interest margin (net interest
    income as a percentage of average
    interest-earning assets)                                      | 3.57                            
|                                                                                                                                          |                                 
|Noninterest expense to average assets                                                                                                     | 2.25                            
|                                                                                                                                          |                                 
|Average interest-earning assets to
    interest-bearing liabilities                                                                       | 110.67                          
|                                                                                                                                          |                                 
|Allowance for loan losses to total
    loans at end of period                                                                             | .81                             
|                                                                                                                                          |                                 
|Allowance for loan losses to
    nonperforming loans                                                                                      | 2,062.59                        
|                                                                                                                                          |                                 
|Net charge-offs to average out-
    standing loans during the period                                                                      | .03                             
|                                                                                                                                          |                                 
|Ratio of nonperforming assets
    to total assets                                                                                         | .12                             
|                                                                                                                                          |                                 
|Dividend payout ratio                                                                                                                     | 23.97                           

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|Southern Missouri Bancorp, Inc. is a Missouri corporation originally organized for the principal purpose of becoming the holding company of Southern Missouri Savings Bank. The
Bank converted from a Federally-chartered stock savings bank to a state-chartered stock savings bank effective February 17, 1998, and subsequently changed its name to Southern Missouri Bank ∓
Trust Co. The Company's state of incorporation changed from Delaware to Missouri effective April 1, 1999. The principal business of SMBT consists primarily of attracting deposits from the general
public and using such deposits along with wholesale funding from the Federal Home Loan Bank of Des Moines (FHLB) to finance mortgage loans secured by one-to four-family residences and, to a lesser
extent, consumer loans, commercial real estate loans, and commercial business loans. These funds have also been used to purchase investment securities, mortgage-backed securities (MBS), U.S. government and federal agency obligations and other permissible securities.
      The revenues of Southern Missouri are derived principally from interest earned on loans and, to a lesser extent, from interest earned on investment securities and MBS. Southern Missouri's operations
are significantly influenced by general economic conditions including monetary and fiscal policies of the U.S. government and the Federal Reserve Bank. Additionally, Southern Missouri is subject to
policies and regulations issued by financial institution regulatory agencies, including the Federal Deposit Insurance Corporation, the Office of Thrift Supervision (OTS) and the Missouri Division of
Finance. Each of these factors may influence interest rates, loan demand, prepayment rates and deposit flows. Interest rates available on competing investments as well as general market interest
rates influence the Bank's cost of funds. Lending activities are affected by the demand for financing real estate and other types of loans, which in turn is affected by the interest rates at which
such financing may be offered. The Bank intends to continue to focus on its lending programs for one-to four-family residential real estate, commercial mortgage, commercial business and consumer
financing on loans secured by properties or collateral located primarily in Southeastern Missouri.**FORWARD-LOOKING STATEMENTS**      Except for the historical information contained herein, the matters discussed in this annual report may be deemed to be forward-looking statements, which we believe are within the meaning
of the Private Securities Litigation Reform Act of 1995. These matters involve risks and uncertainties, including changes in economic conditions in Southern Missouri's market area, changes in
policies by regulatory agencies, fluctuations in interest rates, demand for loans in Southern Missouri's market area and price competition for loans and deposits. Actual strategies and results in
future periods may differ materially from those currently expected. These forward-looking statements represent Southern Missouri's judgment as of the date of this report. Southern Missouri disclaims,
however, any intent or obligation to update these forward-looking statements.**CRITICAL ACCOUNTING POLICIES**
      The Company has established various accounting policies, which govern the application of accounting principles generally accepted in the United States of America in the preparation of our financial
statements. Our significant accounting policies are described in the footnotes to the Consolidated Financial Statements. Certain accounting policies involve |  | significant judgments and assumptions by management that have a material impact on the carrying value of certain assets and liabilities; management considers such accounting
policies to be critical accounting policies. The judgments and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the
circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ from these judgments and estimates that could have a material impact on the
carrying values of assets and liabilities and the results of operations of the Company.
       The allowance for losses on loans represents management's best estimate of probable losses in the existing loan portfolio. The allowance for losses on loans is increased by the provision for losses
on loans charged to expense and reduced by loans charged off, net of recoveries. The provision for losses on loans is determined based on management's assessment of several factors: reviews and
evaluations of specific loans, changes in the nature and volume of the loan portfolio, current economic conditions and the related impact on specific borrowers and industry groups, historical loan
loss experience, the level of classified and nonperforming loans and the results of regulatory examinations.
       Integral to the methodology for determining the adequacy of the allowance for loan losses is portfolio segmentation and impairment measurement. Under the Company's methodology, loans are first
segmented into 1) those comprising large groups of smaller-balance homogeneous loans, including single-family mortgages and installment loans, that are collectively evaluated for impairment and 2)
all other loans that are individually evaluated. Those loans in the second category are further segmented utilizing a defined grading system which involves categorizing loans by severity of risk
based on conditions that may affect the ability of the borrowers to repay their debt, such as current financial information, collateral valuations, historical payment experience, credit
documentation, public information, and current trends. The loans subject to credit classification represent the portion of the portfolio subject to the greatest credit risk and where adjustments to
the allowance for losses on loans as a result of provisions and charge-offs are most likely to have a significant impact on operations.
       A periodic review of selected credits (based on loan size and type) is conducted to identify loans with heightened risk or probable losses and to assign risk grades. The primary responsibility for
this review rests with the loan administration personnel. This review is supplemented with periodic examination of both selected credits and the credit review process by the applicable regulatory
agencies and external auditors. The information from these reviews assists management in the timely identification of problems and potential problems and provides a basis for deciding whether the
credit represents a probable loss or risk that should be recognized.
       Loans are considered impaired if, based on current information and events, it is probable that Southern Missouri will be unable to collect the scheduled payments of principal or interest when due
according to the contractual terms of the loan agreement. The measurement of impaired loans is generally based on the fair value of the collateral for collateral-dependent loans. If the loan is not
collateral-dependent, the measurement of impairment is based on the present value of expected future cash flows discounted at the historical effective interest rate or the observable market price of
the loan. In measuring the fair value of the collateral, management uses the assumptions (e.g., discount rates) and methodologies (e.g., comparison to the recent selling price of similar assets)
consistent with those that would be utilized by unrelated third parties. Impairment identified through this evaluation process is a
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|component of the allowance for loan losses. If a loan that is individually evaluated for impairment is found to have none, it is grouped together with loans having similar
characteristics (e.g., the same risk grade), and an allowance for loan losses is based upon historical average charge-offs for similar loans over the past five years, the historical average
charge-off rate for developing trends in the economy, in industries and other factors. For portfolio loans that are evaluated for impairment as part of homogenous pools, an allowance is maintained
based upon the average charge-offs for the past five years. Management also applies judgment to alter slightly the historical average charge-off rate for developing trends in the economy and other
factors.
       Changes in the financial condition of individual borrowers, in economic conditions, in historical loss experience and in the conditions of the various markets in which collateral may be sold may all
affect the required level of the allowance for losses on loans and the associated provision for losses on loans.**FINANCIAL CONDITION**
       The Company's total assets increased $13.2 million, or 4.9%, to $279.5 million at June 30, 2003, as compared to $266.3 million at June 30, 2002. The growth was primarily due to an $11.6 million, or
5.5%, increase in the loan portfolio and the purchase of $4.0 million in bank owned life insurance, partially offset by a $2.8 million decline in cash balances and investments. The insurance was
purchased as a means to offset employee benefit costs. The growth in the loan portfolio exceeded the Company's growth targets and was comprised principally of $7.8 million in commercial business
loans and $5.6 million in commercial real estate loans, which was partially offset by a $3.2 million decline in the one-to four-family real estate loans. Asset growth was primarily funded by deposit
growth of $5.6 million, or 3.0%, from $188.9 million to $194.5 million, an increase in FHLB advances of $6.5 million, or 13.8%, from $47.0 million to $53.5 million, and by the $1.8 million, or 5.4%,
decrease in the investment portfolio from $32.8 million to $31.0 million.
       Allowance for loan losses increased $266,000, or 17.0%, from $1.6 million at June 30, 2002, to $1.8 million at June 30, 2003. The allowance for loan losses at June 30, 2003, represented 0.8% of
loans receivable, as compared to 0.7% of loans receivable at June 30, 2002. At June 30, 2003, nonperforming loans which includes loans past due greater than 90 days was $89,000 as compared to
$336,000 at June 30, 2002, (see Provision for Loan Losses).
       Premises and equipment increased $360,000 after depreciation expense, to $6.2 million at June 30, 2003, from $5.8 million at June 30, 2002, due to the renovation of the home office and enhancements
in our information technology systems.
       Intangible assets generated through branch acquisitions decreased $255,000 to $3.1 million as of June 30, 2003, and will continue to be amortized in accordance with Statement of Financial Accounting
Standards (SFAS) No. 142. |  | Total deposits increased $5.6 million, or 3.0%, to $194.5 million at June 30, 2003, from $188.9 million at June 30, 2002. The increase was primarily due to growth in checking
accounts and certificates of deposit (CDs) of $7.0 million and $2.0 million, respectively, partially offset by the decline in money market demand accounts of $4.2 million. The cost of
interest-bearing deposits declined to 2.16% at June 30, 2003, as compared to 2.79% at June 30, 2002, due in part to the decline in the market rates of interest.
       During 2003, the Company introduced a new high-yield interest bearing checking account (Premier) with a 3.01% annual percentage yield on the first $10,000 balance if the customer meets certain
guidelines on the use of their check card and receives e-mailed bank statements. This results in lower costs and greater efficiency for the Bank. At June 30, 2003, the Premier account had $2.7
million in deposits.
       FHLB advances increased $6.5 million, or 13.8%, from $47.0 million at June 30, 2002, to $53.5 million at June 30, 2003. The outstanding advances have fixed interest rates and $37.0 million of such
advances are subject to early redemption from the issuer. At June 30, 2003, the advances had a weighted average cost of 5.18% and a weighted average maturity of 4.7 years as compared to a weighted average cost of 5.62% and a weighted average
maturity of 6.9 years at June 30, 2002. The average cost of deposits declined at a faster pace than FHLB advances due to the average maturity of FHLB advances being longer.
       The Company's stockholders' equity increased by $597,000, or 2.4% to $25.1 million at June 30, 2003, from $24.5 million at June 30, 2002. This increase was primarily due to net income of $2.7
million, partially offset by the repurchase of $1.6 million in common stock and the payment of cash dividends of $656,000. The Company has approximately 35,000 shares of common stock remaining to be
purchased under its current stock repurchase program.
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|  | 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|**RESULTS OF OPERATIONS**
       Southern Missouri's results of operations are primarily dependent on the level of its net interest income and noninterest income, and its ability to control operating expenses. Net interest income
is dependent primarily on the difference or spread between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities, as well as the relative
amounts of these assets and liabilities. Southern Missouri, like other financial institutions, is also subject to interest rate risk to the degree that its interest-earning assets mature or reprice
at different times, or on a varying basis, from its interest-bearing liabilities.
       Southern Missouri's noninterest income consists primarily of fees charged on transaction and loan accounts. Southern Missouri's operating expenses include: employee compensation and benefits,
occupancy expenses, legal and professional fees, federal deposit insurance premiums, amortization of intangible assets and other general and administrative expenses.**COMPARISON OF THE YEARS ENDED JUNE 30, 2003 AND 2002**
       **Net Income.** Southern Missouri's net income increased $429,000, or 18.6%, to $2.7 million for fiscal 2003 when compared to the results of the prior fiscal year. The improvement in
net income was primarily due to increased net interest income, increased noninterest income and the reduction in provision for loan losses, partially offset by higher noninterest expense and
provisions for income taxes.
       **Net Interest Income.** Net interest income increased $431,000, or 4.9%, to $9.3 million for fiscal 2003 when compared to the prior fiscal year. The increase was primarily due to the
$18.3 million increase in average interest-earning assets, partially offset by a $15.5 million increase in average interest-bearing liabilities. The average interest rate spread between
interest-earning assets and interest bearing liabilities decreased four basis points from the prior year. At June 30, 2003, the interest rate spread was 3.10% as compared to an average of 3.29% for
fiscal 2003.
       This past fiscal year, the banking industry as a whole experienced a declining net interest spread due to declining interest rates and a flattening of the yield curve as short-term interest rates
dropped at a slower pace than longer-term interest rates. During fiscal 2003, the Federal Reserve Bank dropped its targeted federal fund rate 75 basis points from 1.75% to the current 1.00%, while
the ten year treasury rate dropped 129 basis points from 4.81% at June 30, 2002 to 3.52% at June 30, 2003.
       **Interest Income.** Interest income decreased $589,000, or 3.5%, to $16.4 million for fiscal 2003 when compared to the prior fiscal year. The decrease was primarily due to the 72 basis
point decline in the average yield earned on these assets, from 7.04% to 6.32%, partially offset by the $18.3 million increase in the average balance of interest-earning assets.
       Interest income on loans receivable increased by $227,000 or 1.5% to $15.2 million for fiscal 2003 when compared to the prior fiscal year. The increase was primarily due to a $25.4 million increase
in average |  | loans receivable, partially offset by a 77 basis point decline in the average yield on the loans. Interest income on the investment and MBS portfolio decreased by $721,000 or
38.0%, to $1.2 million for fiscal 2003 when compared to the prior fiscal year. The decrease was primarily due to a 133 basis point decrease in the average yield on these investments, and a $4.3
million decrease in the average balance outstanding. The decline was due to rapid prepayment rates causing increased premium amortization on MBS's, the relative short average life of the investment
portfolio and the general decline in interest rates. Other interest income decreased $95,000 in fiscal 2003 as compared to the prior year due to lower average balances and lower yields earned on
these assets.
       **Interest Expense.** Interest expense decreased $1.0 million, or 12.5%, to $7.1 million for fiscal 2003 as compared to the prior fiscal year. The decrease was primarily due to the 68
basis point decrease in the average rate paid on interest-bearing liabilities from 3.71% in fiscal 2002 to 3.03% in fiscal 2003, partially offset by the $15.5 million increase in the average balance
of interest-bearing liabilities used to fund loan growth and the purchase of bank owned life insurance.
       **Provision for Loan Losses.** A provision for loan losses is charged to earnings to bring the total allowance for loan losses to a level considered adequate by management to provide
for probable loan losses based on prior loss experience, type and amount of loans in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any
underlying collateral and current economic conditions. Management also considers other factors relating to the collectibility of the loan portfolio.
       The provision for loan losses was $330,000 for fiscal 2003 as compared to $350,000 for the prior fiscal year. The decrease in loan loss provision was primarily due to the decline in non-performing
assets and loan delinquencies. At June 30, 2003, classified assets totaled $3.7 million as compared to $5.2 million at June 30, 2002. The improvement in classified assets was primarily due to
receiving cash payments of $1.3 million on previously classified assets. The largest classified assets were two loans to one borrower secured by commercial real estate property, which totaled $2.0
million as of June 30, 2003, and both of which were current at that date.
       The above provision was made based on management's analysis of the various factors which affect the loan portfolio and management's desire to maintain the allowance at a level considered adequate.
Management performs a detailed analysis of the loan portfolio, including types of loans, the charge-off history and an analysis of the allowance for loan losses. Management also considered the
continued origination of loans secured by commercial businesses and commercial real estate. These loans bear an inherently higher level of credit risk than one-to four-family residential real estate
loans. While management believes the allowance for loan losses at June 30, 2003, is adequate to cover probable losses in the portfolio, there can be no assurance that, in the future, the Bank's
regulators will not require further increases in the allowance or actual losses will not exceed the allowance.
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|**Noninterest Income.** Noninterest income increased $541,000, or 61.8% to $1.4 million for fiscal 2003, as compared to the $874,000 earned during fiscal 2002. Bank
service charges increased $375,000, or 76.9%, for fiscal 2003 as compared to prior year, which was primarily due to an expanded customer base, structural changes in the assessment of overdraft fees
and the implementation in the third quarter of the overdraft privilege program(ODP). The ODP allows our non-business checking account customers to overdraw their accounts up to $400. The customer is
charged a fee for each check that is presented for payment while the account balance is negative. Other income increased $160,000, or 57.9%, which was primarily from additional sources of revenue,
including increased cash surrender values on bank owned life insurance policies, fee income and miscellaneous services offered to customers. In February, 2003, the Bank purchased "key person" life
insurance policies on six employees for a cash surrender value of $4.0 million. At June 30, 2003, the value of the cash surrender value had increased to $4.1 million, which resulted in earnings of
$73,000 during fiscal 2003.
       **Noninterest Expense.** Noninterest expense increased $293,000, or 5.0%, to $6.2 million for fiscal 2003, as compared to the prior fiscal year. The increased expense resulted primarily
from higher compensation and benefits and occupancy and equipment expenses, partially offset by a decline in professional services expenses. The decrease in professional fees was primarily due to the
internal audit function being outsourced in 2002 and during 2003, an internal auditor was added to our staff.
       Compensation expense increased $242,000, or 8.1% for fiscal 2003 as compared to prior year. The increase was a result of higher health insurance costs, incentive bonuses, increased salaries and
higher employee stock ownership plan expenses. Occupancy and equipment expense increased $171,000, or 15.0% for fiscal 2003 as compared to prior year. The increase was a result of higher depreciation
expense on recent capital expenditures. The Company continues to invest in new technology to enhance the efficiency of the Bank and provide customers with a variety of new products. Capital
improvements to the home office were completed in the first quarter of fiscal 2003.
       **Provision for Income Taxes.** Provision for income taxes increased $269,000 to $1.5 million for fiscal 2003, as compared to the prior fiscal year. The increase was attributed to
increased pre-tax income.**COMPARISON OF THE YEARS ENDED JUNE 30, 2002 AND 2001**
       **Net Income.** Southern Missouri's net income increased $760,000, or 49.1%, to $2.3 million for fiscal 2002 when compared to the results of the prior fiscal year. The prior year's
results included a $399,000 after tax gain on the sale of two branches. Exclusive of the sale, net income for fiscal 2002 would have exceeded the prior year by $1.1 million. The improvement in net
income was primarily due to increased net interest income and the reduction in provision for loan losses, partially offset by higher noninterest expense and provisions for income taxes. |  | **Net Interest Income.** Net interest income increased $2.2 million, or 32.7%, to $8.9 million for fiscal 2002 when compared to the prior fiscal year. The increase
was primarily due to the 57 basis point increase in the average interest rate spread between interest-earning assets and interest-bearing liabilities and the $34.3 million increase in average
interest-earning assets, partially offset by a $31.4 million increase in average interest-bearing liabilities. The increase in the average interest rate spread was primarily due to the overall
decline in average interest rates as interest-bearing liabilities repriced downward at shorter intervals than the yield earned on interest-earning assets.
       During fiscal 2002, the Company operated in an economy that experienced declining interest rates and a change in the shape of the yield curve as short-term interest rates dropped at a faster pace
than longer-term interest rates causing a steepening of the yield curve. During fiscal 2002, the Federal Reserve Bank dropped its targeted federal fund rate from 3.75% to 1.75%. These changes
contributed to the improvement in the Company's average net interest rate spread.
       **Interest Income.** Interest income increased $832,000, or 5.2%, to $17.0 million for fiscal 2002 when compared to the prior fiscal year. The increase was primarily due to the $34.3
million increase in the average balance of interest-earning assets, partially offset by the 77 basis point decline in the average yield earned on these assets, from 7.81% to 7.04%. Interest income on
loans receivable increased by $1.2 million, or 8.5% to $15.0 million for fiscal 2002 when compared to the prior fiscal year. The increase was primarily due to a $30.8 million increase in average
loans receivable, partially offset by a 71 basis point decline in the average yield on the loans. Interest income on the investment and mortgage-backed security portfolio decreased by $225,000 or
10.6%, to $1.9 million for fiscal 2002 when compared to the prior fiscal year. The decrease was primarily due to a 108 basis point decrease in the average yield on these investments, partially offset
by higher average balances of $2.9 million. Other interest income decreased $114,000 in fiscal 2002 as compared to the prior year mostly due to lower yields earned on these assets.
       **Interest Expense.** Interest expense decreased $1.4 million, or 14.2%, to $8.1 million for fiscal 2002 as compared to the prior fiscal year. The decrease was primarily due to the 134
basis point decrease in the average rate paid on interest-bearing liabilities from 5.05% in fiscal 2001 as compared to 3.71% in fiscal 2002, partially offset by the $31.4 million increase in the
average balance of interest-bearing liabilities used to fund loan growth.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ 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|**Provision for Loan Losses.** The provision for loan losses was $350,000 for fiscal 2002 as compared to $510,000 for the prior fiscal year. The decrease in loan loss
provision was primarily due to the decline in non-performing assets and loan delinquencies. At June 30, 2002, classified assets totaled $5.2 million as compared to $5.5 million at June 30, 2001. The
largest classified assets were two loans to one borrower secured by commercial real estate property, which totaled $2.1 million as of June 30, 2002, and both of which were current at that date.
       **Noninterest Income.** Noninterest income increased $61,000, or 7.5% to $874,000 for fiscal 2002, as compared to the $813,000 earned during fiscal 2001, exclusive of the $634,000 gain
on the sale of the two branches in fiscal 2001. The increase was primarily due to an expanded customer base and the implementation of other fee-related services.
       **Noninterest Expense.** Noninterest expense increased $653,000, or 12.5%, to $5.9 million for fiscal 2002, as compared to the prior fiscal year. The increase was primarily due to
increased expenses for compensation and benefits and occupancy and equipment of $379,000 and $340,000, respectively. Increased compensation expense was primarily due to increased staffing levels and
higher compensation. Increased occupancy and equipment expense was primarily due to increased depreciation expense due to the Company's investments in premises and equipment the past two years.
       **Provision for Income Taxes.** Provision for income taxes increased $357,000 to $1.2 million for fiscal 2002, as compared to the prior fiscal year. The increase was attributed to
increased pre-tax income.**ASSET/LIABILITY MANAGEMENT**
       The goal of the Company's asset/liability management strategy is to manage the interest rate sensitivity of both interest-earning assets and interest-bearing liabilities in order to maximize net
interest income without exposing the Company to an excessive level of interest rate risk. The Company employs various strategies intended to manage the potential effect that changing interest rates
have on future operating results. The primary asset/liability management strategy has been to focus on matching the anticipated repricing intervals of interest-earning assets and interest-bearing
liabilities. At times, however, depending on the level of general interest rates, the relationship between long- and short-term interest rates, market conditions and competitive factors, the Company
may determine to increase its interest rate risk position somewhat in order to maintain or increase its net interest margin.
       In an effort to manage the increased interest rate risk resulting from its fixed-rate lending, the Bank has utilized long-term (up to 10 year maturities) FHLB advances, subject to early redemption
and has promoted long term CDs to fund a portion of the fixed-rate residential loan originations and to extend the average maturity of the CD portfolio. Other elements of the Company's current
asset/liability |  | strategy include: (i) increasing loans receivable through the origination of adjustable-rate residential loans, when available, (ii) increasing originations of commercial real
estate and commercial business loans, which typically provide higher yields and shorter repricing periods, but inherently increased credit risk, (iii) expanding the consumer loan portfolio, (iv)
limiting the price volatility of the investment portfolio by maintaining a weighted average maturity of less than five years, (v) active solicitation of less rate-sensitive deposits, (vi) offering
competitively priced money market accounts and CDs with maturities of up to five years. The degree to which each segment of the strategy is achieved will affect profitability and exposure to interest
rate risk.
       Recently, the Bank's fixed-rate residential loan production and portfolio has decreased primarily due to the additional focus being placed on commercial loans, increased residential loan prepayment
rates and increased competitiveness of the secondary market loan rates. During the year ended June 30, 2003, fixed-rate residential loan origination totaled $24.7 million as compared to $31.6 million
during the prior year. At June 30, 2003, fixed-rate residential loans with remaining maturities in excess of 10 years totaled $65.6 million, or 29.8% of loans receivable as compared to $66.4 million
or 31.4% of loans receivable at June 30, 2002. The Company originated $18.8 million of fixed rate commercial loans during the year ended June 30, 2003 as compared to $29.9 million during the prior
year. The Company originated $55.4 million in adjustable rate commercial loans during the year ended June 30, 2003, as compared to $34.3 million during the prior year. At June 30, 2003, CDs with
original terms of two years or more totaled $35.8 million as compared to $32.0 million at June 30, 2002.**AVERAGE BALANCE, INTEREST AND AVERAGE YIELDS AND RATES**
       The following table sets forth certain information relating to the Company's average interest-earning assets and interest-bearing liabilities and reflects the average yield on assets and the average
cost of liabilities for the periods indicated. These yields and costs are derived by dividing income or expense by the average month-end balance of assets or liabilities, respectively, for the years
indicated. Nonaccrual loans are included in the net loan category.
       The table also presents information with respect to the difference between the weighted-average yield earned on interest-earning assets and the weighted-average rate paid on interest-bearing
liabilities, or interest rate spread, which financial institutions have traditionally used as an indicator of profitability. Another indicator of an institution's net interest income is its net yield
on interest-earning assets, which is its net interest income divided by the average balance of interest-earning assets. Net interest income is affected by the interest rate spread and by the relative
amounts of interest-earning assets and interest-bearing liabilities. When interest-earning assets approximate or exceed interest-bearing liabilities, any positive interest rate spread will generate
net interest income.
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(dollars in thousands)

|                                                                                          | 2003            | 2002                   | 2001       
|----------------------------------------------------------------------------------------- | --------------- | ---------------------- | -----------
|**Year Ended June 30**                                                                    | Average
Balance | Interest
and
Dividends | Yield/
Cost
|                                                                                          |                 |                        |            
|Interest-earning assets:                                                                  |                 |                        |            
|Mortgage loans (1)                                                                        | $169,440        | $11,753                | 6.94%      
|Other loans (1)                                                                           | 52,395          | 3,452                  | 6.59       
|                                                                                          |                 |                        |            
|Total net loans                                                                           | 221,835         | 15,205                 | 6.85       
|Mortgage-backed securities                                                                | 22,348          | 737                    | 3.30       
|Investment securities (2)                                                                 | 10,700          | 436                    | 4.07       
|Other interest-earning assets                                                             | 4,833           | 26                     | .54        
|                                                                                          |                 |                        |            
|TOTAL INTEREST-     
EARNING ASSETS (1)                                                   | 259,716         | 16,404                 | 6.32       
|Other noninterest-earning assets                                                          | 14,143          | -                      |            
|                                                                                          |                 |                        |            
|TOTAL ASSETS                                                                              | $273,859        | $16,404                |            
|                                                                                          |                 |                        |            
|Interest-bearing liabilities:                                                             |                 |                        |            
|Savings accounts                                                                          | $55,514         | $1,074                 | 1.93       
|Now accounts                                                                              | 20,746          | 169                    | .81        
|Money market accounts                                                                     | 17,434          | 323                    | 1.85       
|Certificates of deposit                                                                   | 87,198          | 2,805                  | 3.22       
|                                                                                          |                 |                        |            
|TOTAL INTEREST-
BEARING DEPOSITS                                                          | 180,892         | 4,371                  | 2.42       
|                                                                                          |                 |                        |            
|Borrowings:                                                                               |                 |                        |            
|Securities sold under
        agreements to repurchase                                    | 5,480           | 73                     | 1.33       
|FHLB advances                                                                             | 48,309          | 2,676                  | 5.54       
|                                                                                          |                 |                        |            
|TOTAL INTEREST-
BEARING LIABILITIES                                                       | 234,681         | 7,120                  | 3.03       
|Noninterest-bearing
    demand deposits                                                   | 10,871          | -                      |            
|Other liabilities                                                                         | 3,604           | -                      |            
|                                                                                          |                 |                        |            
|TOTAL LIABILITIES                                                                         | 249,156         | 7,120                  |            
|Stockholders' equity                                                                      | 24,703          | -                      |            
|                                                                                          |                 |                        |            
|                                                                                          |                 |                        |            
|TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY                                                | $273,859        | $7,120                 |            
|                                                                                          |                 |                        |            
|                                                                                          |                 |                        |            
|Net interest income                                                                       | -               | $9,284                 |            
|Interest rate spread (3)                                                                  | -               | -                      | 3.29%      
|Net interest margin (4)                                                                   | -               | -                      | 3.57%      
|Ratio of average interest-
    earning assets to average
    interest-bearing liabilities | 110.67%         | -                      | -          

|(1) | Calculated net of deferred loan fees, loan discounts and loans-in-process.                                                                             
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Includes FHLB stock and related cash dividends.                                                                                                        
|(3) | Net interest spread represents the difference between the average rate on interest-earning assets and the average cost of interest-bearing liabilities.
|(4) | Net yield on average interest-earning assets represents net interest income divided by average interest-earning assets.                                

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|**YIELDS EARNED AND RATES PAID**
       The following table sets forth for the periods and at the dates indicated, the weighted average yields earned on the Company's |  | assets, the weighted average interest rates paid on the Company's liabilities, together with the net yield on interest-earning assets.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                        | At
June 30, |  | For
Year Ended June 30,
|--------------------------------------------------------------------------------------------------------------------------------------- | ----------- |  | -----------------------
|                                                                                                                                        | 2003        |  | 2003                   
|Weighted-average yield on loan portfolio                                                                                                | 6.53%       |  | 6.85%                  
|                                                                                                                                        |             |  |                        
|Weighted-average yield on mortgage-backed
    securities                                                                                | 2.27        |  | 3.30                   
|                                                                                                                                        |             |  |                        
|Weighted-average yield on investment
    securities (1)                                                                                 | 3.43        |  | 4.07                   
|                                                                                                                                        |             |  |                        
|Weighted-average yield on other
    interest-earning assets                                                                             | .85         |  | .54                    
|                                                                                                                                        |             |  |                        
|Weighted-average yield on all
    interest-earning assets                                                                               | 5.91        |  | 6.32                   
|                                                                                                                                        |             |  |                        
|Weighted-average rate paid on deposits                                                                                                  | 2.16        |  | 2.42                   
|                                                                                                                                        |             |  |                        
|Weighted-average rate paid on securities
    sold under agreements to repurchase                                                        | 1.25        |  | 1.33                   
|                                                                                                                                        |             |  |                        
|Weighted-average rate paid on FHLB
    advances                                                                                         | 5.18        |  | 5.54                   
|                                                                                                                                        |             |  |                        
|Weighted-average rate paid on all
    interest-bearing liabilities                                                                      | 2.81        |  | 3.03                   
|                                                                                                                                        |             |  |                        
|Interest rate spread (spread between weighted
    average rate on all interest-earning assets
    and all interest-bearing liabilities) | 3.10        |  | 3.29                   
|                                                                                                                                        |             |  |                        
|Net interest margin (net interest income
    as a percentage of average interest-
    earning assets)                                   | 3.34        |  | 3.57                   

(1) Includes Federal Home Loan Bank stock.

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|**RATE/VOLUME ANALYSIS**
       The following table sets forth the effects of changing rates and volumes on net interest income of the Bank. Information is provided with respect to (i) effects on interest income attributable to
changes in volume (changes in volume multiplied by prior rate); (ii) effects |  | on interest income attributable to changes in rate (changes in rate multiplied by prior volume); and (iii) changes in rate/volume (change in rate multiplied by change in
volume).
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                 | Years Ended June 30,
2003 Compared to 2002
Increase (Decrease) Due to | Years Ended June 30,
2002 Compared to 2001
Increase (Decrease) Due to
|---------------------------------------------------------------- | --------------------------------------------------------------------- | ---------------------------------------------------------------------
|(dollars in thousands)                                           | Rate                                                                  | Volume                                                               
|                                                                 |                                                                       |                                                                      
|Interest-earning assets:
     Loans receivable (1)               | $ (1,512)                                                             | $ 1,935                                                              
|Mortgage-backed
         securities                              | (520)                                                                 | (215)                                                                
|Investment securities                                            | (53)                                                                  | (12)                                                                 
|Other interest-
         earning deposits                        | (81)                                                                  | (44)                                                                 
|                                                                 |                                                                       |                                                                      
|Total net change in
     income on interest-
     earning assets | (2,166)                                                               | 1,664                                                                
|                                                                 |                                                                       |                                                                      
|Interest-bearing liabilities:
     Deposits                      | (1,515)                                                               | 344                                                                  
|Securities sold under
         agreements to repurchase          | (33)                                                                  | 29                                                                   
|FHLB advances                                                    | (64)                                                                  | 326                                                                  
|                                                                 |                                                                       |                                                                      
|Total net change in expense on
     interest-bearing liabilities | (1,612)                                                               | 699                                                                  
|                                                                 |                                                                       |                                                                      
|Net change in net
     interest income                           | $ (554)                                                               | $ 965                                                                
|                                                                 |                                                                       |                                                                      

(1) Does not include interest on loans placed on nonaccrual status.

**INTEREST RATE SENSITIVITY ANALYSIS**
       The following table sets forth as of June 30, 2003, management's estimates of the projected changes in net portfolio value and net interest income in the event of 1%, 2% and 3%, instantaneous,
permanent increases or decreases in market interest rates.

|                    | Net Portfolio            | NPV as % of
PV of Assets
|------------------- | ------------------------ | ------------------------
|                    | $ Amount                 | $ Change                
|**Change in Rates** | *(dollars in thousands)* |                         
|                   
|+300 bp             | 21,037                   | (4,364)                 
|+200 bp             | 23,063                   | (2,338)                 
|+100 bp             | 24,284                   | (1,117)                 
|0 bp                | 25,401                   | -)                      
|-100 bp             | 25,474                   | 73)                     
|-200 bp             | 24,492                   | (909)                   
|-300 bp             | 25,208                   | (193)                   

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|Computations in the table above are based on prospective effects of hypothetical changes in interest rates and are based on an internally generated model using the actual maturity
and repricing schedules for Southern Missouri's loans and deposits, adjusted by management's assumptions for prepayment rates and deposit runoff. Further, the computations do not consider any
reactions that the Bank may undertake in response to changes in interest rates. These projected changes should not be relied upon as indicative of actual results in any of the aforementioned interest
rate changes.
       Management cannot accurately predict future interest rates or their effect on the Bank's NPV and net interest income in the future. Certain shortcomings are inherent in the method of analysis
presented in the computation of NPV and net interest income. For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may react in different
degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on
other types of assets and liabilities may lag behind changes in market interest rates. Additionally, most of Southern Missouri's loans have features which restrict changes in interest rates on a
short-term basis and over the life of the asset. Further, in the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in
calculating the foregoing table. Finally, the ability of many borrowers to service their debt may decrease in the event of an interest rate increase.**LIQUIDITY AND CAPITAL RESOURCES**
       Southern Missouri's primary potential sources of funds include deposit growth, securities sold under agreements to repurchase, FHLB advances, amortization and prepayment of loan principal,
investment maturities and sales, and ongoing operating results. While scheduled repayments on loans and securities as well as the maturity of short-term investments are a relatively predictable
source of funding, deposit flows, FHLB advance redemptions and loan and security prepayment rates are significantly influenced by factors outside of the Bank's control, including general economic
conditions and market competition. The Bank has relied on FHLB advances as a source for funding cash or liquidity needs. |  | Southern Missouri uses its liquid assets as well as other funding sources to meet ongoing commitments, to fund loan commitments, to repay maturing certificates of deposit and FHLB
advances, to make investments, to fund other deposit withdrawals and to meet operating expenses. At June 30, 2003, the Bank had outstanding commitments to extend credit of $29.3 million (including
$17.8 million on lines of credit). Total commitments to originate fixed-rate loans with terms in excess of one year were $4.1 million at interest rates ranging from 4.5% to 7.0%. Management
anticipates that current funding sources will be adequate to meet foreseeable liquidity needs.
       The primary sources of funding for the Company are deposits, securities sold under agreements to repurchase and FHLB advances. For the year ended June 30, 2003, Southern Missouri increased deposits,
FHLB advances and securities sold under agreements to repurchase by $5.6 million, $6.5 million and $923,000, respectively. During the prior year, Southern Missouri increased deposits, FHLB advances
and securities sold under agreements to repurchase by $15.7 million, $10.0 million and $196,000, respectively. At June 30, 2003, the Bank had additional borrowing capacity from the FHLB of $26.4
million as compared to $48.7 million at June 30, 2002.
       Liquidity management is an ongoing responsibility of the Bank's management. The Bank adjusts its investment in liquid assets based upon a variety of factors including (i) expected loan demand and
deposit flows, (ii) anticipated investment and FHLB advance maturities, (iii) the impact on profitability, and (iv) asset/liability management objectives.
       At June 30, 2003, the Bank had $55.1 million in CDs maturing within one year and $108.2 million in other deposits without a specified maturity. Management believes that most maturing
interest-bearing liabilities will be retained or replaced by new interest-bearing liabilities. Also at June 30, 2003, the Bank had $27.0 million in FHLB advances eligible for early redemption within
one year.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|**REGULATORY CAPITAL**
       Federally insured savings banks are required to maintain a minimum level of regulatory capital. FDIC regulations established capital requirements, including a leverage (or core capital) requirement
and a risk-based capital requirement. The FDIC is also authorized to impose capital requirements in excess of these standards on individual institutions on a case-by-case basis.
       At June 30, 2003, the Bank exceeded regulatory capital requirements with core and risk-based capital of $21.0 million and $22.9 million, or 7.6% and 12.0% of adjusted total assets and risk-weighted
assets, respectively. These capital levels exceeded minimum requirements of 4.0% and 8.0% for adjusted total assets and risk-weighted assets, by approximately $10.0 million and $7.6 million,
respectively. Under regulatory guidelines, SMBT was considered well-capitalized at June 30, 2003.**IMPACT OF INFLATION**
       The consolidated financial statements and related data presented herein have been prepared in accordance with U.S. generally accepted accounting principles, which require the measurement of
financial position and operating results in historical dollars without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on the
operations of the Company is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, changes in interest rates generally have a more significant impact on a financial institution's performance than does inflation. Interest rates do not necessarily move in the same
direction or to the same extent as the prices of goods and services. In the current interest rate environment, liquidity and maturity structure of the Company's assets and liabilities are critical to
the maintenance of acceptable performance levels. |  | **IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS**
      See Note 1 of Notes to Consolidated Financial Statements for a discussion of the impact of recent accounting pronouncements.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|KRAFT, MILES & TATUM, LLC
CERTIFIED PUBLIC ACCOUNTANTS1650 WEST HARPER, POPLAR BLUFF, MISSOURI 63901-4196
(573) 785-6438
FAX (573) 785-0114

Board of Directors
Southern Missouri Bancorp, Inc.
Poplar Bluff, Missouri

We have audited the accompanying consolidated statements of financial condition of Southern Missouri Bancorp, Inc. and Subsidiary (Company) as of June 30, 2003 and 2002, and the
related consolidated statements of income, stockholders' equity, and cash flows for each of the years in the three year period ended June 30, 2003. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Southern Missouri Bancorp, Inc. and
Subsidiary as of June 30, 2003 and 2002, and the results of their operations and their cash flows for each of the years in the three year period ended June 30, 2003 in conformity with accounting
principles generally accepted in the United States of America.


Poplar Bluff, Missouri
July 17, 2003

MEMBERS - AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTSMISSOURI SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|**Assets**                                                                                                                                    | 2003          | 2002         
|--------------------------------------------------------------------------------------------------------------------------------------------- | ------------- | -------------
|                                                                                                                                              |              
|Cash and cash equivalents                                                                                                                     | $ 7,617,740   | $ 8,612,714  
|Investment and mortgage-backed
     securities: (Note 3)                                                                                      |               |              
|Available for sale - at estimated market value
     (amortized cost $30,786,269 and $32,249,517
     at June 30, 2003 and 2002, respectively) | 31,002,858    | 32,758,857   
|Stock in FHLB of Des Moines                                                                                                                   | 2,675,000     | 2,350,000    
|Loans receivable, net (Note 4)                                                                                                                | 222,840,345   | 211,211,588  
|Accrued interest receivable (Note 5)                                                                                                          | 1,270,334     | 1,559,674    
|Foreclosed real estate, net (Note 6)                                                                                                          | 217,403       | 383,346      
|Premises and equipment (Note 7)                                                                                                               | 6,203,385     | 5,843,680    
|Bank owned life insurance - cash surrender value                                                                                              | 4,072,617     | -            
|Intangible assets, net                                                                                                                        | 3,114,191     | 3,369,448    
|Prepaid expenses and other assets                                                                                                             | 440,785       | 198,282      
|                                                                                                                                              |              
|TOTAL ASSETS                                                                                                                                  | $ 279,454,658 | $ 266,287,589
|                                                                                                                                              |              
|**Liabilities and Stockholders' Equity**                                                                                                      |               |              
|                                                                                                                                              |               |              
|Deposits (Note 8)                                                                                                                             | $ 194,531,956 | $ 188,946,856
|Securities sold under agreements to repurchase (Note 9)                                                                                       | 5,234,392     | 4,311,237    
|Advances from FHLB of Des Moines (Note 10)                                                                                                    | 53,500,000    | 47,000,000   
|Advances from borrowers for taxes and insurance                                                                                               | -             | 170,610      
|Accounts payable and other liabilities                                                                                                        | 686,032       | 776,513      
|Accrued interest payable                                                                                                                      | 393,841       | 571,168      
|                                                                                                                                              |              
|TOTAL LIABILITIES                                                                                                                             | 254,346,221   | 241,776,384  
|                                                                                                                                              |              
|Commitments and contingencies (Note 15)                                                                                                       | -             | -            
|                                                                                                                                              |               |              
|Preferred stock, $.01 par value; 500,000 shares
     authorized; none issued and outstanding                                                  | -             | -            
|Common stock, $.01 par value; 4,000,000 shares
     authorized; 1,803,201 shares issued                                                       | 18,032        | 18,032       
|Additional paid-in capital                                                                                                                    | 17,497,708    | 17,456,872   
|Retained earnings-substantially restricted                                                                                                    | 19,175,369    | 17,093,398   
|Treasury stock of 650,306 shares in 2003 and
     592,966 shares in 2002, at cost                                                             | (11,538,218)  | (10,122,620) 
|Unearned employee benefits                                                                                                                    | (180,905)     | (255,361)    
|Accumulated other comprehensive income                                                                                                        | 136,451       | 320,884      
|                                                                                                                                              |              
|TOTAL STOCKHOLDERS' EQUITY                                                                                                                    | 25,108,437    | 24,511,205   
|                                                                                                                                              |              
|TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY                                                                                                    | $ 279,454,658 | $ 266,287,589
|                                                                                                                                              |              

See accompanying notes to consolidated financial statements.

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|**Interest income:**                                                    | 2003         | 2002         | 2001        
|----------------------------------------------------------------------- | ------------ | ------------ | ------------
|                                                                        |             
|Loans receivable                                                        | $ 15,204,984 | $ 14,978,086 | $ 13,806,477
|Investment securities                                                   | 436,366      | 500,637      | 1,116,939   
|Mortgage-backed securities                                              | 737,116      | 1,393,518    | 1,002,102   
|Other interest-earning assets                                           | 25,896       | 121,181      | 235,556     
|                                                                        |             
|TOTAL INTEREST INCOME                                                   | 16,404,362   | 16,993,422   | 16,161,074  
|                                                                        |             
|**Interest expense:**                                                   |              |              |             
|Deposits (Note 8)                                                       | 4,371,163    | 5,630,403    | 7,268,120   
|Securities sold under agreements
         to repurchase                 | 73,060       | 88,092       | 99,087      
|Advances from FHLB                                                      | 2,676,044    | 2,421,396    | 2,122,810   
|                                                                        |             
|Total interest expense                                                  | 7,120,267    | 8,139,891    | 9,490,017   
|                                                                        |             
|Net interest income                                                     | 9,284,095    | 8,853,531    | 6,671,057   
|Provision for loan losses (Note 4)                                      | 330,000      | 350,000      | 510,000     
|                                                                        |             
|NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES                     | 8,954,095    | 8,503,531    | 6,161,057   
|                                                                        |             
|**Noninterest income:**                                                 |              |              |             
|Gain on sale of investment
         securities, available for sale      | -            | -            | 11,121      
|Gain on sale of mortgage-backed
         securities, available for sale | -            | 1,366        | -           
|Banking service charges                                                 | 862,862      | 487,682      | 503,452     
|Loan late charges                                                       | 116,741      | 109,534      | 92,328      
|Gain on sale of branches                                                | -            | -            | 633,538     
|Other                                                                   | 435,309      | 275,759      | 206,383     
|                                                                        |             
|TOTAL NONINTEREST INCOME                                                | 1,414,912    | 874,341      | 1,446,822   
|                                                                        |             
|**Noninterest expense:**                                                |              |              |             
|General and administrative:                                             |              |              |             
|Compensation and benefits                                               | 3,240,085    | 2,997,782    | 2,618,465   
|Occupancy and equipment                                                 | 1,305,241    | 1,134,642    | 794,172     
|SAIF deposit insurance premium                                          | 31,452       | 31,255       | 27,516      
|Professional fees                                                       | 94,965       | 211,374      | 205,177     
|Advertising                                                             | 159,212      | 161,422      | 169,302     
|Postage and office supplies                                             | 280,187      | 255,646      | 218,252     
|Amortization of intangible assets                                       | 255,258      | 255,258      | 214,519     
|Provision for loss on impairment
             of premises and equipment | -            | -            | 125,338     
|Other                                                                   | 798,489      | 824,890      | 846,536     
|                                                                        |             
|TOTAL NONINTEREST EXPENSE                                               | 6,164,889    | 5,872,269    | 5,219,277   
|                                                                        |             
|Income before income taxes                                              | 4,204,118    | 3,505,603    | 2,388,602   
|                                                                        |             
|Income taxes (Note 12)                                                  |              |              |             
|Current                                                                 | 1,695,900    | 1,126,700    | 850,000     
|Deferred                                                                | (230,000)    | 70,000       | (10,000)    
|                                                                        |             
|                                                                        | 1,465,900    | 1,196,700    | 840,000     
|                                                                        |             
|NET INCOME                                                              | $ 2,738,218  | $ 2,308,903  | $ 1,548,602 
|                                                                        |             
|Basic earnings per common share                                         | $ 2.35       | $ 1.94       | $ 1.26      
|Diluted earnings per common share                                       | $ 2.28       | $ 1.90       | $ 1.25      

See accompanying notes to consolidated financial statements.

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|                                                                       | Common
Stock | Additional
Paid-in
Capital | Retained
Earnings | Treasury
Stock | Unearned
Employee
Benefits | Accumulated
Other
Comprehensive
Income | Total
Stockholders'
Equity
|---------------------------------------------------------------------- | ------------ | -------------------------- | ----------------- | -------------- | -------------------------- | -------------------------------------- | --------------------------
|                                                                       |             
|BALANCE AT JUNE 30, 2000                                               | $ 18,032     | $ 17,517,834               | $ 14,438,957      | $ (9,451,693)  | $ (436,587)                | $(629,956)                             | $ 21,456,587              
|                                                                       |             
|Net income                                                             |              |                            | 1,548,602         |                |                            |                                        | 1,548,602                 
|Change in unrealized gain (loss)
     on available for sale securities |              |                            |                   |                |                            | 877,300                                | 877,300                   
|                                                                       |              |                            |                   |                |                            |                                        |                           
|TOTAL COMPREHENSIVE INCOME                                             |              |                            |                   |                |                            |                                        | 2,425,902                 
|                                                                       |              |                            |                   |                |                            |                                        |                           
|Purchase of treasury stock                                             |              |                            |                   | (10,646)       |                            |                                        | (10,646)                  
|Dividends paid ($.50 per share)                                        |              |                            | (615,119)         |                |                            |                                        | (615,119)                 
|Release of ESOP awards                                                 |              | 25,128                     |                   |                | 81,876                     |                                        | 107,004                   
|MRP expense, net                                                       |              |                            |                   |                | 13,424                     |                                        | 13,424                    
|Exercise of stock options                                              |              | (92,111)                   |                   | 297,447        |                            |                                        | 205,336                   
|                                                                       |             
|BALANCE AT JUNE 30, 2001                                               | 18,032       | 17,450,851                 | 15,372,440        | (9,164,892)    | (341,287)                  | 247,344                                | 23,582,488                
|                                                                       |             
|Net income                                                             |              |                            | 2,308,903         |                |                            |                                        | 2,308,903                 
|Change in unrealized gain (loss)
     on available for sale securities |              |                            |                   |                |                            | 73,540                                 | 73,540                    
|                                                                       |              |                            |                   |                |                            |                                        |                           
|TOTAL COMPREHENSIVE INCOME                                             |              |                            |                   |                |                            |                                        | 2,382,443                 
|                                                                       |              |                            |                   |                |                            |                                        |                           
|Purchase of treasury stock                                             |              |                            |                   | (1,142,399)    |                            |                                        | (1,142,399)               
|Dividends paid ($.50 per share)                                        |              |                            | (587,945)         |                |                            |                                        | (587,945)                 
|Release of ESOP awards                                                 |              | 45,282                     |                   |                | 71,891                     |                                        | 117,173                   
|MRP expense, net                                                       |              |                            |                   |                | 14,035                     |                                        | 14,035                    
|Exercise of stock options                                              |              | (39,261)                   |                   | 184,671        |                            |                                        | 145,410                   
|                                                                       |             
|BALANCE AT JUNE 30, 2002                                               | 18,032       | 17,456,872                 | 17,093,398        | (10,122,620)   | (255,361)                  | 320,884                                | 24,511,205                
|                                                                       |             
|                                                                       |              |                            |                   |                |                            |                                        |                           
|Net income                                                             |              |                            | 2,738,218         |                |                            |                                        | 2,738,218                 
|Change in unrealized gain (loss)
     on available for sale securities |              |                            |                   |                |                            | (184,433)                              | (184,433)                 
|                                                                       |              |                            |                   |                |                            |                                        |                           
|TOTAL COMPREHENSIVE INCOME                                             |              |                            |                   |                |                            |                                        | 2,553,785                 
|                                                                       |              |                            |                   |                |                            |                                        |                           
|Purchase of treasury stock                                             |              |                            |                   | (1,641,518)    |                            |                                        | (1,641,518)               
|Dividends paid ($.56 per share)                                        |              |                            | (656,247)         |                |                            |                                        | (656,247)                 
|Release of ESOP awards                                                 |              | 79,763                     |                   |                | 67,190                     |                                        | 146,953                   
|MRP expense, net                                                       |              |                            |                   |                | 7,266                      |                                        | 7,266                     
|Tax benefit of MRP                                                     |              | 2,500                      |                   |                |                            |                                        | 2,500                     
|Exercise of stock options                                              |              | (41,427)                   |                   | 225,920        |                            |                                        | 184,493                   
|                                                                       |             
|BALANCE AT JUNE 30, 2003                                               | $ 18,032     | $ 17,497,708               | $ 19,175,369      | $ (11,538,218) | $ (180,905)                | $ 136,451                              | $ 25,108,437              
|                                                                       |             

See accompanying notes to consolidated financial statements.

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|**Cash flows from operating activities:**                                  | 2003          | 2002          | 2001         
|-------------------------------------------------------------------------- | ------------- | ------------- | -------------
|                                                                           |               |               |              
|Net income                                                                 | $2,738,218    | $2,308,903    | $1,548,602   
|Items not requiring (providing) cash:                                      |               |               |              
|Depreciation                                                               | 677,138       | 551,668       | 413,087      
|MRP expense and ESOP expense                                               | 154,219       | 131,208       | 120,428      
|Gain on sale of investment
         securities, available for sale         | -             | -             | (11,121)     
|Gain on sale of mortgage-backed
         securities, available for sale    | -             | (1,366)       | -            
|Amortization of intangible assets                                          | 255,258       | 255,258       | 214,519      
|Increase in cash surrender value
         of bank owned life insurance     | (72,617)      | -             | -            
|Provision for loss on impairment of
         premises and equipment        | -             | -             | 125,338      
|Provision for loan losses                                                  | 330,000       | 350,000       | 510,000      
|Gain on sale of branches                                                   | -             | -             | (633,538)    
|Net amortization of premiums and discounts                                 | 592,761       | 345,408       | 47,713       
|Changes in:                                                                |               |               |              
|Accrued interest receivable                                                | 289,340       | 42,156        | (115,188)    
|Prepaid expenses and other assets                                          | (242,503)     | 180           | 85,903       
|Accounts payable and other liabilities                                     | 20,336        | (362,416)     | 221,172      
|Accrued interest payable                                                   | (177,327)     | (567,966)     | 2,729        
|                                                                           |               |               |              
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                  | 4,564,823     | 3,053,033     | 2,529,644    
|                                                                           |               |               |              
|**Cash flows from investing activities:**                                  |               |               |              
|                                                                           |               |               |              
|Net increase in loans                                                      | (11,952,333)  | (30,392,626)  | (27,157,886) 
|Net cash received in acquisition of branches                               | -             | -             | 14,021,579   
|Net cash paid in sale of branches                                          | -             | -             | (4,153,644)  
|Proceeds from sales of investment
     securities, available for sale      | -             | -             | 7,102,357    
|Proceeds from maturing investment
     securities, available for sale      | 7,658,450     | 11,545,000    | 10,195,000   
|Purchase of investment securities,
     available for sale                 | (3,646,690)   | (12,836,748)  | (3,558,681)  
|Proceeds from sales of mortgage-backed
     securities, available for sale | -             | 3,389,315     | -            
|Proceeds from maturing mortgage-backed
     securities, available for sale | 20,601,348    | 13,151,318    | 2,343,854    
|Purchase of mortgage-backed
     securities, available for sale            | (23,742,621)  | (13,113,698)  | (14,937,089) 
|Purchase of FHLB stock                                                     | (325,000)     | (200,000)     | (300,000)    
|Purchase of premises and equipment                                         | (955,523)     | (1,326,540)   | (1,648,548)  
|Purchase of bank owned life insurance                                      | (4,000,000)   | -             | -            
|Proceeds from sale of foreclosed real estate                               | 78,199        | 466,442       | 365,347      
|                                                                           |               |               |              
|NET CASH USED IN INVESTING ACTIVITIES                                      | $(16,284,170) | $(29,317,537) | $(17,727,711)
|                                                                           |               |               |              

See accompanying notes to consolidated financial statements.

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|**Cash flows from financing activities:**                                                                                                                                                                   | 2003         | 2002        | 2001        
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | ----------- | ------------
|                                                                                                                                                                                                            |              |             |             
|Net increase in demand
     deposits and savings accounts                                                                                                                                                   | $3,441,910   | $11,997,393 | $38,489,609 
|Net increase (decrease) in
     certificates of deposit                                                                                                                                                     | 2,143,190    | 3,668,044   | (20,730,046)
|Net increase in securities sold under
     agreements to repurchase                                                                                                                                         | 923,155      | 196,095     | 4,115,142   
|Proceeds from FHLB advances                                                                                                                                                                                 | 24,200,000   | 11,000,000  | 77,000,000  
|Repayments of FHLB advances                                                                                                                                                                                 | (17,700,000) | (1,000,000) | (77,000,000)
|Net decrease in advances from
     borrowers for taxes and insurance                                                                                                                                        | (170,610)    | (109,502)   | (16,460)    
|Dividends on common stock                                                                                                                                                                                   | (656,247)    | (587,945)   | (615,119)   
|Exercise of stock options                                                                                                                                                                                   | 184,493      | 145,410     | 205,336     
|Payments to acquire treasury stock                                                                                                                                                                          | (1,641,518)  | (1,142,399) | (10,646)    
|                                                                                                                                                                                                            |              |             |             
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                                                                                                                                                   | 10,724,373   | 24,167,096  | 21,437,816  
|                                                                                                                                                                                                            |              |             |             
|(Decrease) increase in cash and cash equivalents                                                                                                                                                            | (994,974)    | (2,097,408) | 6,239,749   
|Cash and cash equivalents at beginning of year                                                                                                                                                              | 8,612,714    | 10,710,122  | 4,470,373   
|                                                                                                                                                                                                            |              |             |             
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                                                                                                                                                    | $7,617,740   | $8,612,714  | $10,710,122 
|                                                                                                                                                                                                            |              |             |             
|**Supplemental disclosures of cash flow information:**                                                                                                                                                      |              |             |             
|                                                                                                                                                                                                            |              |             |             
|Noncash investing and financing activities                                                                                                                                                                  |              |             |             
|Conversion of loans to foreclosed real estate                                                                                                                                                               | $ 147,370    | $ 94,408    | $ 1,134,909 
|Conversion of foreclosed real estate to loans                                                                                                                                                               | 123,662      | 177,600     | 153,000     
|                                                                                                                                                                                                            |              |             |             
|Cash paid during the period for                                                                                                                                                                             |              |             |             
|Interest (net of interest credited)                                                                                                                                                                         | 3,725,562    | 3,723,833   | 3,718,786   
|Income taxes                                                                                                                                                                                                | 1,540,899    | 1,258,040   | 797,254     
|                                                                                                                                                                                                            |              |             |             
|Noncash investing and financing transactions relating to the two branch
acquisitions that are not reflected in the Consolidated Statement
of Cash Flows for the year ended June 30, 2001, are listed below: |              |             |             
|                                                                                                                                                                                                            |              |             |             
|Fair value of assets acquired excluding cash and
     cash equivalents acquired                                                                                                                             |              |             | $27,249,092 
|Liabilities assumed                                                                                                                                                                                         |              |             | (45,109,896)
|Intangible assets                                                                                                                                                                                           |              |             | 3,839,225   
|Net cash received in acquisition of branches                                                                                                                                                                |              |             | 14,021,579  

See accompanying notes to consolidated financial statements.

---

|**NOTE 1: Organization and Summary of Significant Accounting Policies***Organization*-Southern Missouri Bancorp, Inc., a Missouri corporation (the Company) was organized in 1994 and is the parent company of Southern Missouri Bank ∓ Trust (the Bank). Substantially all
of the Company's consolidated revenues are derived from the operations of the Bank, and the Bank represents substantially all of the Company's consolidated assets and liabilities.*Basis of Financial Statement Presentation*-The financial statements of the Company have been prepared in conformity with U.S. generally accepted accounting principles and general practices within the financial institution industry. In the normal
course of business, the Company encounters two significant types of risk: economic and regulatory. Economic risk is comprised of interest rate risk, credit risk, and market risk. The Company is
subject to interest rate risk to the degree that its interest-bearing liabilities reprice on a different basis than its interest-earning assets. Credit risk is the risk of default on the Company's
loan portfolio that results from the borrowers' inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of collateral underlying loans receivable
and the value of the Company's investment in real estate.
       Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare the
consolidated financial statements in conformity with U.S. generally accepted accounting principles. Actual results could differ from those estimates. The determination of the provision for loan
losses and the valuation of real estate are based on estimates that are particularly susceptible to changes in the economic environment and market conditions. These balances may be adjusted in the
future based on such changes, or based on requirements of regulatory examiners of the Company's subsidiary.*Principles of Consolidation*-The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, the Bank. All significant intercompany accounts and
transactions have been eliminated. |  | *Cash and Cash Equivalents*-For purposes of reporting cash flows, cash and cash equivalents include cash, due from depository institutions and interest-bearing deposits in
other depository institutions with original maturities of three months or less. Interest-bearing deposits in other depository institutions were $5,505,308 and $6,275,882 at June 30, 2003 and 2002,
respectively.*Investment and Mortgage-Backed Securities*-Debt and equity securities classified as available for sale are carried at fair value. Their related unrealized gains and losses, net of tax, are
reported in accumulated other comprehensive income, a component of stockholders' equity. Debt securities that the Company has the positive intent and ability to hold to maturity are classified as held to maturity securities and are reported at amortized cost. Debt securities that are bought and held principally for the purpose of
selling in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings. All securities have been classified as available for
sale.
      Premiums and discounts on debt securities are amortized or accreted as adjustments to income over the estimated life of the security using the level yield method. Gain or loss on the sale of
securities is based on the specific identification method. The fair value of securities is based on quoted market prices or dealer quotes. If a quoted market price is not available, fair value is
estimated using quoted market prices for similar securities.
      The Company does not invest in collateralized mortgage obligations that are considered high risk.
      The Bank is a member of the Federal Home Loan Bank (FHLB) system. Capital stock of the FHLB is carried at cost.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|*Loans Receivable, Net*-Loans receivable, net are stated at unpaid principal balances, less the allowance for loan losses and net deferred loan origination fees.
       Interest on loans is accrued based upon the principal amount outstanding. The accrual of interest on loans is discontinued when, in management's judgment, the collectibility of interest or principal
in the normal course of business is doubtful. A loan is considered delinquent when a payment has not been made by the contractual due date. Interest income previously accrued but not collected at the
date a loan is placed on nonaccrual status is reversed against interest income. Cash receipts on a nonaccrual loan are applied to principal and interest in accordance with its contractual terms
unless full payment of principal is not expected, in which case cash receipts, whether designated as principal or interest, are applied as a reduction of the carrying value of the loan. A nonaccrual
loan is generally returned to accrual status when principal and interest payments are current, full collectibility of principal and interest is reasonably assured and a consistent record of
performance has been demonstrated.
       The allowance for losses on loans represents management's best estimate of losses probable in the existing loan portfolio. The allowance for losses on loans is increased by the provision for losses
on loans charged to expense and reduced by loans charged off, net of recoveries. Loans are charged off in the period deemed uncollectible. Recoveries of loans previously charged off are recorded when
received. The provision for losses on loans is determined based on management's assessment of several factors: reviews and evaluations of specific loans, changes in the nature and volume of the loan
portfolio, current economic conditions and the related impact on specific borrowers and industry groups, historical loan loss experience, the level of classified and nonperforming loans and the
results of regulatory examinations.
       Valuation allowances are established for impaired loans for the difference between the loan amount and fair value of collateral less estimated selling costs. Impairment losses are recognized through
an increase in the allowance for loan losses. |  | Loans are considered impaired if, based on current information and events, it is probable that the company will be unable to collect the scheduled payments of principal or
interest when due according to the contractual terms of the loan agreement.
       *Loan Origination Fees*-Loan fees and certain direct loan origination costs are deferred, and the net fee or cost is recognized as an adjustment to interest income using the interest method
over the contractual life of the loans.*Foreclosed Real Estate*-Real estate acquired by foreclosure or by deed in lieu of foreclosure is initially recorded at the lower of cost or fair value less estimated selling costs. Costs for
development and improvement of the property are capitalized.
       Valuations are periodically performed by management, and an allowance for losses is established by a charge to operations if the carrying value of a property exceeds its estimated fair value, less
estimated selling costs.
       Loans to facilitate the sale of real estate acquired in foreclosure are discounted if made at less than market rates. Discounts are amortized over the fixed interest period of each loan using the
interest method.*Stock Compensation* - The Company has elected not to adopt the recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123, *Accounting for Stock-Based Compensation*,
which requires a fair-value-based method of accounting for stock options. As permitted under SFAS No. 123, the Company continues to apply APB Opinion No. 25, *Accounting for Stock Issued to Employees*,
and related interpretations in accounting for its stock option plan, and accordingly, does not recognize compensation cost for its stock option plan. Had compensation cost for the Company's stock
option plan been consistently expensed based upon the fair value at the grant date for awards under the methodology prescribed under SFAS No. 123, the Company's net income and earnings per share
would have been reduced as shown in the table below. Detailed information for activity in the Company's stock plan and the assumptions used in the fair-value-based method can be found in Note
11.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                                           | June 30   
|---------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------
|                                                                                                                                                           | 2003      
|                                                                                                                                                           |           
|Net income as reported                                                                                                                                     | $2,738,218
|Deduct: Total stock-based employee
     compensation expense determined under
     fair-value-based method for all awards,
     net of related tax effects | (5,000)   
|                                                                                                                                                           |           
|Pro forma net income                                                                                                                                       | $2,733,218
|                                                                                                                                                           |           
|Earnings per share                                                                                                                                         |           
|Basic as reported                                                                                                                                          | $2.35     
|Basic pro forma                                                                                                                                            | 2.35      
|Diluted as reported                                                                                                                                        | 2.28      
|Diluted pro forma                                                                                                                                          | 2.28      

---

|*Income Taxes*-The Company and its subsidiary file consolidated income tax returns. Deferred income taxes are provided on temporary differences between the financial
reporting bases and income tax bases of the Company's assets and liabilities.*Premises and Equipment*-Premises and equipment are stated at cost less accumulated depreciation and include expenditures for major betterments and renewals. Maintenance, repairs, and minor
renewals are expensed as incurred. When property is retired or sold, the retired asset and related accumulated depreciation are removed from the accounts and the resulting gain or loss taken into
income. The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are
considered to be impaired, the impairment loss recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets.
       Depreciation is computed by use of straight-line and accelerated methods over the estimated useful lives of the assets. Estimated lives are generally twenty to forty years for premises, and five to
seven years for equipment.*Earnings Per Share*-Basic income per share is computed using the weighted-average number of common shares outstanding. ESOP shares which have been committed to be released are considered
outstanding. Diluted income per share includes the effect of all dilutive potential common shares (primarily stock options) outstanding during each year.*Intangible Assets*-The Bank adopted the provisions of SFAS No. 142, *Goodwill and Other Intangible Assets*, effective July 1, 2002. Intangible assets acquired through the purchase of branches
were excluded from the scope of SFAS No. 142. In October 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 147, *Acquisitions of Certain Financial Institutions*. SFAS No. 147
clarified that the carrying amount of an unidentified intangible asset continue to be amortized. The Bank's gross amount of this intangible asset at June 30, 2003 and 2002 was $3,837,416 and
$3,837,416, respectively, with accumulated amortization of $723,226 and $467,968, respectively. The intangible asset is being amortized over 15 years with amortization expense over the next five
years expected to be $255,258 per year.*Segments*-Southern Missouri Bancorp, Inc., through the branch network of its subsidiary, Southern Missouri Bank ∓ Trust, provides a broad range of financial services to individuals and
companies in Southeast Missouri. These services include demand, time and savings deposits, and lending activities. While the Company's chief decision makers monitor the revenue streams of the various
Company products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Company's banking operations are considered by management
to be aggregated in one reportable segment. |  | *The following paragraphs summarize the impact of new accounting pronouncements:*
       In April 2003, the FASB issued SFAS No. 149, *Amendment of Statement 133 on Derivative Instruments and Hedging Activities*, effective for contracts entered into or modified after June 30, 2003. The
statement amends and clarifies financial accounting and reporting for derivative instruments including certain derivative instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities under SFAS No 133. The adoption of Statement No. 149 is not expected to have a material effect on the Company's financial position or results of
operations.
       In May 2003, the FASB issued SFAS No. 150, *Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity*, effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The statement establishes standards for how an issuer classifies
and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or
an asset in some circumstances). Many of those instruments were previously classified as equity. The adoption of Statement No. 150 is not expected to have a material effect on the Company's financial
position or results of operations.**NOTE 2: Acquisitions and Divestitures**
       In August 2000, the Bank purchased two full-service branches in Kennett and Qulin, Missouri, from Commerce Bancshares, Inc. for $4.9 million in cash. The transaction which was accounted for in
accordance with SFAS No. 72, *Accounting for Certain Acquisitions of Bank and Thrift Acquisitions*, included the acquisition of approximately $25.3 million in loans, $1.6 million in premises and
equipment and the assumption of $44.7 million in deposits. See also Note 1 for accounting of intangible assets acquired through the purchase of branches.
       In September 2000, the Bank completed its divesture of its branches in Malden and Ellington, Missouri, resulting in a reduction of the deposit base of approximately $13.2 million and a pre-tax gain
of $633,538 recorded in other noninterest income.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|**NOTE 3: Investment and Mortgage-Backed Securities***Available for Sale* - The amortized cost, gross unrealized gains, gross unrealized losses and estimated market value of securities available for sale consisted of the following: |  | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 

|                                                                                    | June 30, 2003 
|----------------------------------------------------------------------------------- | --------------
|                                                                                    |               
|                                                                                    | Amortized
Cost
|                                                                                    |               
|Investment securities:
     U.S. government and Federal
         agency obligations | $3,617,453    
|Obligations of states and
         political subdivisions                           | 1,206,630     
|FNMA preferred stock                                                                | 1,000,000     
|                                                                                    |               
|TOTAL INVESTMENT SECURITIES                                                         | 5,824,083     
|                                                                                    |               
|Mortgage-backed securities:                                                         |               
|FHLMC certificates                                                                  | 5,978,033     
|GNMA certificates                                                                   | 592,475       
|FNMA certificates                                                                   | 6,544,806     
|CMO's issued by government agencies                                                 | 11,552,300    
|CMO's issued by private issuer                                                      | 294,572       
|                                                                                    |               
|TOTAL MORTGAGE-BACKED SECURITIES                                                    | 24,962,186    
|                                                                                    |               
|TOTAL                                                                               | $30,786,269   
|                                                                                    |               

|                                                                                    | June 30, 2002 
|----------------------------------------------------------------------------------- | --------------
|                                                                                    | Amortized
Cost
|                                                                                    |               
|Investment securities:
     U.S. government and Federal
         agency obligations | $6,987,208    
|Obligations of states and
          political subdivisions                          | 2,950,363     
|                                                                                    |               
|TOTAL INVESTMENT SECURITIES                                                         | 9,937,571     
|                                                                                    |               
|Mortgage-backed securities:                                                         |               
|FHLMC certificates                                                                  | 1,330,431     
|GNMA certificates                                                                   | 900,192       
|FNMA certificates                                                                   | 4,950,138     
|CMO's issued by government agencies                                                 | 14,176,937    
|CMO's issued by private issuer                                                      | 954,248       
|                                                                                    |               
|TOTAL MORTGAGE-BACKED SECURITIES                                                    | 22,311,946    
|                                                                                    |               
|TOTAL                                                                               | $32,249,517   
|                                                                                    |               

---

|The amortized cost and estimated market value of investment and mortgage-backed securities, by contractual maturity, are shown below. Expected maturities will differ from
contractual maturities |  | because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------

|                                     | June 30, 2003 
|------------------------------------ | --------------
|**Available for Sale**               | Amortized
Cost
|                                     |               
|Due in one year or less              | $ 185,217     
|Due after one year thru 5 years      | 3,171,896     
|Due after 5 years thru 10 years      | 1,466,970     
|Preferred Stock - no stated maturity | 1,000,000     
|                                     |               
|Total investment securities          | 5,824,083     
|                                     |               
|Mortgage-backed securities           | 24,962,186    
|                                     |               
|TOTAL                                | $ 30,786,269  
|                                     |               

|Proceeds from sales of investment and mortgage-backed securities available for sale and gross realized gains and losses are summarized below: |  | 
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | 

|                                                | June 30           
|----------------------------------------------- | ------------------
|                                                | 2003              
|                                                |                   
|Proceeds from sales:
     Investment securities | $                -
|Mortgage-backed securities                      | -                 
|                                                |                   
|Gross realized gains:                           |                   
|Investment securities                           | -                 
|Mortgage-backed securities                      | -                 
|                                                |                   
|Gross realized losses:                          |                   
|Investment securities                           | -                 
|Mortgage-backed securities                      | -                 

|The carrying value of investment and mortgage-backed securities pledged as collateral to secure public deposits amounted to $16,446,110 and $14,873,673 at June 30, 2003 and 2002, respectively. |  | Adjustable rate mortgage loans included in mortgage-backed securities at June 30, 2003 and 2002 amounted to $2,789,026 and $1,266,620, respectively.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

---

|**NOTE 4: Loans Receivable, net**
       Loans receivable, net are summarized as follows: |  | 
|----------------------------------------------------------------------------------------- |  | 

|                                     | June 30      
|------------------------------------ | -------------
|                                     | 2003         
|                                     |              
|Real estate loans:
     Conventional | $ 116,806,457
|Construction                         | 3,373,874    
|Commercial                           | 48,648,914   
|Loans secured by deposit accounts    | 981,684      
|Consumer loans                       | 19,559,284   
|Commercial                           | 37,060,199   
|                                     |              
|                                     | 226,430,412  
|Loans in process                     | (1,717,118)  
|Deferred loan fees, net              | (37,244)     
|Allowance for loan losses            | (1,835,705)  
|                                     |              
|TOTAL                                | $ 222,840,345
|                                     |              

|Adjustable rate loans included in the loan portfolio amounted to $105,446,620 and $86,117,489 at June 30, 2003 and 2002, respectively.
       One-to four-family residential real estate loans amounted to $115,077,899 and $118,300,466 at June 30, 2003 and 2002, respectively. |  | Real estate construction loans are secured principally by single and multi-family dwelling units.
       Commercial real estate loans are secured principally by commercial buildings, motels, medical centers, churches, fast food restaurants and farmland.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Following is a summary of activity in the allowance for loan losses: |  | 
|-------------------------------------------------------------------- |  | 

|                                           | June 30    
|------------------------------------------ | -----------
|                                           | 2003       
|                                           |            
|Balance, beginning of period               | $ 1,569,266
|                                           |            
|Loans charged-off                          | (125,862)  
|Recoveries of loans previously charged-off | 62,301     
|                                           |            
|Net charge-offs                            | (63,561)   
|                                           |            
|Provision charged to expense               | 330,000    
|Acquired allowance for losses              | -          
|                                           |            
|Balance, end of period                     | $ 1,835,705
|                                           |            

|Total loans past due ninety days or more and still accruing interest amounted to $82,000, $202,000 and $490,000 at June 30, 2003, 2002, and 2001, respectively. The Company ceased
recognition of interest income on loans with a book value of $7,099, $133,585, and $0 at June 30, 2003, 2002 and 2001, respectively. The average balance of nonaccrual loans for the years ended June
30, 2003, 2002 and 2001 was $52,000, $80,000, and $132,000 respectively. Allowance for losses on nonaccrual loans amounted to $0, $13,350, and $0 at June 30, 2003, 2002 and 2001. Interest income of
approximately $400, $1,000, and $0 was recognized on these loans for the years ended June 30, 2003, 2002 and 2001, respectively. Gross interest income would have
 Following is a summary of loans to directors, executive officers and loans to corporations in which executive officers and directors have a substantial interest: |  | been approximately $800, $13,000, and $0 for the years ended June 30, 2003, 2002 and 2001, respectively, if the interest payments had been received in accordance with the original
terms. The Bank is not committed to lend additional funds to customers whose loans have been placed on nonaccrual status.
       Of the above nonaccrual loans at June 30, 2003, 2002 and 2001, none were considered to be impaired. There were no impaired loans during the years ended June 30, 2003, 2002 and 2001.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Balance, June 30, 2001 | $ 1,587,845
|---------------------- | -----------
|Additions              | 4,386,699  
|Repayments             | (2,433,634)
|Balance, June 30, 2002 | 3,540,910  
|Additions              | 5,659,346  
|Repayments             | (4,365,583)
|Balance, June 30, 2003 | $ 4,834,673

|These loans were made in substantially the same terms as those prevailing at the time for comparable transactions with unaffiliated persons. |  | 
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | 

---

|**NOTE 5: Accrued Interest Receivable**
       Accrued interest receivable is summarized as follows: |  | 
|---------------------------------------------------------------------------------------------------- |  | 

|                           | June 30    
|-------------------------- | -----------
|                           | 2003       
|                           |            
|Investment securities      | $ 74,967   
|Mortgage-backed securities | 118,857    
|Loans receivable           | 1,076,510  
|                           |            
|                           | $ 1,270,334
|                           |            

|**NOTE 6: Foreclosed Real Estate**
       Foreclosed real estate consists of the following: |  | 
|------------------------------------------------------------------------------------------- |  | 

|                       | June 30  
|---------------------- | ---------
|                       | 2003     
|                       |          
|Foreclosed real estate | $ 217,403
|Allowance for losses   | -        
|                       |          
|                       | $ 217,403
|                       |          

|**NOTE 7: Premises and Equipment**
       Following is a summary of premises and equipment: |  | 
|------------------------------------------------------------------------------------------- |  | 

|                                  | June 30    
|--------------------------------- | -----------
|                                  | 2003       
|                                  |            
|Land                              | $ 1,185,355
|Buildings and improvements        | 4,755,694  
|Furniture, fixtures and equipment | 3,153,732  
|Automobiles                       | 38,768     
|Construction in progress          | -          
|                                  |            
|                                  | 9,133,549  
|Less accumulated depreciation     | (2,930,164)
|                                  |            
|                                  | $ 6,203,385
|                                  |            

|Depreciation expense for the years ended June 30, 2003, 2002 and 2001 was $677,138, $551,668, and $413,087, respectively.
       Construction in progress at June 30, 2002 consisted of remodeling at the main banking facility in Poplar Bluff, Missouri, which was completed in October 2002. |  | During 2001, an impairment loss of $125,338 was recognized on the abandonment of certain computer equipment and as a result of a decrease in the market value of the Company's former office in Kennett, Missouri.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|**NOTE 8: Deposits**
       Deposits are summarized as follows: |  | 
|--------------------------------------------------------------- |  | 

|                                                       | June 30      
|------------------------------------------------------ | -------------
|                                                       | 2003         
|                                                       |              
|Noninterest-bearing accounts                           | $ 12,710,925 
|NOW accounts                                           | 23,997,100   
|Money market deposit accounts                          | 14,743,438   
|Savings accounts                                       | 56,779,625   
|                                                       |              
|TOTAL TRANSACTION ACCOUNTS                             | 108,231,088  
|                                                       |              
|                                                       |              
|                                                       |              
|Certificates:                                          |              
|1.00 - 1.99%                                           | 32,137,690   
|2.00 - 2.99%                                           | 21,162,585   
|3.00 - 3.99%                                           | 10,208,704   
|4.00 - 4.99%                                           | 15,342,655   
|5.00 - 5.99%                                           | 5,854,234    
|6.00 - 6.99%                                           | 1,595,000    
|7.00 - 7.99%                                           | -            
|8.00 - 8.99%                                           | -            
|                                                       |              
|Total certificates, 2.94%
     and 3.66%, respectively | 86,300,868   
|                                                       |              
|TOTAL DEPOSITS                                         | $ 194,531,956
|                                                       |              
|WEIGHTED-AVERAGE RATES - DEPOSITS                      | 2.16%        
|                                                       |              

|The aggregate amount of certificates of deposit with a minimum denomination of $100,000 was $26,060,825 and $20,020,253 at June 30, 2003 and 2002, respectively.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------

|Certificate maturities at June 30, 2003 are summarized as follows: |  | 
|------------------------------------------------------------------ |  | 

|July 1, 2003 to June 30, 2004 | $ 55,146,443
|----------------------------- | ------------
|July 1, 2004 to June 30, 2005 | 14,230,233  
|July 1, 2005 to June 30, 2006 | 3,061,013   
|July 1, 2006 to June 30, 2007 | 9,766,817   
|July 1, 2007 to June 30, 2008 | 4,018,196   
|Thereafter                    | 78,166      
|                              | $ 86,300,868

|Interest expense on deposits is summarized as follows: |  | 
|------------------------------------------------------ |  | 

|                              | Year Ended June 30
|----------------------------- | ------------------
|                              | 2003              
|                              |                   
|NOW accounts                  | $ 169,489         
|Money market deposit accounts | 322,632           
|Savings accounts              | 1,074,288         
|Certificates of deposit       | 2,804,754         
|                              |                   
|                              | $ 4,371,163       
|                              |                   

---

|**NOTE 9: Securities Sold Under Agreements to Repurchase**
       Securities sold under agreements to repurchase, which are classified as borrowings, generally mature within one to four days. The following table presents balance and interest rate information
on |  | the securities sold under agreements to repurchase. Prior to July 1, 2001, the Company had not entered into these types of contracts.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------

|                                          | June 30    
|----------------------------------------- | -----------
|                                          | 2003       
|                                          |            
|Year-end balance                          | $ 5,234,392
|Average balance during the year           | 5,480,000  
|Maximum month-end balance during the year | 7,444,437  
|Average interest during the year          | 1.33%      
|Year-end interest rate                    | 1.25%      

|The market value of the securities underlying the agreements at June 30, 2003 and 2002, was $5,755,414 and $5,684,663, respectively. |  | The securities sold under agreements to repurchase are under the Company's control.
|------------------------------------------------------------------------------------------------------------------------------------ |  | -----------------------------------------------------------------------------------

|**NOTE 10: Advances from Federal Home Loan Bank of Des Moines**
       Advances from Federal Home Loan Bank of Des Moines are summarized as follows: |  | 
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | 

|                      |                                   |               | June 30     
|--------------------- | --------------------------------- | ------------- | ------------
|Maturity              | Call Date or
Quarterly
Thereafter | Interest
Rate | 2003        
|                     
|07-01-03              | -                                 | 1.50%         | $ 5,500,000 
|06-19-06              | -                                 | 4.33%         | 1,000,000   
|09-08-06              | -                                 | 5.00%         | 5,000,000   
|06-11-07              | -                                 | 4.89%         | 1,000,000   
|06-19-07              | -                                 | 4.63%         | 1,000,000   
|08-30-07              | -                                 | 3.91%         | 1,000,000   
|10-17-07              | -                                 | 4.84%         | 2,000,000   
|02-06-08              | 08-06-03                          | 5.17%         | 3,000,000   
|10-26-09              | 09-01-03                          | 5.50%         | 10,000,000  
|01-20-10              | 07-20-03                          | 5.77%         | 5,000,000   
|10-27-10              | 10-27-03                          | 5.86%         | 9,000,000   
|12-09-10              | 12-09-05                          | 5.93%         | 10,000,000  
|                      |                                   |               |             
|                      |                                   |               | $ 53,500,000
|                      |                                   |               |             
|Weighted-average rate | 5.18%                             | 5.62%        
|                      |                                   |               |             

In addition to the above advances, the Bank had an available line of credit amounting to $26,427,000, $48,716,000, and $45,170,000 with the FHLB at June 30, 2003, 2002 and 2001,
respectively.
       Advances from FHLB of Des Moines are secured by FHLB stock and one-to four-family mortgage loans of $64,200,000 and $56,400,000 at June 30, 2003 and 2002, respectively.


The principal maturities of FHLB advances at June 30, 2003 are as follows:July 1, 2003 to June 30, 2004$  5,500,000July 1, 2004 to June 30, 2005-July 1, 2005 to June 30, 20061,000,000July 1, 2006 to June 30, 20077,000,000July 1, 2007 to June 30, 20086,000,000Thereafter34,000,000


---

|**NOTE 11: Employee Benefits**
       The Bank has adopted a 401(k) profit sharing plan that covers substantially all eligible employees. Contributions to the plan are at the discretion of the Board of Directors of the Bank. During
2003, 2002, and 2001, there were no contributions made to the plan.
       The Bank established a tax-qualified employee stock ownership plan (ESOP) in April 1994. The plan covers substantially all employees who have attained the age of 21 and completed one year of
service.
       The Bank makes contributions to the ESOP equal to the ESOP's debt service less dividends on unallocated ESOP shares used to repay the ESOP loan. Dividends on allocated ESOP shares are paid to
participants of the ESOP. The ESOP shares are pledged as collateral on the ESOP loan.
       Shares are released from collateral and allocated to participants based on pro-rata compensation as the loan is repaid over seven years.
       The number of ESOP shares at June 30, 2003 and 2002 were as follows: |  | Effective July 1, 1998, the loan terms were modified and principal payments were extended an additional four years. Benefits are vested over five years. Forfeitures are allocated
on the same basis as other contributions. Benefits are payable upon a participant's retirement, death, disability or separation of service. The purchase of the shares of the ESOP has been recorded in
the consolidated financial statements through a credit to common stock and additional paid-in capital with a corresponding charge to a contra equity account for the unreleased shares. As shares are
committed to be released from collateral, the Bank reports compensation expense equal to the average fair value of the ESOP shares committed to be released. The ESOP expense for 2003, 2002, and 2001
was $146,953, $117,173, and $107,004, respectively.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                  | 2003   | 2002  
|----------------- | ------ | ------
|                  |       
|Allocated shares  | 62,438 | 59,489
|Unreleased shares | 12,253 | 18,982
|                  |       
|TOTAL ESOP SHARES | 74,691 | 78,471
|                  |       

|The fair value of unreleased ESOP shares at June 30, 2003 was $300,200. |  | 
|----------------------------------------------------------------------- |  | 

---

|The Bank adopted a management recognition plan (MRP) for the benefit of non-employee directors and two MRPs for officers and key employees (who may also be directors) in April
1994. Total shares in the MRP left to be issued are 5,118 at June 30, 2003. During 2003, 2002 and 2001, the Bank did not grant any MRPs to employees. The shares granted are in the form of restricted
stock payable at the rate of 20% of such shares per year. Compensation expense, in the amount of the fair market value of the common stock at the date of grant, will be recognized pro-rata over the
five years during which the shares are payable.
       The Board of Directors can terminate the MRPs at any time, and if it does so, any shares not allocated will revert to the Company. The MRP expense for 2003, 2002 and 2001 was $7,266, $14,035, and
$13,424, respectively. |  | The Company sponsors a stock option plan adopted in April 1994. The purpose of the plan is to provide additional incentive to certain directors, officers and key employees of the
Bank. In October 1999, the stockholders voted to increase the number of shares reserved for options by 67,932 shares. The stock options are granted at the fair market value of the common stock on the
date of the grant. Through June 30, 1999, all options granted were 100% vested at the grant date. For shares granted since June 30, 1999, the vesting period range is from the grant date up to a five
year period. All options expire ten years from the date of the grant. At June 30, 2003, there are 41,932 shares remaining available for option grants. The weighted-average remaining contractual life
of options outstanding at June 30, 2003 is 5.5 years.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Changes in options outstanding were as follows: |  | 
|----------------------------------------------- |  | 

|                                              | Years Ended June 30,  
|--------------------------------------------- | ----------------------
|                                              | 2003                  
|                                              | Weighted
Average
Price
|                                              |                       
|Options
     Outstanding at beginning of year | $ 13.67               
|Granted                                       | -                     
|Exercised                                     | 10.00                 
|Forfeited                                     | -                     
|Outstanding at year-end                       | 14.39                 
|Options exercisable at year-end               | 14.47                 

|Following is a summary of the fair values of options granted using the Black-Scholes pricing model: |  | 
|--------------------------------------------------------------------------------------------------- |  | 

|                               | 2003    | 2002    | 2001   
|------------------------------ | ------- | ------- | -------
|                              
|Assumptions:                   |         |         |        
|Expected dividend yield        | 5.00%   | 5.00%   | 5.00%  
|Expected volatility            | 21.50%  | 21.50%  | 21.00% 
|Risk-free interest rate        | 6.20%   | 6.20%   | 5.60%  
|Weighted-average expected life | 5 years | 5 years | 5 years

---

|The Bank adopted a directors' retirement plan in April 1994 for outside directors. The directors' retirement plan provides that each non-employee director (participant) shall
receive, upon termination of service on the Board on or after age 60, other than termination for cause, a benefit in equal annual installments over a five year period. The benefit will be based upon
the product of the participant's vesting |  | percentage and the total Board fees paid to the participant during the calendar year preceding termination of service on the Board. The vesting percentage shall be determined
based upon the participant's years of service on the Board, whether before or after the reorganization date, according to the following schedule:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Full Years of Service
on the Board | Non-Employee Directors'
Vested Percentage
|---------------------------------- | -----------------------------------------
|                                  
|Less than 5                        | 0%                                       
|5 to 9                             | 50%                                      
|10 to 14                           | 75%                                      
|15 or more                         | 100%                                     

| |  | In the event that the participant dies before collecting any or all of the benefits, the Bank shall pay the participant's beneficiary. No benefits shall be payable to anyone other
than the beneficiary, and shall terminate on the death of the beneficiary.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|The following items are components of net pension costs for the years ended June 30, 2003, 2002 and 2001: |  | 
|--------------------------------------------------------------------------------------------------------- |  | 

|                                                   | 2003     | 2002     | 2001    
|-------------------------------------------------- | -------- | -------- | --------
|                                                   |         
|Service cost - benefits earned
    during the year | $ 6,571  | $ 6,027  | $ 5,537 
|Interest cost on benefit obligation                | 11,677   | 11,916   | 12,258  
|Amortization of unrecognized gains                 | (1,247)  | (1,015)  | (589)   
|                                                   |         
|NET PENSION COST                                   | $ 17,001 | $ 16,928 | $ 17,206
|                                                   |         

|The following table sets forth the directors' retirement plan's funded status and amounts recognized in the consolidated financial statements at June 30, 2003 and
2002: |  | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | 

|                                                          | 2003      | 2002     
|--------------------------------------------------------- | --------- | ---------
|                                                          |          
|Actuarial present value of benefit obligations:           |           |          
|Vested accumulated benefits                               | $ 149,745 | $ 140,575
|Non-vested accumulated benefits                           | 17,726    | 19,668   
|                                                          |          
|Total accumulated benefits                                | 167,471   | 160,243  
|Effect of projected future fee increases                  | -         | -        
|                                                          |          
|Projected benefit obligation for service rendered to date | 167,471   | 160,243  
|Unrecognized net actuarial gain                           | 13,715    | 24,342   
|                                                          |          
|Accrued pension cost included in other liabilities        | $ 181,186 | $ 184,585
|                                                          |          

|A reconciliation of the projected benefit obligation and fair value of plan assets is summarized as follows at June 30, 2003 and 2002: |  | 
|-------------------------------------------------------------------------------------------------------------------------------------- |  | 

|                           | 2003                         |                           | 2002
|-------------------------- | ---------------------------- | ------------------------- | ----
|                           | Projected
Benefit
Obligation | Plan Assets
at
Fair Value |     
|                           |                              |                           |     
|Balance, beginning of year | $ 160,243                    | $        -                |     
|Service cost               | 6,571                        | -                         |     
|Interest cost              | 11,677                       | -                         |     
|Actual return              | -                            | -                         |     
|Actuarial loss (gain)      | 9,380                        | -                         |     
|Contributions              | -                            | 20,400                    |     
|Benefits paid              | (20,400)                     | (20,400)                  |     
|                           |                              |                           |     
|Balance, end of year       | $ 167,471                    | $        -                |     
|                           |                              |                           |     

|                                            | 2003 | 2002 | 2001
|------------------------------------------- | ---- | ---- | ----
|                                            |     
|Weighted-average assumptions as of June 30: |      |      |     
|Discount rate                               | 7%   | 7%   | 7%  
|Rate of directors' fees increase            | 0%   | 0%   | 0%  

---

|**NOTE 12: Income Taxes**                                                                                                                                                                                                                                                                                                             |  |                                                                                                                                                                                                                                                                              
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|SFAS No. 109 requires the Bank to establish a deferred tax liability for the tax bad debt reserves over the base year amounts. The Bank's base year tax bad debt reserves are $1,796,626. The
estimated deferred tax liability on such amount is approximately $611,000, which has not been recorded in the accompanying Consolidated |  | Financial Statements. If these tax bad debt reserves are used for other than loan losses, the amount will be subject to Federal income taxes at the then prevailing corporate
rate.
       The components of net deferred tax assets (liabilities) are summarized as follows:

|                                                                      | 2003      | 2002      
|--------------------------------------------------------------------- | --------- | ----------
|                                                                      |          
|Deferred tax assets:                                                  |           |           
|Provision for losses on loans                                         | $ 624,140 | $ 516,439 
|Accrued compensation and benefits                                     | 126,101   | 100,234   
|                                                                      |          
|Gross deferred tax assets                                             | 750,241   | 616,673   
|Valuation allowance                                                   | -         | -         
|                                                                      |          
|Total deferred tax assets                                             | 750,241   | 616,673   
|                                                                      |          
|                                                                      |           |           
|Deferred tax liabilities:                                             |           |           
|FHLB stock dividends                                                  | 166,566   | 166,566   
|Purchase accounting adjustments                                       | 69,725    | 81,012    
|Premises and equipment, tax vs. book
        accumulated depreciation | 270,136   | 211,842   
|Installment sale                                                      | -         | 143,439   
|Unrealized gain on available for sale securities                      | 80,138    | 188,456   
|                                                                      |          
|Total deferred tax liabilities                                        | 586,565   | 791,315   
|                                                                      |          
|NET DEFERRED TAX ASSETS (LIABILITIES)                                 | $ 163,676 | $(174,642)
|                                                                      |          

|Income taxes are summarized as follows: |  | 
|--------------------------------------- |  | 

|          | Year Ended June 30
|--------- | ------------------
|          | 2003              
|          |                   
|Current:  |                   
|Federal   | $ 1,529,900       
|State     | 166,000           
|          |                   
|          | 1,695,900         
|          |                   
|Deferred: |                   
|Federal   | (224,000)         
|State     | (6,000)           
|          |                   
|          | (230,000)         
|          |                   
|          | $ 1,465,900       
|          |                   

---

|The provision for income taxes varies from the amount of income tax determined by applying the statutory Federal income tax rate to income before income taxes as a result of the
following differences: |  | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 

|                                                                                        | Year Ended June 30
|--------------------------------------------------------------------------------------- | ------------------
|                                                                                        | 2003              
|                                                                                        |                   
|Tax at statutory Federal rate                                                           | $ 1,429,411       
|Increase (reduction) in taxes
     resulting from:
         Nontaxable municipal income | (69,174)          
|State tax, net of Federal benefit                                                       | 102,300           
|Nondeductible ESOP expenses                                                             | 27,925            
|Cash surrender value of bank
             owned life insurance                          | (27,376)          
|Other, net                                                                              | 2,814             
|                                                                                        |                   
|ACTUAL PROVISION                                                                        | $ 1,465,900       
|                                                                                        |                   

|**NOTE 13: Comprehensive Income**                                                                                                                                                                                                            |  |                                                                                                                                                                                                                                        
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|SFAS No. 130 *Reporting Comprehensive Income* requires the reporting of comprehensive income and its components. Comprehensive income is defined as the change in equity from transactions and other
events and circumstances from non-owner |  | sources, and excludes investments by and distributions to owners. Comprehensive income includes net income and other items of comprehensive income meeting the above criteria.
Components of other comprehensive income are as follows:

|                                                                                               | Year Ended June 30
|---------------------------------------------------------------------------------------------- | ------------------
|                                                                                               | 2003              
|                                                                                               |                   
|Unrealized gains (losses) on
 available for sale securities:                                   |                   
|Unrealized holding gains (losses)
         arising during period                               | $ (292,751)       
|Less: reclassification
         adjustments for (gains) losses
         realized in net income | -                 
|                                                                                               |                   
|Total unrealized gains (losses)
         on securities                                         | (292,751)         
|Income tax expense (benefit)                                                                   | (108,318)         
|                                                                                               |                   
|Other comprehensive income (loss)                                                              | $ (184,433)       
|                                                                                               |                   

|At June 30, 2003, 2002 and 2001, accumulated other comprehensive income in the Statement of Financial Condition |  | consisted entirely of unrealized gains (losses) on available for sale investment and mortgage-backed securities.
|--------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------

---

|**NOTE 14: Stockholders' Equity and Regulatory Capital**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Bank is subject to various regulatory capital requirements administered by the Federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory -- and
possibly additional discretionary -- actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance-sheet
items as calculated under regulatory accounting practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings,
and other factors.
       Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total capital and Tier I capital
(as |  | defined in the regulations) to risk-weighted assets (as defined) and of Tier I capital (as defined) to average total assets (as defined). Management believes, as of June 30, 2003,
that the Bank meets all capital adequacy requirements to which it is subject.
       As of June 30, 2003, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.
To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table. There are no conditions or events since
that notification that management believes have changed the Bank's category.
       The following table summarizes the Bank's actual and required regulatory capital:



|(dollars in thousands)                   |                               |                                                                  |          |        |          |        
|---------------------------------------- | ----------------------------- | ---------------------------------------------------------------- | -------- | ------ | -------- | -------
|Actual                                   | For Capital
Adequacy Purposes | To Be Well
Capitalized Under
Prompt Corrective
Action Provisions
|****                                     | Amount                        | Ratio                                                            | Amount   | Ratio  | Amount   | Ratio  
|**As of June 30, 2003**                  |                               |                                                                  |         
|Total Capital (to Risk-Weighted Assets)  | $ 22,865                      | 12.0%                                                            | $ 15,246 | ≥ 8.0% | $ 19,057 | ≥ 10.0%
|Tier I Capital (to Risk-Weighted Assets) | 21,020                        | 11.0%                                                            | 7,623    | ≥ 4.0% | 11,434   | ≥ 6.0% 
|Tier I Capital (to Average Assets)       | 21,020                        | 7.6%                                                             | 11,052   | ≥ 4.0% | 13,815   | ≥ 5.0% 
|                                         |                               |                                                                  |          |        |          |        
|**As of June 30, 2002**                  |                               |                                                                  |          |        |          |        
|Total Capital (to Risk-Weighted Assets)  | $ 21,080                      | 12.2%                                                            | $ 13,788 | ≥ 8.0% | $ 17,235 | ≥ 10.0%
|Tier I Capital (to Risk-Weighted Assets) | 19,511                        | 11.3%                                                            | 6,894    | ≥ 4.0% | 10,341   | ≥ 6.0% 
|Tier I Capital (to Average Assets)       | 19,511                        | 7.5%                                                             | 10,385   | ≥ 4.0% | 12,981   | ≥ 5.0% 

|The Bank's ability to pay dividends on its common stock to the Company is restricted to maintain adequate capital as shown in the above table.
|----------------------------------------------------------------------------------------------------------------------------------------------

|**NOTE 15: Commitments and Contingencies**                                                                                                                                                                                                                      |  |                                                                                                                                            
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|In the ordinary course of business, the Bank has various outstanding commitments and contingent liabilities that are not reflected in the accompanying Consolidated Financial Statements. The Bank is
involved in litigation of a routine nature which is being |  | defended and handled in the ordinary course of business. These matters are not considered significant to the Company's financial condition.

---

|**NOTE 16: Off-Balance-Sheet and Credit Risk**                                                                                                                                                                                                                    |  |                                                                                                                                                                                                                                                                     
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Company's Consolidated Financial Statements do not reflect various financial instruments to extend credit to meet the financing needs of its customers. These financial instruments include
commitments to extend credit and standby letters of credit. These |  | instruments involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the statements of financial condition. A summary of the
Company's commitments to extend credit and standby letters of credit is as follows:

|                             | Contract or Notional Amount
June 30
|---------------------------- | -----------------------------------
|                             | 2003                               
|                             |                                    
|Commitments to extend credit | $ 29,327,525                       
|Standby letters of credit    | $ 499,724                          

|At June 30, 2003, total commitments to originate fixed-rate loans with terms in excess of one year were $4.1 million at interest rates ranging from 4.5% to 7.0%. Commitments to
extend credit and standby letters of credit include exposure to some credit loss in the event of nonperformance of the customer. The Company's policies for credit commitments and financial guarantees
are the same as those for extension of credit that are recorded in the statements of |  | financial condition. The commitments extend over varying periods of time with the majority being disbursed within a thirty-day period.
       The Company grants collateralized commercial, real estate, and consumer loans to customers in Southeast Missouri. Although the Company has a diversified portfolio, loans aggregating $116,806,457 at
June 30, 2003, are secured by single and multi-family residential real estate in the Company's primary lending area.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|**NOTE 17: Earnings Per Share**
       The following table sets forth the computations of basic and diluted earnings per common share: |  | 
|-------------------------------------------------------------------------------------------------------------------------------------- |  | 

|                                                                                                    | Year Ended June 30
|--------------------------------------------------------------------------------------------------- | ------------------
|                                                                                                    | 2003              
|                                                                                                    |                   
|                                                                                                    |                   
|Numerator - net income                                                                              | $ 2,738,218       
|                                                                                                    |                   
|Denominators                                                                                        |                   
|Denominator for basic earnings
        per share -                                                  |                   
|Weighted-average shares
             outstanding                                                    | 1,167,446         
|Common equivalent shares due
             to stock options under
             treasury stock method | 31,734            
|                                                                                                    |                   
|Denominator for diluted
         earnings per share                                                 | 1,199,180         
|                                                                                                    |                   
|Basic earnings per common share                                                                     | $ 2.35            
|Diluted earnings per common share                                                                   | $ 2.28            

---

|**NOTE 18: Fair Value of Financial Instruments**
       The carrying amounts and estimated fair values of the Company's financial instruments at June 30, 2003 and 2002, are summarized as follows: |  | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 

|                                                                                        | 2003            |             | 2002
|--------------------------------------------------------------------------------------- | --------------- | ----------- | ----
|                                                                                        | Carrying
Amount | Fair
Value  |     
|                                                                                        |                 |             |     
|Non-trading instruments and
    nonderivatives:
         Cash and cash equivalents      | $ 7,617,740     | $ 7,617,740 |     
|Investment and mortgage-
             backed securities
             available for sale | 31,002,858      | 31,002,858  |     
|Stock in FHLB of Des Moines                                                             | 2,675,000       | 2,675,000   |     
|Loans receivable, net                                                                   | 222,840,345     | 232,269,581 |     
|Bank owned life insurance                                                               | 4,072,617       | 4,072,617   |     
|Accrued interest receivable                                                             | 1,270,334       | 1,270,334   |     
|Deposits                                                                                | 194,531,956     | 196,473,891 |     
|Securities sold under
             agreements to repurchase                             | 5,234,392       | 5,234,392   |     
|Advances from FHLB of
             Des Moines                                           | 53,500,000      | 60,657,981  |     
|Accrued interest payable                                                                | 393,841         | 393,841     |     

|The following methods and assumptions were used in estimating the fair values of financial instruments:
       Cash and cash equivalents are valued at their carrying amounts due to the relatively short period to maturity of the instruments.
       Fair values of investment and mortgage-backed securities are based on quoted market prices or, if unavailable, quoted market prices of similar securities.
       Stock in FHLB of Des Moines is valued at cost, which represents redemption value and approximates fair value.
       Fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining
maturities. Loans with similar characteristics are aggregated for purposes of the calculations.
       Fair value of bank owned life insurance is equal to the cash surrender value of the underlying life insurance policies. |  | The carrying amounts of accrued interest approximate their fair values.
       Deposits with no defined maturities, such as NOW accounts, savings accounts and money market deposit accounts, are valued at the amount payable on demand at the reporting date.
       The fair value of certificates of deposit is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities.
       The carrying amounts of securities sold under agreements to repurchase approximate fair value.
       Fair value of advances from the FHLB of Des Moines is estimated by discounting maturities using an estimate of the current market for similar instruments.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|**NOTE 19: Condensed Parent Company Only Financial Statements**                                                 |  |                                                                                                                               
|--------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------
|The following condensed statements of financial condition and condensed statements of income and cash flows for |  | SouthernMissouri Bancorp, Inc. should be read in conjunction with the consolidated financial statements and the notes thereto.

|                                           | At June 30  
|------------------------------------------ | ------------
|**Statements of Financial Condition**      | 2003        
|                                           |             
|**Assets**                                 |             
|Cash                                       | $ 606,586   
|ESOP note receivable                       | 143,440     
|Other assets                               | 135,390     
|Equity in net assets of the Bank           | 24,270,683  
|                                           |             
|TOTAL ASSETS                               | $ 25,156,099
|                                           |             
|                                           |             
|**Liabilities and Stockholders' Equity**   |             
|                                           |             
|Accrued expenses and other liabilities     | $ 47,662    
|                                           |             
|TOTAL LIABILITIES                          | 47,662      
|                                           |             
|                                           |             
|Stockholders' equity                       | 25,108,437  
|                                           |             
|                                           |             
|TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY | $ 25,156,099
|                                           |             

|                                                                                    | Year Ended June 30
|----------------------------------------------------------------------------------- | ------------------
|**Statements of Income**                                                            | 2003              
|                                                                                    |                   
|                                                                                    |                   
|Interest income                                                                     | $ 12,485          
|Dividend from Bank                                                                  | 1,800,000         
|Other income                                                                        | -                 
|                                                                                    |                   
|                                                                                    | 1,812,485         
|Operating expenses                                                                  | 263,406           
|                                                                                    |                   
|                                                                                    |                   
|Income before income taxes and
     equity in undistributed income of
     the Bank | 1,549,079         
|                                                                                    |                   
|Income taxes                                                                        | (90,743)          
|                                                                                    |                   
|                                                                                    |                   
|Income before equity in undistributed
     income of the Bank                       | 1,639,822         
|                                                                                    |                   
|Equity in undistributed income of
     the Bank                                     | 1,098,396         
|                                                                                    |                   
|NET INCOME                                                                          | $ 2,738,218       
|                                                                                    |                   

---

|                                                                                                    | Year Ended June 30
|--------------------------------------------------------------------------------------------------- | ------------------
|**Statements of Cash Flows**                                                                        | 2003              
|                                                                                                    |                   
|Cash flows from operating activities:                                                               |                   
|Net income                                                                                          | $ 2,738,218       
|Adjustments to reconcile net income
         to net cash provided by operating
         activities: |                   
|Equity in undistributed income
         of the Bank                                                 | (1,098,396)       
|Other adjustments, net                                                                              | (50,260)          
|                                                                                                    |                   
|NET CASH PROVIDED BY
OPERATING ACTIVITIES                                                           | 1,589,562         
|                                                                                                    |                   
|                                                                                                    |                   
|Cash flows from investing activities:                                                               |                   
|Principal collected on loan to ESOP                                                                 | 72,873            
|Purchase of investment security,
         available for sale                                        | -                 
|Proceeds from sales and maturities
         of investment securities, available
         for sale   | -                 
|Proceeds from sales of other assets                                                                 | 4,500             
|                                                                                                    |                   
|NET CASH PROVIDED BY
INVESTING ACTIVITIES                                                           | 77,373            
|                                                                                                    |                   
|                                                                                                    |                   
|Cash flows from financing activities:                                                               |                   
|Dividends on common stock                                                                           | (656,247)         
|Exercise of stock options                                                                           | 184,493           
|Payments to acquire treasury stock                                                                  | (1,641,518)       
|                                                                                                    |                   
|NET CASH USED IN
FINANCING ACTIVITIES                                                               | (2,113,272)       
|                                                                                                    |                   
|                                                                                                    |                   
|Net (decrease) increase in cash and
     cash equivalents                                           | (446,337)         
|Cash and cash equivalents at beginning
     of period                                               | 1,052,923         
|                                                                                                    |                   
|CASH AND CASH EQUIVALENTS
AT END OF PERIOD                                                          | $ 606,586         
|                                                                                                    |                   

---

|**NOTE 20: Quarterly Financial Data (Unaudited)**
       Quarterly operating data is summarized as follows (in thousands): |  | 
|-------------------------------------------------------------------------------------------------------------------------- |  | 

|                           | June 30, 2003
|-------------------------- | -------------
|                           | First
Quarter
|                           |              
|Interest income            | $ 4,264      
|Interest expense           | 1,878        
|                           |              
|Net interest income        | 2,386        
|Provision for loan losses  | 120          
|Noninterest income         | 247          
|Noninterest expense        | 1,468        
|                           |              
|Income before income taxes | 1,045        
|Income taxes               | 384          
|                           |              
|NET INCOME                 | $ 661        
|                           |              

|                           | June 30, 2002
|-------------------------- | -------------
|                           | First
Quarter
|                           |              
|Interest income            | $ 4,317      
|Interest expense           | 2,317        
|                           |              
|Net interest income        | 2,000        
|Provision for loan losses  | 80           
|Noninterest income         | 203          
|Noninterest expense        | 1,377        
|                           |              
|Income before income taxes | 746          
|Income taxes               | 250          
|                           |              
|NET INCOME                 | $ 496        
|                           |              

---

|*Corporate Headquarters*
531 Vine Street
Poplar Bluff, Missouri 63901            | *Special Counsel*
Silver, Freedman ∓ Taff, L.L.P.
Washington, D.C. 20007                  | *Common Stock*
Nasdaq Stock Market
Nasdaq Symbol: SMBC
|-------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | ------------------------------------------------------
|                                                                                 |                                                                                              |                                                       
|*Independent Auditors*
Kraft, Miles ∓ Tatum, LLC
Poplar Bluff, Missouri 63901 | *Transfer Agent*
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016 |                                                       

|*Annual Meeting*
The Annual Meeting of Stockholders will be held Monday, October 20, 2003, at 9:00 a.m., Central Time, at the Greater Poplar Bluff Area Chamber of Commerce Building, 1111 West Pine, Poplar Bluff,
Missouri 63901.*Annual Report on Form 10-KSB and Other Reports*
A copy of the Company's annual report on Form 10-KSB, including financial statement schedules and our quarterly reports as filed with the Securities and Exchange Commission, will be furnished without
charge to stockholders as of the record date upon written request to the Secretary, Southern Missouri Bancorp, Inc., 531 Vine Street, Poplar Bluff, Missouri 63901. These documents also may be
accessed through the SEC's website at www.sec.gov |  | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 

---

|*Directors*                                                                                                                                                                                                                                                                                                         | **                                                                                                                                                                                                                                                                   | *Executive Officers*                                                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------
|Thadis R. Seifert
Chairman of the Board
Retired former executive vice president
   of Bank
Leonard M. Ehlers
Vice-Chairman
Retired court reporter of the 36th
   Judicial Circuit
Samuel H. Smith
Engineer and majority owner of
   S.H. Smith and Company, Inc.
James W. Tatum
Retired certified public accountant | Ronnie D. Black
Executive Director General Association
   of General Baptists
L. Douglas Bagby
General Manager Municipal Utilities of
   City of Poplar Bluff
Sammy A. Schalk
President of Gamblin Lumber Company
Greg A. Steffens
President
Chief Financial Officer | Greg A. Steffens
President
Chief Financial Officer
James W. Tatum
Vice President

SOUTHERN MISSOURI BANK AND TRUST

|*Directors*                                                                                                                                                                                                                                | **                                                                                                                                                                                                                                                                   | *Senior Officers*                                                                                                                                                                                                                                 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Samuel H. Smith
Chairman of the Board
Engineer and majority owner of
   S.H. Smith and Company, Inc.
James W. Tatum
Vice-Chairman
Retired certified public accountant
Thadis R. Seifert
Retired former executive vice president
   of Bank | Ronnie D. Black
Executive Director General Association
   of General Baptists
L. Douglas Bagby
General Manager Municipal Utilities of
   City of Poplar Bluff
Sammy A. Schalk
President of Gamblin Lumber Company
Greg A. Steffens
President
Chief Executive Officer | Greg A. Steffens
President
Chief Executive Officer
James D. Duncan
Executive Vice President
Chairman Loan Dept.
Kimberly A. Capps
Chief Financial Officer
William D. Hribovsek
Senior Commercial Loan Officer
Adrian Rushing
Senior Vice President

> SOUTHERN MISSOURI BANCORP, INC.
> 
> is a single-bank holding company that outperforms peers on ROE and other measures. This has come about through the establishment of a strong management team, continuing emphasis on
> growing core businesses, and bringing new growth to the company by adopting technology-based systems and services. Southern Missouri Bancorp, Inc. has become one of the top performing bank holding
> companies in Missouri.
> 
> Southern Missouri Bancorp, Inc.        531 Vine Street
>                                                                   Poplar Bluff, Missouri 63901
>                                                                   (573) 785-1421