| Southern Missouri Bancorp, Inc.      (NASDAQ: SMBC) isthe holding company for Southern      Missouri Bank & Trust Company (Southern Missouri Bank). While the last      year hasbeen turbulent for much of our      industry, the Companyreported record profits and      maintained asset quality. The Company looks forward to the      coming year withgreat anticipation. We believe      it’s a great timeto be a bank in our      communities.  |
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| Letter      to Shareholders                                    | 2      |
|----------------------------------------------------------------|--------|
| Common      Share Data                                         | 8      |
| Financial      Review                                          | 9      |
| Report      of Independent                                     |   |
|     Registered      Public Accounting Firm | 19     |
| Consolidated      Financial Statements                         | 20     |
| Notes      to Consolidated Financial Statements                | 25     |
| Corporate      and Investor Information                        | 44     |
| Directors      and Officers                                    | 45     |

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|                                                                                                                            |   | 2008   |      |   | 2007   |   |      | CHANGE(%) |   |
|---------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|-----------|--------|
| EARNINGS (dollars      in thousands)    Net      interest income                                       |   | $      | 11,780    |   |   | $      | 9,929     |      |   |   | 18.6 |   |
|     Provision      for possible loan losses                                                                 |   |   | 940       |   |   |   | 605       |      |   |   | 55.4 |   |
|     Other      income                                                                                       |   |   | 2,412     |   |   |   | 2,207     |      |   |   | 9.3 |   |
|     Other      expense                                                                                      |   |   | 7,864     |   |   |   | 7,458     |      |   |   | 5.4 |   |
|     Income      taxes                                                                                       |   |   | 1,775     |   |   |   | 1,145     |      |   |   | 55.1 |   |
|     Net      income                                                                                         |   |   | 3,613     |   |   |   | 2,928     |      |   |   | 23.4 |   |
|                                                                                                                            |   |   |      |   |   |   |      |      |   |   |   |   |
| PER      COMMON SHARE    Net      income:       Basic                    |   | $      | 1.64      |   |   | $      | 1.32      |      |   |   | 24.2 |   |
|        Diluted                                                                               |   |   | 1.63      |   |   |   | 1.29      |      |   |   | 26.4 |   |
|     Tangible      book value                                                                                |   |   | 13.11     |   |   |   | 12.06     |      |   |   | 8.7 |   |
|     Closing      market price                                                                               |   |   | 15.49     |   |   |   | 14.95     |      |   |   | 3.6 |   |
|     Cash      dividends declared                                                                            |   |   | .40       |   |   |   | .36       |      |   |   | 11.1 |   |
|                                                                                                                            |   |   |      |   |   |   |      |      |   |   |   |   |
| AT      YEAR-END (dollars      in thousands)    Total      assets                                      |   | $      | 417,820   |   |   | $      | 379,927   |      |   |   | 10.0 |   |
|     Loans,      net of allowance                                                                            |   |   | 343,070   |   |   |   | 312,063   |      |   |   | 9.9 |   |
|     Reserves      as a percent of nonperforming loans                                                       |   |   | 58,865    | %      |   |   | 9,845     | %         |   |   |   |   |
|     Deposits                                                                                                |   | $      | 292,257   |   |   | $      | 270,088   |      |   |   | 8.2 |   |
|     Stockholders’      equity                                                                         |   |   | 30,472    |   |   |   | 28,714    |      |   |   | 6.1 |   |
|                                                                                                                            |   |   |      |   |   |   |      |      |   |   |   |   |
| FINANCIAL      RATIOS    Return      on average stockholders’ equity                                  |   |   | 12.06     | %      |   |   | 10.49     | %         |   |   |   |   |
|     Return      on average assets                                                                           |   |   | .92       |   |   |   | .80       |      |   |   |   |   |
|     Net      interest margin                                                                                |   |   | 3.17      |   |   |   | 2.90      |      |   |   |   |   |
|     Efficiency      ratio                                                                                   |   |   | 55.41     |   |   |   | 61.45     |      |   |   |   |   |
|     Allowance      for possible loan losses to net loans                                                    |   |   | 1.04      |   |   |   | .81       |      |   |   |   |   |
|     Equity      to average assets at year-end                                                               |   |   | 7.73      |   |   |   | 7.88      |      |   |   |   |   |
|                                                                                                                            |   |   |      |   |   |   |      |      |   |   |   |   |
| OTHER      DATA(1)    Common      shares outstanding                                                        |   |   | 2,190,833 |   |   |   | 2,213,976 |      |   |   |   |   |
|     Average      common and dilutive        shares      outstanding |   |   | 2,212,132 |   |   |   | 2,264,236 |      |   |   |   |   |
|     Stockholders      of record                                                                             |   |   | 276       |   |   |   | 276       |      |   |   |   |   |
|     Full-time      equivalent employees                                                                     |   |   | 100       |   |   |   | 95        |      |   |   |   |   |
|     Assets      per employee (in thousands)                                                                 |   | $      | 4,178     |   |   | $      | 3,999     |      |   |   |   |   |
|     Banking      offices                                                                                    |   |   | 9         |   |   |   | 9         |      |   |   |   |   |

| (1)   | Other      data is as of year-end, except for average  shares. |
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|  |  |  |
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|                                    | In      2008, |
|------------------------------------|---------------|
| Southern Missouri      Bancorp     |
| produced outstanding      results, |
| standing tall in our field.        |

| Return on Equity again surpasses      peer banksWe improved our ROE and      outperformed our peers. | Tangible Book Value per share      growth beats peersWe have regularly exceeded our      peer banks (1) in this key measure of shareholder      value. |
|------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| (1) | Peer      data is based on the average year-end figures (December) from SNL      DataSource’s Index of publicly traded commercial banks and thrifts with      assets of $100 million to $1 billion, headquartered in Missouri, Arkansas,      Illinois, Iowa, Kansas, Kentucky, Nebraska, Oklahoma, and Tennessee. SMBC      data is as of fiscal year-end(June). |
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| Net income for2008 totaled$3.6 million,up 23.4% froma year  ago. |
|------------------------------------------------------------------|

|  |  |  |
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|  | www | While      our local economies may not grow as fast as other areas when times are      good, they don’t decline as quickly when times are bad – the massive      construction and development lending that fueled excess capacity in many      metropolitan areas is simply not an issue in our      markets.Southern      Missouri never adopted a policy of making home loans without requiring      that old-fashioned down payment, and we’re not suffering fallout from      either losing that line of business, or worse, dealing with the asset      quality problems that resulted.And,      as many of the national financial players begin to restrict growth – or      even close offices – in an attempt to repair their stressed capital      ratios, Southern Missouri is still here and ready to do business in our      communities in a safe and soundmanner. |
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|             |
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| Loan quality is      soundThese important indicators show      that our loan quality remained well ahead of peer banks in      2008.  |
|--------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                            |  |
| (1)                                                                                                                                        | Peer      data is based on the average year-end figures (December) from SNL      DataSource’s Index of publicly traded commercial banks and thrifts with      assets of $100 million to $1 billion, headquartered in Missouri, Arkansas,      Illinois, Iowa, Kansas, Kentucky, Nebraska, Oklahoma, and Tennessee. SMBC      data is as of fiscal year-end(June). |

|             |
|--------------------------------------------------------------------|

| (1) | Peer      data is based on the average year-end figures (December) from SNL      DataSource’s Index of publicly traded commercial banks and thrifts with      assets of $100 million to $1 billion, headquartered in Missouri, Arkansas,      Illinois, Iowa, Kansas, Kentucky, Nebraska, Oklahoma, and Tennessee. SMBC      data is as of fiscal year-end(June). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| We      will continue to develop new products and use innovative technology to      reach our next generation of customers.New “rewards checking” products      are on the horizon, and we will specifically tailor some rewards to bring      in young depositors. We have implemented an investment services program at      multiple locations, broadening existing relationships and building new      ones. We will increase our efforts to reach potential customers using the      internet and mobile technology over the coming year.  And we      have developed a Company-wide effort to help our local schools provide      sound financial education to students, knowing that our work will benefit      the community, the young people we meet, and eventually, the      Company.  |  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|

|             |
|--------------------------------------------------------------------|

| Improved      earnings, solid asset quality, andgrowth      in our core business all combined toproduce      the kind of year we hope to reportto you      every year and, we believe, provides afoundation      for future results.  As a result,we      recently announced a 20% increase in ourquarterly      dividend. | In recognition      ofour profitable      year,we increased      ourquarterly      dividendby  20%. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------|

----

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|                   |   |   |   | Book     |             |      |
|------------------------|--------|--------|--------|----------|------------------|-----------|
|                   |   |   |   | Value At |             |      |
|                   |   |   |   | End Of   | MarketPrice      | Dividends |
| Fiscal 2008            | High   | Low    | Close  | Period   | To Book    Value | Declared  |
| 4th Quarter (6-30-08)  | $15.89 | $11.21 | $15.49 | $13.95   | 111.04%          | $0.10     |
| 3rd Quarter (3-31-08)  | $15.10 | $12.75 | $15.10 | $13.95   | 108.24%          | $0.10     |
| 2nd Quarter (12-31-07) | $15.02 | $12.75 | $13.99 | $13.76   | 101.67%          | $0.10     |
| 1st Quarter (9-30-07)  | $15.25 | $14.45 | $14.96 | $13.35   | 112.06%          | $0.10     |
| Fiscal 2007            |   |   |   |     |             |      |
| 4th Quarter (6-30-07)  | $15.49 | $14.00 | $14.95 | $13.01   | 114.91%          | $0.09     |
| 3rd Quarter (3-31-07)  | $15.50 | $14.50 | $15.48 | $12.83   | 120.65%          | $0.09     |
| 2nd Quarter (12-31-06) | $15.73 | $14.06 | $15.19 | $12.59   | 120.65%          | $0.09     |
| 1st Quarter (9-30-06)  | $15.55 | $12.29 | $15.00 | $12.29   | 122.05%          | $0.09     |
| Fiscal 2006            |   |   |   |     |             |      |
| 4th Quarter (6-30-06)  | $15.07 | $11.80 | $13.00 | $11.92   | 109.06%          | $0.09     |
| 3rd Quarter (3-31-06)  | $14.95 | $12.02 | $14.77 | $11.77   | 125.49%          | $0.09     |
| 2nd Quarter (12-31-05) | $15.47 | $13.00 | $14.70 | $11.57   | 127.05%          | $0.09     |
| 1st Quarter (9-30-05)  | $15.06 | $13.90 | $14.35 | $11.42   | 125.66%          | $0.09     |

| BUSINESS      OF THE COMPANY AND THE BANKSouthern 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 1995. Then, effective February 1998, the Bank      converted its charter to a state-chartered stock savings bank. On June 4,      2004, the Bank converted to a state chartered trust company with banking      powers. The Bank’s deposit accounts are generally insured up to a maximum      of $100,000 (some retirement accounts are insured up to $250,000) by the      Deposit Insurance Fund (DIF), which is administered by the Federal Deposit      Insurance Corporation (FDIC).The      Bank’s primary business consists      of attracting deposits from the communities it serves and investing those      funds in loans secured by one- to four-family residences, commercial real      estate, |   | commercial      business and consumer loans. The Company’s results of operations are      primarily dependent on its net interest margin, which is the difference      between the average yield on loans, mortgage-related securities and      investments and the average rate paid on deposits, securities sold under      agreements to repurchaseand      borrowings.The      net interest margin is      affected by economic, regulatory and competitive factors that influence      interest rates, loan demand and deposits. Lending activities are funded      through the attraction of deposit accounts consisting of checking      accounts, passbook accounts, money market deposit accounts, certificate of      deposit accounts with terms of 60 months or less, securities sold under      agreements to repurchase, advances from the Federal Home Loan Bank of Des      Moines, and, to a lesser extent, brokered deposits.  The Bank      currently conducts its business through its home office located in Poplar      Bluff and eight full service branch facilities in Poplar Bluff (2), Van      Buren, Dexter, Kennett, Doniphan, Sikeston and Qulin,      Missouri. |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (dollars      in thousands)                      |   | At      June 30 |    |
|--------------------------------------------------|--------|-----------------|---------|
| Financial      Condition Data:                   |   | 2008            |    |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
| Total      assets                                |   | $               | 417,820 |   |   | $ | 379,927 |   |   | $ | 350,684 |   |   | $ | 330,360 |   |   | $ | 311,703 |   |
| Loans      receivable, net                       |   |            | 343,070 |   |   |   | 312,063 |   |   |   | 280,931 |   |   |   | 267,568 |   |   |   | 248,355 |   |
| Mortgage-backed      securities                  |   |            | 28,006  |   |   |   | 10,723 |   |   |   | 14,440 |   |   |   | 17,243 |   |   |   | 20,994 |   |
| Cash,      interest-bearing deposits             |   |            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    and      investment securities |   |            | 19,931  |   |   |   | 31,492 |   |   |   | 30,328 |   |   |   | 21,344 |   |   |   | 23,794 |   |
| Deposits                                         |   |            | 292,257 |   |   |   | 270,088 |   |   |   | 258,069 |   |   |   | 224,666 |   |   |   | 211,959 |   |
| Borrowings                                       |   |            | 85,854  |   |   |   | 71,758 |   |   |   | 57,296 |   |   |   | 72,257 |   |   |   | 65,698 |   |
| Subordinated      debt                           |   |            | 7,217   |   |   |   | 7,217 |   |   |   | 7,217 |   |   |   | 7,217 |   |   |   | 7,217 |   |
| Stockholders’      equity                  |   |            | 30,472  |   |   |   | 28,714 |   |   |   | 26,554 |   |   |   | 25,003 |   |   |   | 25,952 |   |
|                                             |   |            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| (dollars      in thousands, except per share data) |   | For      The Year Ended June 30 |   |
|----------------------------------------------------|--------|---------------------------------|--------|
| Operating      Data:                               |   | 2008                            |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
| Interest      income                               |   | $                               | 25,327 |   |   | $ | 23,550 |   |   | $ | 20,363 |   |   | $ | 17,284 |   |   | $ | 15,700 |   |
| Interest      expense                              |   |                            | 13,547 |   |   |   | 13,621 |   |   |   | 10,763 |   |   |   | 8,032 |   |   |   | 6,545 |   |
|                                               |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest income                           |   |                            | 11,780 |   |   |   | 9,929 |   |   |   | 9,600 |   |   |   | 9,252 |   |   |   | 9,155 |   |
| Provision      for loan losses                     |   |                            | 940    |   |   |   | 605 |   |   |   | 555 |   |   |   | 4,815 |   |   |   | 275 |   |
|                                               |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      interest income after                     |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    provision      for loan losses   |   |                            | 10,840 |   |   |   | 9,324 |   |   |   | 9,045 |   |   |   | 4,437 |   |   |   | 8,880 |   |
|                                               |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest      income                            |   |                            | 2,412  |   |   |   | 2,207 |   |   |   | 2,144 |   |   |   | 2,313 |   |   |   | 1,875 |   |
| Noninterest      expense                           |   |                            | 7,864  |   |   |   | 7,458 |   |   |   | 7,028 |   |   |   | 6,728 |   |   |   | 6,445 |   |
|                                               |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      before income taxes                    |   |                            | 5,388  |   |   |   | 4,073 |   |   |   | 4,161 |   |   |   | 22 |   |   |   | 4,310 |   |
| Income      tax (benefit) expense                  |   |                            | 1,775  |   |   |   | 1,145 |   |   |   | 1,377 |   |   |   | (82 | ) |   |   | 1,427 |   |
| Net      income                                    |   | $                               | 3,613  |   |   | $ | 2,928 |   |   | $ | 2,784 |   |   | $ | 104 |   |   | $ | 2,883 |   |
|                                               |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      earnings per common share               |   | $                               | 1.64   |   |   | $ | 1.32 |   |   | $ | 1.25 |   |   | $ | .05 |   |   | $ | 1.27 |   |
| Diluted      earnings per common share             |   | $                               | 1.63   |   |   | $ | 1.29 |   |   | $ | 1.24 |   |   | $ | .05 |   |   | $ | 1.23 |   |
| Dividends      per share                           |   | $                               | .40    |   |   | $ | .36 |   |   | $ | .36 |   |   | $ | .36 |   |   | $ | .36 |   |

|                                        |   | At      June 30 |   |
|---------------------------------------------|--------|-----------------|--------|
| Other      Data:                            |   | 2008            |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
| Number      of:                             |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Real      estate loans    |   |            | 2,868  |   |   |   | 2,795 |   |   |   | 2,808 |   |   |   | 2,850 |   |   |   | 2,877 |   |
|    Deposit      accounts     |   |            | 20,560 |   |   |   | 19,978 |   |   |   | 18,845 |   |   |   | 17,336 |   |   |   | 16,995 |   |
|    Full      service offices |   |            | 9      |   |   |   | 9 |   |   |   | 9 |   |   |   | 8 |   |   |   | 8 |   |

|                                                        |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |
|-------------------------------------------------------------|--------|---------------------------------------|-----------|--------|--------|--------|----------|--------|--------|--------|----------|--------|--------|--------|--------|
|                                                        |   | At      Or For The Year Ended June 30 |      |
| Key      Operating Ratios:                                  |   | 2008                                  |      |   | 2007   |   |     | 2006   |   |   | 2005     |   |   | 2004   |   |
| Return      on assets (net income                           |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |
|    divided      by average assets)           |   |                                  | .92       | %      |   |   | .80      | %      |   |   | .80      | %      |   |   | .03    | % |   |   | .98 | % |
| Return      on average equity (net                          |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
|    income      divided by average equity)    |   |                                  | 12.06     |   |   |   | 10.49    |   |   |   | 10.83    |   |   |   | .39    |   |   |   | 11.09 |   |
|                                                        |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
| Average      equity to average assets                       |   |                                  | 7.60      |   |   |   | 7.66     |   |   |   | 7.43     |   |   |   | 8.18   |   |   |   | 8.82 |   |
|                                                        |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
| Interest      rate spread (spread                           |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
|    between      weighted average rate on     |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
|    all      interest-earning assets and all  |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
|    interest-bearing      liabilities)        |   |                                  | 2.86      |   |   |   | 2.57     |   |   |   | 2.69     |   |   |   | 2.84   |   |   |   | 3.06 |   |
|                                                        |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
| Net      interest margin (net interest                      |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
|    income      as a percentage of average    |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
|    interest-earning      assets)             |   |                                  | 3.17      |   |   |   | 2.90     |   |   |   | 2.96     |   |   |   | 3.06   |   |   |   | 3.28 |   |
|                                                        |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
| Noninterest      expense to average assets                  |   |                                  | 2.00      |   |   |   | 2.05     |   |   |   | 2.03     |   |   |   | 2.07   |   |   |   | 2.19 |   |
|                                                        |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
| Average      interest-earning assets to                     |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
|    average      interest-bearing liabilities |   |                                  | 108.60    |   |   |   | 108.29   |   |   |   | 108.15   |   |   |   | 108.10 |   |   |   | 109.42 |   |
|                                                        |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
| Allowance      for loan losses to gross                     |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
|    loans      (1)                            |   |                                  | 1.03      |   |   |   | .81      |   |   |   | .73      |   |   |   | .75    |   |   |   | .80 |   |
|                                                        |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
| Allowance      for loan losses to                           |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
|    nonperforming      loans (1)              |   |                                  | 58,864.74 |   |   |   | 9,845.43 |   |   |   | 3,888.50 |   |   |   | 353.36 |   |   |   | 1,460.14 |   |
|                                                        |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
| Net      (recoveries) charge-offs to average                |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
|    outstanding      loans during the period  |   |                                  | (0.03     | )      |   |   | .04      |   |   |   | .19      |   |   |   | 1.85   |   |   |   | .06 |   |
|                                                        |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
| Ratio      of nonperforming assets                          |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
|    to      total assets (1)                  |   |                                  | .02       |   |   |   | .04      |   |   |   | .08      |   |   |   | .20    |   |   |   | .10 |   |
|                                                        |   |                                  |      |   |   |   |     |   |   |   |     |   |   |   |   |   |   |   |   |   |
| Dividend      payout ratio                                  |   |                                  | 24.49     |   |   |   | 27.50    |   |   |   | 28.80    |   |   |   | 776.14 |   |   |   | 28.50 |   |

| OVERVIEWSouthern      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. On June 4, 2004, the Bank converted to a state      chartered trust company with banking powers, and the Company became a bank      holding company supervised by the Federal Reserve.The      principal business of SMBT consists 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, 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.Southern      Missouri’s results of operations are      primarily dependent on the      levels of its net interest margin and noninterest income, and its ability      to control operating expenses. Net interest margin 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 is 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 and      increased cash surrender value of bank owned life insurance (“BOLI”).      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. 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 Board. Additionally, Southern Missouri is subject      to policies and regulations issued by financial institution regulatory      agencies, including the Federal Deposit Insurance Corporation, the Federal      Reserve 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 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 real estate, commercial business and consumer financing on      loans secured by properties or collateral located primarily in      Southeastern Missouri. FORWARD-LOOKING      STATEMENTS    This      document, including information incorporated by reference, contains      forward-looking statements about the Company and its subsidiaries which we      believe are within the meaning of the Private Securities Litigation Reform      Act of 1995. These forward-looking statements include, without limitation,      statements with respect to anticipated future operating and      financial |   | performance,      growth opportunities, interest rates, cost savings and funding advantages      expected or anticipated to be realized by management. Words such as “may,”      “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,”      “intend,” “plan” and similar expressions are intended to identify these      forward looking statements. Forward-looking statements by the Company and      its management are based on beliefs, plans, objectives, goals,      expectations, anticipations, estimates and the intentions of management      and are not guarantees of future performance. The important factors we      discuss below, as well as other factors discussed under the caption      “Management’s Discussion and Analysis of Financial Condition and Results      of Operations” and identified in our filings with the SEC and those      presented elsewhere by our management from time to time, could cause      actual results to differ materially from those indicated by the      forward-looking statements made in this document:-  the        strength of the United States economy in general and the        strength 
-  of        the local economies in which we conduct operations; 
-  the        effects of, and changes in, trade, monetary and fiscal policies and        laws, including interest rate policies of the Federal Reserve        Board; 
-  inflation,        interest rate, market and monetary        fluctuations; 
-  the        timely development and acceptance of our new products and services and        the perceived overall value of these products and services by users,        including the features, pricing and quality compared to competitors’        products and services; 
-  the        willingness of users to substitute our products and services for        products and services of our competitors; 
-  the        impact of changes in financial services’ laws and regulations (including        laws concerning taxes, banking, securities and        insurance); 
-  the        impact of technological changes; 
-  acquisitions; 
-  changes        in consumer spending and saving habits; and 
-  our        success at managing the risks involved in the        foregoing. 
The      Company disclaims any obligation to update or revise any forward-looking      statements based on the occurrence of future events, the receipt of new      information, or otherwise. CRITICAL      ACCOUNTING POLICIESThe      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. |
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| 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, which are collectively evaluated for impairment and 2)      all other loans which 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      examinations of both selected credits and the credit review process by      applicable regulatory agencies. 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 (i.e., discount rates) and methodologies (i.e., 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 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 (i.e., 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.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      CONDITIONGeneral. The      Company’s total assets increased $37.9 million, or 10.0%, to $417.8      million at June 30, 2008, when compared to $379.9 million at June 30,      2007. The growth was primarily due to growth in the loan portfolio of      $31.0 million, or 10.0%, as well as growth in available for sale      investments of $5.0 million, or 14.4%. Asset growth was primarily funded      by growth in deposit balances of $22.2 million, or 8.2%, FHLB advances      of  $10.1 million, or 18.6%, and repurchase agreements of $4.0      million, or 22.8%.Loans.      Loans      increased $31.1 million, or 10.0%, to $343.1 million at June 30, 2008,      from $312.0 million at June 30, 2007. The growth in the loan portfolio was      comprised principally of residential real estate loans of $14.1 million      (including $7.2 million in multifamily developments), and commercial and      commercial real estate loans of $5.5 million and $8.1 million,      respectively.Allowance      for Loan Losses. The      allowance for loan losses increased $1.1 million, or 40.6%, from $2.5      million at June 30, 2007, to $3.6 million at June 30, 2008. The allowance      for loan losses represented 1.03% of gross loans receivable at June 30,      2008, as compared to 0.81% at June 30, 2007. At June 30, 2008,      nonperforming loans, which included loans past due greater than 90 days      and nonaccruing loans, were $6,000, compared to $26,000 at June 30, 2007      (see, however, Provision for Loan Losses, under Comparison of Years Ended      June 30, 2008 and 2007).Investments.      The      investment portfolio increased $5.0 million, or 14.4%, to $39.9 million at      June 30, 2008, from $34.9 million at June 30, 2007. The increase in the      investment portfolio was primarily due to the Company’s strategic decision      to increase investment balances to meet pledging needs for public unit      deposits and repurchase agreements, and to take advantage      of  attractive yield spreads available during the fiscal      year.Premises      and Equipment. Premises      and equipment decreased $446,000 to $8.2 million at June 30, 2008, from      $8.6 million at June 30, 2007. The decrease was due to depreciation      expense for the fiscal year, partially offset by equipment and software      purchases.Bank      Owned Life Insurance. The      Bank purchased “key person” life insurance policies on six employees with      a cash surrender value of $4.0 million in February, 2003. In addition, in      October, 2004, the Bank purchased “key person” life insurance policies on      20 employees for $2.0 million. At June 30, 2008, the cash surrender value      had increased to $7.3 million.Intangible      Assets. Intangible      assets generated through branch acquisitions in 2000 decreased $255,000 to      $1.8 million as of June 30, 2008, and will continue to be amortized in      accordance with Statement of Financial Accounting Standards (SFAS) No.      142.Deposits. Deposits      increased $22.2 million, or 8.2%, to $292.3 million at June 30, 2008, from      $270.1 million at June 30, 2007. The deposit growth was primarily      comprised of increases in retail and public CDs and checking accounts of      $19.8 million and $3.0 million, respectively, partially offset by      decreases in money market deposit and passbook accounts of      $600,000.  At June 30, 2008, brokered deposits totaled less than      $100,000. Public unit deposits increased $10.3 million during fiscal      2008.    Borrowings.      FHLB      advances increased $10.1 million, or 18.6%, to $64.1 million at June 30,      2008, from $54.0 million at June 30, 2007, with much of the increase      coming late in the fiscal year to fund asset growth. Of the outstanding      advances, $5.6 million were short term borrowings, compared to $7.0      million in short term borrowings at June 30, 2007. Of the remaining $58.5      million in long-term advances, the entire amount carries fixed interest      rates, and $49.5 million is subject to early redemption by the      issuer. |
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| At      June 30, 2008, the long-term advances had a weighted average maturity of      4.3 years, compared to 4.2 years at June 30, 2007. At June 30, 2008, all      FHLB advances had a weighted-average cost of 4.91%, as compared to 5.42%      at June 30, 2007.Subordinated      Debt. In      March, 2004, the Company issued $7.0 million of Floating Rate Capital      Securities of Southern Missouri Statutory Trust I with a liquidation value      of $1,000 per share. The securities are due in 30 years, redeemable after      five years and bear interest at a floating rate based on three month      LIBOR.Stockholders’      Equity. The      Company’s stockholders’ equity increased by $1.8 million, or 6.1%, to      $30.5 million at June 30, 2008, from $28.7 million at June 30, 2007. This      increase was primarily due to net income of $3.6 million and stock options      exercised for $566,000, partially offset by treasury stock purchases of      $1.4 million, dividend payments of $884,000 , and a $278,000 decrease in      the market value of the investment portfolio, net of tax. The Company has      approximately 17,000 shares of common stock remaining to be purchased      under its current stock repurchase program of approximately 110,000 shares      announced on June 21, 2007. COMPARISON      OF OPERATING RESULTS FOR THE YEARS ENDED JUNE 30, 2008 AND      2007Net      Income. Southern      Missouri’s net income was $3.6 million for the fiscal year ended June 30,      2008, an increase of $685,000, or 23.4%, when compared to the results of      the prior fiscal year. The increase in net income was primarily due to a      $1.9 million increase in net interest income and an increase in      non-interest income of $205,000, partially offset by a $630,000 increase      in income tax provisions, a $406,000 increase in non-interest expenses,      and a $335,000 increase in loan lossprovisions. Net      Interest Income. Net      interest income increased $1.9 million, or 18.6%, to $11.8 million for      fiscal 2008, when compared to the prior fiscal year. The increase was      primarily due to a 29 basis point increase in the average interest rate      spread, combined with a $29.0 million increase in average interest-earning      assets. The increase in interest rate spread was primarily a result of      decreasing short-term interest rates, prompted by actions of the Federal      Reserve’s Federal Open Market Committee, as well as a steeper yield curve      for most of the fiscal year. For fiscal 2008, the average interest rate      spread was 2.86%, compared to 2.57% for fiscal year 2007. At June 30,      2008, the spread was 3.12%. Interest      Income. Interest      income increased $1.8 million, or 7.5%, to $25.3 million for fiscal 2008,      when compared to the prior fiscal year. The increase was primarily due to      the $29.0 million increase in the average balance of interest-earning      assets, partially offset by a five basis point decrease in average yield      earned on interest-earning assets, from 6.87% in fiscal 2007 to 6.82% in      fiscal 2008.Interest      income on loans receivable increased by $1.6 million, or 7.4%, to $23.3      million for fiscal 2008 when compared to the prior fiscal year. The      increase was due to a $27.6 million increase in average balance of loans      receivable, partially offset by a 13 basis point decrease in the average      yield earned on loans receivable.Interest      income on the investment portfolio and other interest-earning assets      increased $183,000 or 9.8%, to $2.0 million for fiscal 2008 when compared      to the prior fiscal year. The increase was due to a 27 basis point      increase in the average yield earned on these assets, combined with a $1.4      million increase in the average balance of investments and other      interest-earning assets. Interest      Expense. Interest      expense decreased $74,000, or 0.5%, to $13.5 |   | million      for fiscal 2008 when compared to the prior fiscal year. The decrease was      due to the 34 basis point decrease in the average rate paid on      interest-bearing liabilities, from 4.30% in fiscal 2007 to 3.96% in fiscal      2008, partially offset by a $25.8 million increase in the average balance      of interest-bearing liabilities.Interest      expense on deposits increased $199,000, or 2.2%, to $9.3 million for      fiscal 2008 when compared to the prior fiscal year. The increase was due      to a $21.4 million increase in average deposits outstanding, partially      offset by a 24 basis point decrease in the average rate paid on      deposits.Interest      expense on FHLB advances decreased $324,000, or 9.5%, to $3.1 million for      fiscal 2008 when compared to the prior fiscal year. The decrease was      primarily due to the $4.4 million decrease in the average balance of FHLB      advances for fiscal 2008, combined with the 15 basis point decrease in the      average rate paid on advances.The      Company issued $7.0 million of Floating Rate Capital Securities in March,      2004, with an interest rate of three month LIBOR plus 275 basis points,      repricing quarterly. Interest expense on these securities was $539,000 for      fiscal 2008 as compared to $594,000 for the prior fiscal year. This      decrease was due to the average rate paid decreasing by 77 basis      points. 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 $940,000 for fiscal 2008, compared to      $605,000 for the prior fiscal year. The increase in provision was      primarily due to loan growth, the health of the national and regional      economy, and the potential for declining real estate collateral values. In      fiscal 2008, net recoveries were $90,000, compared to net charge offs of      $125,000 for the prior year. At June 30, 2008, classified assets totaled      $4.5 million, compared to classified assets of $1.3 million at June 30,      2007.  The increase in classifications was due primarily to a      single loan relationship with outstanding classified balances of $3.5      million, secured by commercial and agricultural real estate, and was      performing according to terms at June 30, 2008.  The      relationship was classified due to concerns regarding the borrower’s      ability to generate sufficient cash flow from operations to service the      debt.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      performed 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, which bear an      inherently higher level of credit risk. While management believes the      allowance for loan losses at June 30, 2008, is adequate to cover all      losses inherent in the portfolio, there can be no assurance that, in the      future, increases in the allowance will not be necessary, or that actual      losses will not exceed the allowance. Noninterest      Income. Noninterest      income increased $205,000, or 9.3%, to $2.4 million for fiscal 2008, when      compared to the prior fiscal year.  The increase was primarily      due to increased collection of insufficient funds charges, increased debit      and ATM card income, loan late charges, and increases in the cash      surrender value of BOLI, partially offset by lower secondary market loan      income. Noninterest      Expense. Noninterest      expense increased $406,000, or  5.4%, |
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| to      $7.9 million for fiscal 2008, when compared to the prior fiscal      year.  The increase resulted primarily from higher compensation      expenses, partially offset by lower professional, advertising, and      miscellaneous expenses.  Expenses for compensation and benefits      increased $422,000, or 10.5%, for fiscal 2008 when compared to the prior      year. The increase was due to increased salaries, addition of personnel,      and the payment of additional bonuses based on the Company’s strong      financial performance. Provision      for Income Taxes. The      Company expensed an income tax provision of $1.8 million for fiscal 2008,      compared to $1.1 million in fiscal 2007. The increase was primarily due to      increased pre-tax income, as well as the prior fiscal year’s adjustments      related to compliance with new accounting      standards. COMPARISON      OF THE YEARS ENDED JUNE 30, 2007 AND 2006Net      Income. Southern      Missouri’s net income was $2.9 million for the fiscal year ended June 30,      2007, an increase of $144,000, or 5.2%, when compared to the results of      the prior fiscal year. The increase in net income was primarily due to a      $329,000 increase in net interest income, a reduction in income tax      provisions of $232,000, and an increase in non-interest income of $63,000,      partially offset by a $430,000 increase in non-interest expenses, and a      $50,000 increase in loan loss provisions, compared to the prior fiscal      year. Net      Interest Income. Net      interest income increased $329,000, or 3.4%, to $9.9 million for fiscal      2007, when compared to the prior fiscal year. The increase was primarily      due to a $17.9 million increase in average interest-earning assets,      partially offset by a 12 basis point decrease in the average interest rate      spread. The decrease in interest rate spread was a result of a yield curve      which remained relatively flat during the fiscal year. For fiscal 2007,      the average interest rate spread was 2.57%, compared to 2.69% for fiscal      year 2006. At June 30, 2007, the spread was      2.55%. Interest      Income. Interest      income increased $3.2 million, or 15.6%, to $23.5 million for fiscal 2007,      when compared to the prior fiscal year. The increase was primarily due to      the 60 basis point increase in average yield earned on interest-earning      assets from 6.27% in fiscal 2006 to 6.87% in fiscal 2007. Interest income      also increased due to the $17.9 million increase in the average balance of      interest-earning assets.Interest      income on loans receivable increased by $3.1 million, or 16.9%, to $21.7      million for fiscal 2007 when compared to the prior fiscal year. The      increase was primarily due to a 59 basis point increase in the average      yield earned on loans receivable. Interest income on loans also increased      due to the $20.5 million increase in average loans      receivable.Interest      income on the investment portfolio and other interest-earning assets      increased $49,000 or 2.7%, to $1.9 million for fiscal 2007 when compared      to the prior fiscal year. The increase was due to a 33 basis point      increase in the average yield earned on these assets, and was partially      offset by a $2.6 million decrease in the average balance      outstanding. Interest      Expense. Interest      expense increased $2.9 million, or 26.5%, to $13.6 million for fiscal 2007      when compared to the prior fiscal year. The increase was primarily due to      the 72 basis point increase in the average rate paid on interest-bearing      liabilities from 3.58% in fiscal 2006 to 4.30% in fiscal 2007. Interest      expense also increased due to the $16.1 million increase in the average      balance of interest-bearing liabilities.Interest      expense on deposits increased $2.1 million, or 29.9%, to $9.1 million for      fiscal 2007 when compared to the prior fiscal year. The increase was      primarily due to an 80 basis point increase in the average rate paid on      deposits. Interest expense on deposits also increased due to the $6.4      million increase in |   | average      deposits outstanding.Interest      expense on FHLB advances increased $514,000, or 17.8%, to $3.4 million for      fiscal 2007 when compared to the prior fiscal year. The increase was      primarily due to the $8.3 million increase in the average balance of FHLB      advances for fiscal 2007, and the 12 basis point increase in the average      rate paid on advances.The      Company issued $7.0 million of Floating Rate Capital Securities in March,      2004, with an interest rate of three month LIBOR plus 275 basis points,      repricing quarterly. Interest expense on these securities was $594,000 for      fiscal 2007 as compared to $512,000 for the prior fiscal year. This      increase was due to the average rate paid increasing by 114 basis      points. 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 $605,000 for fiscal 2007, compared to      $555,000 for the prior fiscal year. The increase in provision was      primarily due to strong loan growth and a declining credit quality      environment. In fiscal 2007 net charge offs were $125,000 compared to      $513,000 for the prior year. At June 30, 2007, classified assets totaled      $1.3 million, roughly equal to the total of classified assets at June 30,      2006.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      performed 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, which bear an      inherently higher level of credit risk. While management believes the      allowance for loan losses at June 30, 2007, is adequate to cover all      losses inherent 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 that actual losses will not exceed the      allowance. Noninterest      Income. Noninterest      income increased $63,000, or 3.0%, to $2.2 million for fiscal 2007,      compared to $2.1 million in fiscal 2006.  The increase was      primarily due to a $102,000 increase in miscellaneous income collected      (including ATM and debit card transaction income, and income from sales of      loans on the secondary market), and was offset by a $61,000 decrease in      non-sufficient funds charges. Noninterest      Expense. Noninterest      expense increased $430,000, or 6.1%, to $7.5 million for fiscal 2007,      compared to the $7.0 million expensed during fiscal 2006. The increase      resulted primarily from higher compensation, legal and occupancy      expenses.Expenses      for compensation and benefits increased $322,000, or 8.7%, for      fiscal 2007 when compared to the prior year. The increase was due to the      mid-fiscal 2006 addition of employees attributable to the opening of a new      branch facility, increased salaries, and other compensation-related      expenditures. Occupancy expenses increased $57,000, or 4.1%, primarily due      to the cost of acquiring and operating a new facility for the full fiscal      year. Professional fees increased $73,000, or 41.8%, primarily due to an      increase in legal expenses to obtain a recovery on a large loan loss      reported in fiscal 2005. Provision      for Income Taxes. The      Company expensed an incometax |
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| provision      of $1.1 million for fiscal 2007, compared to $1.4 million in fiscal 2006.      The decrease was due to recognition of benefits from acquired tax credits,      the Company’s investment in additional tax-exempt securities, a reduction      in pre-tax income, and adjustments related to compliance with new      accounting standards. QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKThe      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 may 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 increase its interest rate risk position in order to maintain      its net interest margin.In      an effort to manage the interest rate risk resulting from fixed rate      lending, the Company has utilized longer term (up to 10 year maturities),      fixed-rate FHLB advances, which may be subject to early redemption, to      offset interest rate risk. Other elements of the Company’s current      asset/liability strategy include: (i) increasing originations of      commercial real estate, commercial business loans, agricultural real      estate, and agricultural operating lines, which typically provide higher      yields and shorter repricing periods, but inherently increase credit risk,      (ii) limiting the price volatility of the investment portfolio by      maintaining a weighted average maturity of five years or less, (iii)      actively soliciting less rate-sensitive deposits, and (iv) 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.    The      Company continues to generate long-term, fixed-rate residential loans.      During the year ended June 30, 2008, fixed rate residential loan      originations totaled $22.0 million compared to $20.1 million during the      same period of the prior year. At June 30, 2008, the fixed-rate      residential loan portfolio totaled $98.6 million with a weighted average      maturity of 207 months, compared to $91.2 million at June 30, 2007, with a      weighted average maturity of 200 months. At June 30, 2008, fixed rate      loans with remaining maturities in excess of 10 years totaled $83.7      million, or 24.1%, of loans receivable compared to $78.0 million, or      24.8%, of loans receivable at June 30, 2007. The Company originated $58.3      million in fixed rate commercial and commercial real estate loans during      the year ended June 30, 2008, compared to $63.3 million during the prior      fiscal year. The Company also originated $50.1 million in adjustable rate      commercial and commercial real estate loans during the year ended June 30,      2008, compared to $45.3 million during the prior year. The Company      originated $9.9 million in adjustable rate residential loans during the      year ended June 30, 2008, compared to $6.8 million during the prior year.      At June 30, 2008, adjustable-rate home equity lines of credit had      increased to $8.2 million as compared to $6.5 million as of June 30, 2007.      Over the last several years, the Company had maintained a weighted average      life of its investment portfolio of less than four years, but extended the      portfolio’s average life and duration during fiscal 2008 in order to take      advantage of historically attractive spreads on products with longer      maturities. At June 30, 2008, CDs with original terms of two years or more      totaled $20.8 million compared to $18.4 million at June 30,      2007. |   | INTEREST      RATE SENSITIVITY ANALYSISThe      following table sets forth as of June 30, 2008, and 2007, management’s      estimates of the projected changes in net portfolio value in the event of      1%, 2% and 3%, instantaneous, permanent increases or decreases in market      interest rates.Computations      in the table below 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      Company’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. June      30, 2008                                                                                                     NPV      as % of                                                    Net      Portfolio                           PV      of Assets                                $      Amount      $      Change    % Change  NPV      Ratio  ChangeChange      in      Rates                       (dollars      in thousands) +300      bp                    $20,957          (15,791)          (43)          5.33          -3.51+200      bp                      26,442          (10,306)          (28)          6.60          -2.24+100      bp                      31,816            (4,932)          (13)          7.79          -1.05       0      bp                     36,748                     -                -           8.84                 - -100      bp                      39,471              2,723               7          9.36            0.52 -200      bp                      42,133              5,385             15          9.85            1.01 -300      bp                      43,892              7,144             19        10.15            1.31 June      30, 2007                                                                                                    NPV      as % of                                                     Net      Portfolio                         PV      of Assets                                $      Amount       $      Change   % Change  NPV      Ratio  ChangeChange      in      Rates                        (dollars      in thousands) +300      bp                    $16,862          (16,526)          (49)          4.73          -4.15+200      bp                      22,897          (10,491)          (31)          6.31          -2.57+100      bp                      28,458            (4,930)          (15)          7.70          -1.18       0      bp                     33,388                     -                -           8.88                 - -100      bp                      37,139              3,751             11          9.74            0.86 -200      bp                      39,307              5,919             18        10.19            1.31 -300      bp                      40,593              7,205             22        10.42            1.54   |
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| LIQUIDITY      AND CAPITAL RESOURCESSouthern      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,      2008, the Bank had outstanding commitments to extend credit of $51.5      million (including $39.1 million in unused lines of credit). Total      commitments to originate fixed-rate loans with terms in excess of one year      were $8.5 million at tax-equivalent rates ranging from 5.0% to 10.0%, with      a weighted-average tax-equivalent rate of 6.83%. 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, 2008, Southern Missouri increased deposits, securities sold under      agreements to repurchase, and FHLB advances by $22.2 million, $4.0      million, and $10.1 million, respectively. During the prior year, Southern      Missouri increased deposits and securities sold under agreements to      repurchase by $12.0 million, $6.5 million, and $8.0 million, respectively.      At June 30, 2008, the Bank had pledged its residential real estate loan      portfolio to the FHLB for available credit of approximately $103.9      million, of which $64.1 million had been advanced, and another $3.5      million had been issued in the form of letters of credit.  In      addition, the Bank has the ability to pledge several of its other loan      portfolios, including commercial real estate, home equity, and commercial      business loans, which could provide additional collateral for an      additional $96.6 million in borrowings at June 30, 2008.  In      total, FHLB borrowings are generally limited to 40% of Bank assets      (effective January, 2008), or approximately $165.6 million, which means      $98.0 million in borrowings remain available.  Along with the      ability to borrow from the FHLB, management believes its liquid resources      will be sufficient to meet the Company’s liquidity      needs.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, 2008, the Bank had $130.0 million in CDs maturing within one year      and $163.7 million in other deposits and securities sold under agreements      to repurchase without a specified maturity as compared to the prior year      of $117.1 million in CDs maturing within one year and $157.3 million in      other deposits and securities sold under agreements to repurchase 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, 2008, the Bank had $39.0      million in FHLB advances eligible for early redemption by the lender      within one year.  |   | REGULATORY      CAPITALFederally      insured financial institutions are required to maintain minimum levels of      regulatory capital. FDIC regulations establish 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, 2008, the Bank exceeded regulatory capital requirements with core      and total risk-based capital of $32.7 million and $36.3 million, or 8.08%      and 11.79% 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. (See Note 12      - Stockholders’ Equity and Regulatory Capital.) IMPACT      OF INFLATIONThe      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. AVERAGE      BALANCE, INTEREST AND AVERAGE YIELDS AND RATESThe      table      on the following page 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 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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|                                                                                                                                                                         |   | 2008           |    |   | 2007                 |   |   | 2006       |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|---------|--------|----------------------|--------|--------|------------|--------|
| Year      Ended June 30                                                                                                                                                      |   | AverageBalance |    |   | InterestandDividends |   |   | Yield/Cost |   |   | AverageBalance |   |   | InterestandDividends |   |   | Yield/Cost |   |   | AverageBalance |   |   | InterestandDividends |   |   | Yield/Cost |   |
|                                                                                                                                                                         |   |           |    |   |                 |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning      assets:                                                                                                                                                |   |           |    |   |                 |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Mortgage      loans (1)                                                                                                                                    |   | $              | 232,500 |   |                 | $      | 16,541 |       |   |   | 7.11 | % |   | $ | 211,203 |   |   | $ | 14,726 |   |   |   | 6.97 | % |   | $ | 192,191 |   |   | $ | 12,781 |   |   |   | 6.65 | % |
|    Other      loans (1)                                                                                                                                       |   |           | 92,614  |   |                 |   | 6,745  |       |   |   | 7.28 |   |   |   | 86,352 |   |   |   | 6,966 |   |   |   | 8.07 |   |   |   | 84,838 |   |   |   | 5,773 |   |   |   | 6.81 |   |
|       Total      net loans                                                                                                                     |   |           | 325,114 |   |                 |   | 23,286 |       |   |   | 7.16 |   |   |   | 297,555 |   |   |   | 21,692 |   |   |   | 7.29 |   |   |   | 277,029 |   |   |   | 18,554 |   |   |   | 6.70 |   |
| Mortgage-backed      securities                                                                                                                                              |   |           | 19,372  |   |                 |   | 923    |       |   |   | 4.76 |   |   |   | 13,082 |   |   |   | 556 |   |   |   | 4.25 |   |   |   | 15,648 |   |   |   | 596 |   |   |   | 3.81 |   |
| Investment      securities (2)                                                                                                                                               |   |           | 22,552  |   |                 |   | 1,059  |       |   |   | 4.69 |   |   |   | 28,234 |   |   |   | 1,256 |   |   |   | 4.45 |   |   |   | 25,067 |   |   |   | 1,020 |   |   |   | 4.07 |   |
| Other      interest-earning assets                                                                                                                                           |   |           | 4,567   |   |                 |   | 59     |       |   |   | 1.29 |   |   |   | 3,780 |   |   |   | 46 |   |   |   | 1.22 |   |   |   | 6,989 |   |   |   | 193 |   |   |   | 2.77 |   |
| TOTAL      INTEREST-EARNING      ASSETS (1)                                                                                                                                  |   |           | 371,605 |   |                 |   | 25,327 |       |   |   | 6.82 |   |   |   | 342,651 |   |   |   | 23,550 |   |   |   | 6.87 |   |   |   | 324,733 |   |   |   | 20,363 |   |   |   | 6.27 |   |
| Other      noninterest-earning   assets      (3)                                                                                                              |   |           | 22,429  |   |                 |   | -      |       |   |   | - |   |   |   | 21,563 |   |   |   | - |   |   |   | - |   |   |   | 21,281 |   |   |   | - |   |   |   | - |   |
| TOTAL      ASSETS                                                                                                                                                            |   | $              | 394,034 |   |                 | $      | 25,327 |       |   |   | - |   |   | $ | 364,214 |   |   | $ | 23,550 |   |   |   | - |   |   | $ | 346,014 |   |   | $ | 20,363 |   |   |   | - |   |
| Interest-bearing      liabilities:                                                                                                                                           |   |           |    |   |                 |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Savings      accounts                                                                                                                                      |   | $              | 76,126  |   |                 | $      | 2,426  |       |   |   | 3.19 | % |   | $ | 71,211 |   |   | $ | 2,660 |   |   |   | 3.74 | % |   | $ | 70,704 |   |   | $ | 2,259 |   |   |   | 3.19 | % |
|    NOW accounts                                                                                                                                          |   |           | 32,461  |   |                 |   | 427    |       |   |   | 1.31 |   |   |   | 30,742 |   |   |   | 402 |   |   |   | 1.31 |   |   |   | 29,619 |   |   |   | 362 |   |   |   | 1.22 |   |
|    Money      market accounts                                                                                                                                 |   |           | 6,319   |   |                 |   | 112    |       |   |   | 1.77 |   |   |   | 7,321 |   |   |   | 142 |   |   |   | 1.94 |   |   |   | 11,333 |   |   |   | 206 |   |   |   | 1.82 |   |
|    Certificates      of deposit                                                                                                                               |   |           | 140,955 |   |                 |   | 6,287  |       |   |   | 4.46 |   |   |   | 125,149 |   |   |   | 5,849 |   |   |   | 4.67 |   |   |   | 116,330 |   |   |   | 4,140 |   |   |   | 3.56 |   |
| TOTAL      INTEREST-BEARING      DEPOSITS                                                                                                                                    |   |           | 255,861 |   |                 |   | 9,252  |       |   |   | 3.62 |   |   |   | 234,423 |   |   |   | 9,053 |   |   |   | 3.86 |   |   |   | 227,986 |   |   |   | 6,967 |   |   |   | 3.06 |   |
| Borrowings:                                                                                                                                                                  |   |           |    |   |                 |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Securities      sold under      agreements      to repurchase                                                                |   |           | 20,567  |   |                 |   | 682    |       |   |   | 3.31 |   |   |   | 11,863 |   |   |   | 575 |   |   |   | 4.84 |   |   |   | 10,420 |   |   |   | 400 |   |   |   | 3.84 |   |
|    FHLB      advances                                                                                                                                         |   |           | 58,526  |   |                 |   | 3,074  |       |   |   | 5.25 |   |   |   | 62,906 |   |   |   | 3,399 |   |   |   | 5.40 |   |   |   | 54,642 |   |   |   | 2,884 |   |   |   | 5.28 |   |
|    Junior      subordinated debt                                                                                                                              |   |           | 7,217   |   |                 |   | 539    |       |   |   | 7.47 |   |   |   | 7,217 |   |   |   | 594 |   |   |   | 8.24 |   |   |   | 7,217 |   |   |   | 512 |   |   |   | 7.10 |   |
| TOTAL      INTEREST-BEARING      LIABILITIES                                                                                                                                 |   |           | 342,171 |   |                 |   | 13,547 |       |   |   | 3.96 |   |   |   | 316,409 |   |   |   | 13,621 |   |   |   | 4.30 |   |   |   | 300,265 |   |   |   | 10,763 |   |   |   | 3.58 |   |
|    Noninterest-bearing      demand      deposits                                                                                |   |           | 20,055  |   |                 |   | -      |       |   |   | - |   |   |   | 17,850 |   |   |   | - |   |   |   | - |   |   |   | 17,745 |   |   |   | - |   |   |   | - |   |
|    Other      liabilities                                                                                                                                     |   |           | 1,848   |   |                 |   | -      |       |   |   | - |   |   |   | 2,041 |   |   |   | - |   |   |   | - |   |   |   | 2,286 |   |   |   | - |   |   |   | - |   |
| TOTAL      LIABILITIES                                                                                                                                                       |   |           | 364,074 |   |                 |   | 13,547 |       |   |   | - |   |   |   | 336,300 |   |   |   | 13,621 |   |   |   | - |   |   |   | 320,296 |   |   |   | 10,763 |   |   |   | - |   |
| Stockholders’      equity                                                                                                                                              |   |           | 29,960  |   |                 |   | -      |       |   |   | - |   |   |   | 27,914 |   |   |   | - |   |   |   | - |   |   |   | 25,718 |   |   |   | - |   |   |   | - |   |
| TOTAL      LIABILITIES ANDSTOCKHOLDERS’      EQUITY                                                                                                                    |   | $              | 394,034 |   |                 | $      | 13,547 |       |   |   | - |   |   | $ | 364,214 |   |   | $ | 13,621 |   |   |   | - |   |   | $ | 346,014 |   |   | $ | 10,763 |   |   |   | - |   |
| Net      interest income                                                                                                                                                     |   |           |    |   |                 | $      | 11,780 |       |   |   |   |   |   |   |   |   |   | $ | 9,929 |   |   |   |   |   |   |   |   |   |   | $ | 9,600 |   |   |   |   |   |
| Interest      rate spread (4)                                                                                                                                                |   |           |    |   |                 |   |   |       |   |   | 2.86 | % |   |   |   |   |   |   |   |   |   |   | 2.57 | % |   |   |   |   |   |   |   |   |   |   | 2.69 | % |
| Net      interest margin (5)                                                                                                                                                 |   |           |    |   |                 |   |   |       |   |   | 3.17 | % |   |   |   |   |   |   |   |   |   |   | 2.90 | % |   |   |   |   |   |   |   |   |   |   | 2.96 | % |
| Ratio      of average interest-earning       assets      to average interest-      bearing      liabilities |   |           | 108.60  | %      |                 |   |   |       |   |   |   |   |   |   |   |   |   |   | 108.29 | % |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 108.15 | % |

|                                                                                                                                                            |   | AtJune      30, |   |   | ForThe      Year Ended June 30, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|--------|--------|---------------------------------|--------|
|                                                                                                                                                            |   | 2008            |   |   | 2008                            |   |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                            |   |            |   |   |                            |   |   |   |   |   |   |   |
| Weighted-average      yield on loan portfolio                                                                                                                   |   |            | 6.62   | %      |                            |   | 7.16 | % |   |   | 7.29 | % |   |   | 6.70 | % |
| Weighted-average      yield on mortgage-backed securities                                                                                                       |   |            | 4.78   |   |                            |   | 4.76 |   |   |   | 4.25 |   |   |   | 3.81 |   |
| Weighted-average      yield on investment securities (1)                                                                                                        |   |            | 4.30   |   |                            |   | 4.69 |   |   |   | 4.45 |   |   |   | 4.07 |   |
| Weighted-average      yield on other interest-earning assets                                                                                                    |   |            | 0.39   |   |                            |   | 1.29 |   |   |   | 1.22 |   |   |   | 2.77 |   |
| Weighted-average      yield on all interest-earning assets                                                                                                      |   |            | 6.31   |   |                            |   | 6.82 |   |   |   | 6.87 |   |   |   | 6.27 |   |
| Weighted-average      rate paid on deposits                                                                                                                     |   |            | 2.84   |   |                            |   | 3.62 |   |   |   | 3.86 |   |   |   | 3.06 |   |
| Weighted-average      rate paid on securities sold under   agreements      to repurchase                                                         |   |            | 1.67   |   |                            |   | 3.31 |   |   |   | 4.84 |   |   |   | 3.84 |   |
| Weighted-average      rate paid on FHLB advances                                                                                                                |   |            | 4.91   |   |                            |   | 5.25 |   |   |   | 5.40 |   |   |   | 5.28 |   |
| Weighted-average      rate paid on subordinated debt                                                                                                            |   |            | 5.56   |   |                            |   | 7.47 |   |   |   | 8.24 |   |   |   | 7.10 |   |
| Weighted-average      rate paid on all interest-bearing liabilities                                                                                             |   |            | 3.19   |   |                            |   | 3.96 |   |   |   | 4.30 |   |   |   | 3.58 |   |
| Interest      rate spread (spread between weighted average rate on   all      interest-earning assets and all interest-bearing      liabilities) |   |            | 3.12   |   |                            |   | 2.86 |   |   |   | 2.57 |   |   |   | 2.69 |   |
| Net      interest margin (net interest income as a percentageof   average      interest-earning assets)                                          |   |            | 3.38   |   |                            |   | 3.17 |   |   |   | 2.90 |   |   |   | 2.96 |   |

|                                                                                                          |   | Years      Ended June 30,2008      Compared      to 2007Increase      (Decrease) Due to |   |   | Years      Ended June 30,2007      Compared to 2006Increase      (Decrease) Due to |   |
|---------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------|--------|
| (dollars      in thousands)                                                                                   |   | Rate                                                                                    |   |   | Volume                                                                             |   |   | Rate/Volume |   |   | Net |   |   | Rate |   |   | Volume |   |   | Rate/Volume |   |   | Net |   |
| Interest-earning      assets:                                                                                 |   |                                                                                    |   |   |                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Loans      receivable (1)                                                                   |   |                                                                                    | (387   | )      |                                                                               |   | 2,009 |   |   |   | (28 | ) |   |   | 1,594 |   |   |   | 1,634 |   |   |   | 1,375 |   |   |   | 129 |   |   |   | 3,138 |   |
|    Mortgage-backed      securities                                                             |   |                                                                                    | 67     |   |                                                                               |   | 267 |   |   |   | 33 |   |   |   | 367 |   |   |   | 69 |   |   |   | (98 | ) |   |   | (11 | ) |   |   | (40 | ) |
|    Investment      securities (2)                                                              |   |                                                                                    | 68     |   |                                                                               |   | (253 | ) |   |   | (12 | ) |   |   | (197 | ) |   |   | 95 |   |   |   | 129 |   |   |   | 12 |   |   |   | 236 |   |
|    Other      interest-earning deposits                                                        |   |                                                                                    | 3      |   |                                                                               |   | 10 |   |   |   | - |   |   |   | 13 |   |   |   | (108 | ) |   |   | (89 | ) |   |   | 50 |   |   |   | (147 | ) |
| Total      net change in income on   interest-earning      assets                              |   |                                                                                    | (249   | )      |                                                                               |   | 2,033 |   |   |   | (7 | ) |   |   | 1,777 |   |   |   | 1,690 |   |   |   | 1,317 |   |   |   | 180 |   |   |   | 3,187 |   |
| Interest-bearing      liabilities:                                                                            |   |                                                                                    |   |   |                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Deposits                                                                                    |   |                                                                                    | (667   | )      |                                                                               |   | 926 |   |   |   | (60 | ) |   |   | 199 |   |   |   | 1,721 |   |   |   | 271 |   |   |   | 94 |   |   |   | 2,086 |   |
|    Securities      sold under      agreements      to repurchase |   |                                                                                    | (182   | )      |                                                                               |   | 421 |   |   |   | (132 | ) |   |   | 107 |   |   |   | 104 |   |   |   | 55 |   |   |   | 16 |   |   |   | 175 |   |
|    Subordinated      debt                                                                      |   |                                                                                    | (56    | )      |                                                                               |   | - |   |   |   | 1 |   |   |   | (55 | ) |   |   | 82 |   |   |   | - |   |   |   | - |   |   |   | 82 |   |
|    FHLB      advances                                                                          |   |                                                                                    | (94    | )      |                                                                               |   | (237 | ) |   |   | 6 |   |   |   | (325 | ) |   |   | 66 |   |   |   | 436 |   |   |   | 13 |   |   |   | 515 |   |
| Total      net change in expense on   interest-bearing      liabilities                        |   |                                                                                    | (999   | )      |                                                                               |   | 1,110 |   |   |   | (185 | ) |   |   | (74 | ) |   |   | 1,973 |   |   |   | 762 |   |   |   | 123 |   |   |   | 2,858 |   |
| Net      change in net interest income                                                                        |   |                                                                                    | 750    |   |                                                                               |   | 923 |   |   |   | 178 |   |   |   | 1,851 |   |   |   | (283 | ) |   |   | 555 |   |   |   | 57 |   |   |   | 329 |   |

| Assets                                                                                                                                                                 |                                                      |   | 2008        |        |   | 2007   |        |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------|--------|-------------|-------------|--------|--------|-------------|
| Cash      and cash equivalents                                                                                                                                         |                                                      | $      | 6,042,408   |        |   | $      | 7,330,966   |   |
| Interest-bearing      time deposits                                                                                                                                    |                                                      |   | 1,980,000   |        |   |   | -           |   |
| Available      for sale securities (Note 2)                                                                                                                            |                                                      |   | 39,915,280  |        |   |   | 34,883,588  |   |
| Stock      in FHLB of Des Moines                                                                                                                                       |                                                      |   | 3,323,700   |        |   |   | 3,070,600   |   |
| Loans,      net of allowance for loan losses of   $3,567,203      and $2,537,659 at   June      30, 2008 and 2007, respectively (Note 3) |                                                      |   | 343,069,775 |        |   |   | 312,062,967 |   |
| Accrued      interest receivable                                                                                                                                       |                                                      |   | 3,011,777   |        |   |   | 2,248,064   |   |
| Premises      and equipment, net (Note 4)                                                                                                                              |                                                      |   | 8,204,631   |        |   |   | 8,650,673   |   |
| Bank      owned life insurance - cash surrender value                                                                                                                  |                                                      |   | 7,289,819   |        |   |   | 6,998,565   |   |
| Intangible      assets, net                                                                                                                                            |                                                      |   | 1,837,903   |        |   |   | 2,093,160   |   |
| Prepaid      expenses and other assets                                                                                                                                 |                                                      |   | 3,145,090   |        |   |   | 2,588,212   |   |
|                                                                                                                                                                   | TOTAL      ASSETS                                         |   | $           | 417,820,383 |   |   | $           | 379,926,795 |   |
|                                                                                                                                                                   |                                                      |   |        |        |   |   |        |   |
|                                                                                                                                                                   |                                                      |   |        |        |   |   |        |   |
| Liabilities      and Stockholders’ Equity                                                                                                                        |                                                      |   |        |        |   |   |        |   |
| Deposits      (Note 5)                                                                                                                                                 |                                                      | $      | 292,257,045 |        |   | $      | 270,088,096 |   |
| Securities      sold under agreements to repurchase (Note 6)                                                                                                           |                                                      |   | 21,803,513  |        |   |   | 17,758,364  |   |
| Advances      from FHLB of Des Moines (Note 7)                                                                                                                         |                                                      |   | 64,050,000  |        |   |   | 54,000,000  |   |
| Accounts      payable and other liabilities                                                                                                                            |                                                      |   | 821,407     |        |   |   | 742,816     |   |
| Accrued      interest payable                                                                                                                                          |                                                      |   | 1,199,769   |        |   |   | 1,406,280   |   |
| Subordinated      debt (Note 8)                                                                                                                                        |                                                      |   | 7,217,000   |        |   |   | 7,217,000   |   |
|                                                                                                                                                                   | TOTAL      LIABILITIES                                    |   |        | 387,348,734 |   |   |        | 351,212,556 |   |
|                                                                                                                                                                   |                                                      |   |        |        |   |   |        |   |
| Commitments      and contingencies (Note 13)                                                                                                                           |                                                      |   | -           |        |   |   | -           |   |
|                                                                                                                                                                   |                                                      |   |        |        |   |   |        |   |
| Preferred      stock, $.01 par value; 500,000 shares   authorized;      none issued or outstanding                                                      |                                                      |   | -           |        |   |   | -           |   |
| Common      stock, $.01 par value; 4,000,000 shares   authorized;      2,957,226 shares issued                                                          |                                                      |   | 29,572      |        |   |   | 29,572      |   |
| Additional      paid-in capital                                                                                                                                        |                                                      |   | 16,675,839  |        |   |   | 17,389,156  |   |
| Retained      earnings                                                                                                                                                 |                                                      |   | 27,364,219  |        |   |   | 24,634,854  |   |
| Treasury      stock of 766,393 shares in 2008 and 743,250   shares      in 2007, at cost                                                                |                                                      |   | (13,002,803 | )           |   |   | (12,990,541 | ) |
| Accumulated      other comprehensive loss - AFS securities                                                                                                             |                                                      |   | (626,673    | )           |   |   | (348,802    | ) |
| Accumulated      other comprehensive income - FAS 158                                                                                                                  |                                                      |   | 31,495      |        |   |   | -           |   |
|                                                                                                                                                                   | TOTAL      STOCKHOLDERS’ EQUITY                     |   |        | 30,471,649  |   |   |        | 28,714,239 |   |
|                                                                                                                                                                   | TOTAL      LIABILITIES ANDSTOCKHOLDERS’      EQUITY |   | $           | 417,820,383 |   |   | $           | 379,926,795 |   |

| Interest      income:                                                                                                        |   | 2008   |       |   | 2007   |   |       | 2006   |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
|    Loans                                                                                                      |   | $      | 23,285,907 |   |   | $      | 21,691,579 |   |   | $ | 18,554,139 |   |
|    Investment      securities                                                                                 |   |   | 1,058,742  |   |   |   | 1,255,676  |   |   |   | 1,020,140 |   |
|    Mortgage-backed      securities                                                                            |   |   | 923,039    |   |   |   | 556,235    |   |   |   | 596,065 |   |
|    Other      interest-earning assets                                                                         |   |   | 58,992     |   |   |   | 46,144     |   |   |   | 193,301 |   |
| TOTAL      INTEREST INCOME                                                                                                   |   |   | 25,326,680 |   |   |   | 23,549,634 |   |   |   | 20,363,645 |   |
| Interest      expense:                                                                                                       |   |   |       |   |   |   |       |   |   |   |   |   |
|    Deposits                                                                                                   |   |   | 9,251,569  |   |   |   | 9,052,748  |   |   |   | 6,966,798 |   |
|    Securities      sold under agreements      to      repurchase                |   |   | 681,817    |   |   |   | 574,570    |   |   |   | 400,097 |   |
|    Advances      from FHLB of Des Moines                                                                      |   |   | 3,074,378  |   |   |   | 3,398,868  |   |   |   | 2,884,426 |   |
|    Subordinated      debt                                                                                     |   |   | 539,017    |   |   |   | 594,357    |   |   |   | 512,074 |   |
| TOTAL      INTEREST EXPENSE                                                                                                  |   |   | 13,546,781 |   |   |   | 13,620,543 |   |   |   | 10,763,395 |   |
| NET      INTEREST INCOME                                                                                                     |   |   | 11,779,899 |   |   |   | 9,929,091  |   |   |   | 9,600,250 |   |
| Provision      for loan losses (Note 3)                                                                                      |   |   | 940,000    |   |   |   | 605,000    |   |   |   | 555,000 |   |
| NET      INTEREST INCOME AFTER                                                                                               |   |   |       |   |   |   |       |   |   |   |   |   |
| PROVISION      FOR LOAN LOSSES                                                                                               |   |   | 10,839,899 |   |   |   | 9,324,091  |   |   |   | 9,045,250 |   |
| Noninterest      income:                                                                                                     |   |   |       |   |   |   |       |   |   |   |   |   |
|    Net      gains on sales of      available      for sale securities           |   |   | 6,084      |   |   |   | -          |   |   |   | - |   |
|    Customer      service charges                                                                              |   |   | 1,257,525  |   |   |   | 1,140,474  |   |   |   | 1,211,084 |   |
|    Loan      late charges                                                                                     |   |   | 142,232    |   |   |   | 124,076    |   |   |   | 119,762 |   |
|    Increase      in cash surrender value      of      bank owned life insurance |   |   | 291,254    |   |   |   | 263,210    |   |   |   | 249,598 |   |
|    Other                                                                                                      |   |   | 715,016    |   |   |   | 679,038    |   |   |   | 563,047 |   |
| TOTAL      NONINTEREST INCOME                                                                                                |   |   | 2,412,111  |   |   |   | 2,206,798  |   |   |   | 2,143,491 |   |
| Noninterest      expense:                                                                                                    |   |   |       |   |   |   |       |   |   |   |   |   |
|    Compensation      and benefits                                                                             |   |   | 4,428,909  |   |   |   | 4,006,971  |   |   |   | 3,685,388 |   |
|    Occupancy      and equipment                                                                               |   |   | 1,525,999  |   |   |   | 1,432,659  |   |   |   | 1,375,670 |   |
|    Deposit      insurance premium                                                                             |   |   | 30,393     |   |   |   | 31,022     |   |   |   | 30,583 |   |
|    Professional      fees                                                                                     |   |   | 223,136    |   |   |   | 246,271    |   |   |   | 173,685 |   |
|    Advertising                                                                                                |   |   | 176,479    |   |   |   | 224,438    |   |   |   | 187,632 |   |
|    Postage      and office supplies                                                                           |   |   | 275,585    |   |   |   | 298,440    |   |   |   | 294,888 |   |
|    Amortization      of intangible assets                                                                     |   |   | 255,258    |   |   |   | 255,258    |   |   |   | 255,258 |   |
|    Other                                                                                                      |   |   | 947,968    |   |   |   | 962,959    |   |   |   | 1,024,826 |   |
| TOTAL      NONINTEREST EXPENSE                                                                                               |   |   | 7,863,727  |   |   |   | 7,458,018  |   |   |   | 7,027,930 |   |
| INCOME      BEFORE INCOME TAXES                                                                                              |   |   | 5,388,283  |   |   |   | 4,072,871  |   |   |   | 4,160,811 |   |
| Income      taxes (Note 10)                                                                                                  |   |   |       |   |   |   |       |   |   |   |   |   |
|    Current                                                                                                    |   |   | 2,278,803  |   |   |   | 1,307,458  |   |   |   | 1,673,184 |   |
|    Deferred                                                                                                   |   |   | (504,000   | )      |   |   | (163,000   | )      |   |   | (296,539 | ) |
|                                                                                                                         |   |   | 1,774,803  |   |   |   | 1,144,458  |   |   |   | 1,376,645 |   |
| NET      INCOME                                                                                                              |   | $      | 3,613,480  |   |   | $      | 2,928,413  |   |   | $ | 2,784,166 |   |
| Basic      earnings per common share                                                                                         |   | $      | 1.64       |   |   | $      | 1.32       |   |   | $ | 1.25 |   |
| Diluted      earnings per common share                                                                                       |   | $      | 1.63       |   |   | $      | 1.29       |   |   | $ | 1.24 |   |

|                                                                                                                                    |   | CommonStock |   |   | AdditionalPaid-inCapital |   |       | RetainedEarnings |   |   | TreasuryStock |   |   | UnearnedEmployeeBenefits |        |   | AccumulatedOtherComprehensiveIncome      (Loss) |   |    | TotalStockholders’Equity |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|--------|--------|--------------------------|--------|------------|------------------|--------|--------|---------------|--------|--------|--------------------------|-------------|--------|-------------------------------------------------|--------|---------|--------------------------------|--------|
|                                                                                                                                    |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |
| BALANCE      AT JUNE 30, 2005                                                                                                           |   | $           | 29,572 |   |                     | $      | 17,363,542 |             |   | $      | 20,531,752    |   |   | $                        | (12,702,489 | )      |                                            | $      | (45,763 | )                              |   | $ | (173,115 | ) |   | $ | 25,003,499 |   |
|                                                                                                                                    |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   |   |   |
| Net      income                                                                                                                         |   |        |   |   |                     |   |       |             |   |   | 2,784,166     |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | 2,784,166 |   |
| Change      in unrealized loss   on      available for sale securities                                                   |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   | (517,210 | ) |   |   | (517,210 | ) |
| TOTAL      COMPREHENSIVE INCOME                                                                                                         |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | 2,266,956 |   |
|                                                                                                                                    |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   |   |   |
|                                                                                                                                    |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   |   |   |
|                                                                                                                                    |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   |   |   |
| Reclassification      of unearned   compensation      in accordance with   adoption      of SFAS No. 123R |   |        |   |   |                     |   | (45,763    | )                |   |   |          |   |   |                     |        |   |                                            |   | 45,763  |                           |   |   |   |   |   |   | - |   |
| Dividends      paid ($.36 per share)                                                                                                    |   |        |   |   |                     |   |       |             |   |   | (804,038      | )      |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | (804,038 | ) |
| SOP      expense                                                                                                                        |   |        |   |   |                     |   | 51,473     |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | 51,473 |   |
| MRP      expense                                                                                                                        |   |        |   |   |                     |   | 10,890     |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | 10,890 |   |
| Tax      benefit of MRP                                                                                                                 |   |        |   |   |                     |   | 2,599      |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | 2,599 |   |
| Exercise      of stock options                                                                                                          |   |        |   |   |                     |   | (28,120    | )                |   |   |          |   |   |                     | 50,968      |   |                                            |   |    |                           |   |   |   |   |   |   | 22,848 |   |
| BALANCE      AT JUNE 30, 2006                                                                                                           |   | $           | 29,572 |   |                     | $      | 17,354,621 |             |   | $      | 22,511,880    |   |   | $                        | (12,651,521 | )      |                                            | $      | -       |                           |   | $ | (690,325 | ) |   | $ | 26,554,227 |   |
|                                                                                                                                    |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   |   |   |
| Net      income                                                                                                                         |   |        |   |   |                     |   |       |             |   |   | 2,928,413     |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | 2,928,413 |   |
| Change      in unrealized gain   on      available for sale securities                                                   |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   | 341,523 |   |   |   | 341,523 |   |
| TOTAL      COMPREHENSIVE INCOME                                                                                                         |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | 3,269,936 |   |
|                                                                                                                                    |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   |   |   |
| Purchases      of treasury stock                                                                                                        |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     | (397,020    | )      |                                            |   |    |                           |   |   |   |   |   |   | (397,020 | ) |
| Dividends      paid ($.36 per share)                                                                                                    |   |        |   |   |                     |   |       |             |   |   | (805,439      | )      |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | (805,439 | ) |
| SOP Expense                                                                                                                       |   |        |   |   |                     |   | 50,067     |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | 50,067 |   |
| MRP      expense                                                                                                                        |   |        |   |   |                     |   | 13,147     |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | 13,147 |   |
| Tax      benefit of MRP                                                                                                                 |   |        |   |   |                     |   | 3,321      |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | 3,321 |   |
| Exercise      of stock options                                                                                                          |   |        |   |   |                     |   | (32,000    | )                |   |   |          |   |   |                     | 58,000      |   |                                            |   |    |                           |   |   |   |   |   |   | 26,000 |   |
| BALANCE      AT JUNE 30, 2007                                                                                                           |   | $           | 29,572 |   |                     | $      | 17,389,156 |             |   | $      | 24,634,854    |   |   | $                        | (12,990,541 | )      |                                            | $      | -       |                           |   | $ | (348,802 | ) |   | $ | 28,714,239 |   |
|                                                                                                                                    |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   |   |   |
| Net      income                                                                                                                         |   |        |   |   |                     |   |       |             |   |   | 3,613,480     |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | 3,613,480 |   |
| Change      in unrealized loss   on      available for sale securities                                                   |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   | (277,871 | ) |   |   | (277,871 | ) |
| Defined      benefit pension plan net gain                                                                                              |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   | 31,495 |   |   |   | 31,495 |   |
| TOTAL      COMPREHENSIVE INCOME                                                                                                         |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | 3,367,104 |   |
|                                                                                                                                    |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   |   |   |
| Purchases      of treasury stock                                                                                                        |   |        |   |   |                     |   |       |             |   |   |          |   |   |                     | (1,364,279  | )      |                                            |   |    |                           |   |   |   |   |   |   | (1,364,279 | ) |
| Dividends      paid ($.40 per share)                                                                                                    |   |        |   |   |                     |   |       |             |   |   | (884,115      | )      |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | (884,115 | ) |
| SOP Expense                                                                                                                       |   |        |   |   |                     |   | 48,481     |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | 48,481 |   |
| MRP      expense                                                                                                                        |   |        |   |   |                     |   | 19,777     |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | 19,777 |   |
| Tax      benefit of MRP                                                                                                                 |   |        |   |   |                     |   | 4,817      |             |   |   |          |   |   |                     |        |   |                                            |   |    |                           |   |   |   |   |   |   | 4,817 |   |
| Exercise      of stock options                                                                                                          |   |        |   |   |                     |   | (786,392   | )                |   |   |          |   |   |                     | 1,352,017   |   |                                            |   |    |                           |   |   |   |   |   |   | 565,625 |   |
| BALANCE      AT JUNE 30, 2008                                                                                                           |   | $           | 29,572 |   |                     | $      | 16,675,839 |             |   | $      | 27,364,219    |   |   | $                        | (13,002,803 | )      |                                            | $      | -       |                           |   | $ | (595,178 | ) |   | $ | 30,471,649 |   |

| Cash flows from operating      activities:                                                                                   |   | 2008   |        |   |   |   |   | 2007   |   |      |        |   |   | 2006   |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|--------|--------|--------|-----------|-------------|--------|--------|--------|--------|
| Net      income                                                                                                              |   | $      | 3,613,480   |   |   |   |   |   | $      | 2,928,413 |        |   |   |   |   | $ | 2,784,166 |   |
| Items      not requiring (providing) cash:                                                                                   |   |   |        |   |   |   |   |   |   |      |        |   |   |   |   |   |   |   |
|    Depreciation                                                                                               |   |   | 680,693     |   |   |   |   |   |   | 713,774   |        |   |   |   |   |   | 642,449 |   |
|    SOP,      MRP expense and ESOP expense                                                                     |   |   | 73,075      |   |   |   |   |   |   | 66,535    |        |   |   |   |   |   | 62,364 |   |
|    Net      realized gains on sale      of      available for sale securities   |   |   | (6,084      | )      |   |   | -      |   |   |      |        |   |   |   | -      |   |   |   |   |   |
|    (Gain)      Loss on sale of foreclosed assets                                                              |   |   | (18,455     | )      |   |   |   |   |   |      | (1,035      | )      |   |   |   |   |   |   | 29,938 |   |
|    Amortization      of intangible assets                                                                     |   |   | 255,258     |   |   |   |   |   |   |      | 255,258     |   |   |   |   |   |   |   | 255,258 |   |
|    Increase      in cash surrender value      of      bank owned life insurance |   |   | (291,254    | )      |   |   |   |   |   |      | (263,210    | )      |   |   |   |   |   |   | (249,598 | ) |
|    Provision      for loan losses                                                                             |   |   | 940,000     |   |   |   |   |   |   |      | 605,000     |   |   |   |   |   |   |   | 555,000 |   |
|    Amortization      of premiums and discounts on securities                                                  |   |   | (52,965     | )      |   |   |   |   |   |      | (9,373      | )      |   |   |   |   |   |   | 36,598 |   |
|    Deferred      income taxes                                                                                 |   |   | (504,000    | )      |   |   |   |   |   |      | (163,000    | )      |   |   |   |   |   |   | (296,539 | ) |
| Changes      in:                                                                                                             |   |   |        |   |   |   |   |   |   |      |        |   |   |   |   |   |   |   |   |   |
|    Accrued      interest receivable                                                                           |   |   | (763,713    | )      |   |   |   |   |   |      | (346,437    | )      |   |   |   |   |   |   | (561,225 | ) |
|    Prepaid      expenses and other assets                                                                     |   |   | 49,053      |   |   |   |   |   |   |      | (346,378    | )      |   |   |   |   |   |   | (52,073 | ) |
|    Accounts      payable and other liabilities                                                                |   |   | 110,086     |   |   |   |   |   |   |      | 160,803     |   |   |   |   |   |   |   | 1,194,227 |   |
|    Accrued      interest payable                                                                              |   |   | (206,511    | )      |   |   |   |   |   |      | 440,422     |   |   |   |   |   |   |   | 246,905 |   |
| NET      CASH PROVIDED BY OPERATING ACTIVITIES                                                                               |   | $      | 3,878,663   |   |   |   |   |   |   | $         | 4,040,772   |   |   |   |   |   |   | $ | 4,647,470 |   |
|                                                                                                                         |   |   |        |   |   |   |   |   |   |      |        |   |   |   |   |   |   |   |   |   |
|                                                                                                                         |   |   |        |   |   |   |   |   |   |      |        |   |   |   |   |   |   |   |   |   |
| Cash flows from investing      activities:                                                                                   |   |   |        |   |   |   |   |   |   |      |        |   |   |   |   |   |   |   |   |   |
| Net      change in interest-bearing deposits                                                                                 |   | $      | (1,980,000  | )      |   |   |   |   |   | $         | -           |   |   |   |   |   |   | $ | - |   |
| Net      increase in loans                                                                                                   |   |   | (32,445,458 | )      |   |   |   |   |   |      | (31,877,876 | )      |   |   |   |   |   |   | (14,094,508 | ) |
| Proceeds      from sales of   available      for sale securities                                              |   |   | 233,500     |   |   |   |   |   |   |      | -           |   |   |   |   |   |   |   | - |   |
| Proceeds      from maturities of   available      for sale securities                                         |   |   | 24,698,058  |   |   |   |   |   |   |      | 8,919,334   |   |   |   |   |   |   |   | 5,007,756 |   |
| Purchases      of available for   sale      securities                                                        |   |   | (30,345,266 | )      |   |   |   |   |   |      | (4,849,941  | )      |   |   |   |   |   |   | (9,566,422 | ) |
| Sale      (purchase) of Federal Home Loan Bank stock                                                                         |   |   | (253,100    | )      |   |   |   |   |   |      | (429,300    | )      |   |   |   |   |   |   | 479,800 |   |
| Purchase      of premises and equipment                                                                                      |   |   | (234,651    | )      |   |   |   |   |   |      | (347,815    | )      |   |   |   |   |   |   | (1,689,261 | ) |
| Proceeds      from sale of vehicle                                                                                           |   |   | -           |   |   |   |   |   |   |      | 1,867       |   |   |   |   |   |   |   | - |   |
| Proceeds      from sale of foreclosed and repossessed property                                                               |   |   | 578,367     |   |   |   |   |   |   |      | 201,946     |   |   |   |   |   |   |   | 34,269 |   |
| NET      CASH USED IN INVESTING ACTIVITIES                                                                                   |   | $      | (39,748,550 | )      |   |   |   |   |   | $         | (28,381,785 | )      |   |   |   |   |   | $ | (19,828,366 | ) |

| Cash flows from financing      activities:                                                |   | 2008   |         |   | 2007   |   |         | 2006   |   |
|-------------------------------------------------------------------------------------------|--------|--------|--------------|--------|--------|--------|--------------|--------|--------|
| Net      increase in demand deposits and savings accounts                                 |   | $      | 2,405,635    |   |   | $      | 7,025,174    |   |   | $ | 7,741,339 |   |
| Net      increase in certificates of deposit                                              |   |   | 19,763,314   |   |   |   | 4,993,903    |   |   |   | 25,661,983 |   |
| Net      increase in securities sold under   agreements      to repurchase |   |   | 4,045,149    |   |   |   | 6,462,753    |   |   |   | 538,411 |   |
| Proceeds      from Federal Home Loan Bank advances                                        |   |   | 353,550,000  |   |   |   | 388,475,000  |   |   |   | 36,250,000 |   |
| Repayments      of Federal Home Loan Bank advances                                        |   |   | (343,500,000 | )      |   |   | (380,475,000 | )      |   |   | (51,750,000 | ) |
| Dividends      paid on common stock                                                       |   |   | (884,115     | )      |   |   | (805,439     | )      |   |   | (804,038 | ) |
| Exercise      of stock options                                                            |   |   | 565,625      |   |   |   | 26,000       |   |   |   | 22,848 |   |
| Purchases      of treasury stock                                                          |   |   | (1,364,279   | )      |   |   | (397,020     | )      |   |   | - |   |
| NET      CASH PROVIDED BY FINANCING ACTIVITIES                                            |   | $      | 34,581,329   |   |   | $      | 25,305,371   |   |   | $ | 17,660,543 |   |
| Increase      (Decrease) in cash and cash equivalents                                     |   |   | (1,288,558   | )      |   |   | 964,358      |   |   |   | 2,479,647 |   |
| Cash      and cash equivalents at beginning of year                                       |   |   | 7,330,966    |   |   |   | 6,366,608    |   |   |   | 3,886,961 |   |
| CASH      AND CASH EQUIVALENTS AT END OF YEAR                                             |   | $      | 6,042,408    |   |   | $      | 7,330,966    |   |   | $ | 6,366,608 |   |
|                                                                                      |   |   |         |   |   |   |         |   |   |   |   |   |
|                                                                                      |   |   |         |   |   |   |         |   |   |   |   |   |
| Supplemental disclosures of cash flow      information:                                   |   |   |         |   |   |   |         |   |   |   |   |   |
| Noncash      investing and financing activities                                           |   |   |         |   |   |   |         |   |   |   |   |   |
| Conversion      of loans to foreclosed real estate                                        |   | $      | 654,369      |   |   | $      | 288,577      |   |   | $ | 221,447 |   |
| Conversion      of foreclosed real estate to loans                                        |   |   | 235,000      |   |   |   | 52,611       |   |   |   | 45,000 |   |
|                                                                                      |   |   |         |   |   |   |         |   |   |   |   |   |
| Cash      paid during the period for                                                      |   |   |         |   |   |   |         |   |   |   |   |   |
| Interest      (net of interest credited)                                                  |   |   | 5,050,895    |   |   |   | 5,223,263    |   |   |   | 4,602,987 |   |
| Income      taxes                                                                         |   |   | 1,965,393    |   |   |   | 1,472,391    |   |   |   | 1,090,000 |   |

| NOTE      1:  Organization and Summary of Significant Accounting      PoliciesOrganization. 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      accounting principles generally accepted in the United States of America      and general practices within the banking 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. 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. Use      of Estimates. The preparation of financial statements in conformity with      accounting principles generally accepted in the United States      of America requires      management to make estimates and assumptions that affect the reported      amounts of assets and liabilities and disclosures of contingent assets and      liabilities at the date of the financial statements and the reported      amounts of revenues and expenses during the reporting period. Actual      results could differ from those estimates.Material      estimates that are particularly susceptible to significant change relate      to the determination of the allowance for loan losses. In connection with      the determination of the allowance for loan losses, management obtains      independent appraisals for significant properties. Cash      and Cash Equivalents. For      purposes of reporting cash flows, cash and cash equivalents includes 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 $5,656,273      and $4,394,010 at June 30, 2007 and 2008,      respectively. Available      for Sale Securities. Available      for sale securities, which include any security for which the Company has      no immediate plan to sell but which may be sold in the future are carried at fair value.      Unrealized gains and losses, net of tax, are reported in accumulated other      comprehensive loss, a component of stockholders’ equity. 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. Realized gains or losses 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.  |   | Federal      Home Loan Bank Stock. The Bank is a member of the Federal Home Loan Bank      (FHLB) system. Capital stock of the FHLB is      a required investment based      upon a predetermined formula and is carried at      cost. Loans. Loans      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      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 theloans. 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. |
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| 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 20 to      40 years for premises, and five to seven years for      equipment. Intangible      Assets. The      Bank adopted the provisions of Statement of Financial Accounting Standards      (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 142. In October 2002, the Financial      Accounting Standards Board (FASB) issued SFAS No. 147, Acquisitions of      Certain Financial Institutions. SFAS 147 clarified that the carrying      amount of an unidentified intangible asset should continue to be      amortized. The Bank’s gross amount of this intangible asset at June 30,      2008 and 2007 was $3,837,416 and $3,837,416, respectively, with      accumulated amortization of $1,999,513 and $1,744,256, 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. Income      Taxes. The      Company and its subsidiary file consolidated income tax returns. Deferred      assets and liabilities are recognized for the tax effects of differences      between the financial reporting bases and income tax bases of the      Company’s assets and liabilities. Incentive      Plan. The      Company accounts for its management and recognition plan (MRP) in      accordance with Statement of Financial Accounting Standards      (SFAS) No. 123 (revised 2004), “Share-Based Payment”. The aggregate      purchase price of all shares owned by the incentive      plan is reflected as a reduction of stockholders’ equity. Compensation      expense is based on the market price of the Company’s stock on the date      the shares are granted and is recorded over the vesting period. The      difference between the aggregate purchase price and the fair value on the      date the shares are considered earned is recorded as an adjustment to      additional paid in capital. Outside      Directors’ Retirement. 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.    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. |   | Stock      Options. In      December 2004, the Financial Accounting Standards Board (FASB) issued      Statement of Financial Accounting Standards (SFAS) No. 123      (revised 2004), “Share-Based Payment,” which requires the compensation      costs related to share-based payment transactions to be recognized in      financial statements. With limited exceptions, the amount of compensation      cost is measured based on the grant-date fair value of the equity      instruments issued. Compensation cost is recognized over the vesting      period during which an employee provides service in exchange for the      award. SFAS No. 123R was adopted during the first quarter of fiscal 2006      for the Company primarily due to the transition from a small business      filer to a full filer; stock-based compensation has been recognized for      all stock options granted or modified after July 1, 2005. In addition,      stock options not vested on July 1, 2005, are being recognized in expense      over the remaining vesting period. Employee      Stock Ownership Plan. The      Company accounts for its employee stock ownership plan (ESOP) in      accordance with American Institute of Certified Public Accountants (AICPA)      Statement of Position 93-6.As      of June 30, 2005, the ESOP shares were fully distributed and the Bank      began purchasing additional shares under the ESOP plan. Earnings      Per Share. Basic      income per share is computed using the weighted-average number of common      shares outstanding. Diluted income per share includes the effect of all      dilutive potential common shares (primarily stock options) outstanding      during each year. Treasury      Stock. Treasury      stock is stated at cost. Cost is determined by the first-in, first-out      method. Reclassification. Certain      amounts included in the 2007 and 2006 consolidated financial statements      have been reclassified to conform to the 2008 presentation. These      reclassifications had no effect on net      income. The      following paragraphs summarize the impact of new accounting      pronouncements:In      September 2006, the Financial Accounting Standards Board (FASB) issued      Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value      Measurements.” SFAS No. 157 establishes a common definition of fair value,      provides a framework for measuring fair value under U.S. GAAP, and expands      disclosure requirements about fair value measurements.  The      Statement is effective for financial statements issued for fiscal years      beginning after November 15, 2007, meaning it is effective for the Company      on July 1, 2008, and is not expected to have a material effect on the      Company’s consolidated financial statements.    In      February 2007, FASB issued SFAS      No. 159, “The Fair Value Option for Financial Assets and Financial      Liabilities — Including an amendment of FASB Statement No.      115.”  SFAS No. 159 permits entities to choose to measure many      financial instruments and certain other items at fair value, on an      instrument-by-instrument basis. Once an entity has elected to record      eligible items at fair value, the decision is irrevocable and the entity      should report unrealized gains and losses for which the fair value option      has been elected in earnings. The Statement’s objective is to improve      financial reporting by providing entities with the opportunity to mitigate      volatility in reported earnings caused by measuring related assets and      liabilities differently without having to apply complex hedge accounting      provisions. This Statement is expected to expand the use of fair value      measurement, which is consistent with the Board’s long-term measurement      objectives for accounting for financial instruments. SFAS No. 159 is      effective for fiscal years beginning after November 15, 2007, meaning it      is |
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| effective      for the company beginning July 1, 2008, and is not expected to have a      material effect on the Company’s consolidated financial      statements.In      December 2007, FASB issued SFAS No. 141(revised), “Business Combinations”.      The Statement retains the fundamental requirements in Statement 141 that      the acquisition method of accounting be used for business combinations,      but broadens the scope of Statement 141 and contains improvements to the      application of this method. The Statement requires an acquirer to      recognize the assets acquired, the liabilities assumed, and any      non-controlling interest in the acquired entity at the acquisition date,      measured at their fair values as of that date. Costs incurred to effect      the acquisition are to be recognized separately from the acquisition.      Assets and liabilities arising from contractual contingencies must be      measured at fair value as of the acquisition date. Contingent      consideration must also be measured at fair value as of the acquisition      date. The Statement also changes the accounting for negative goodwill      arising from a bargain purchase, requiring recognition in earnings instead      of allocation to assets acquired. For business combinations achieved in      stages (step acquisitions), the assets and liabilities must be recognized      at the full amounts of their fair values, while under former guidance the      entity was acquired in a series of purchases, with costs and fair values      being identified and measured at each step. The Statement applies to      business combinations occurring on or after the beginning of the first      annual reporting period beginning on or after December 15, 2008, meaning      it is effective for the Company beginning July 1,2009.Also      in December 2007, FASB issued SFAS No. 160, “Noncontrolling Interests in      Consolidated Financial Statements — an amendment of ARB No. 51.” The      Statement clarifies that a noncontrolling interest in a subsidiary is an      ownership interest in the consolidated entity that should be reported as      equity in the consolidated financial statements. The Statement establishes      a single method of accounting for changes in a parent’s ownership interest      if the parent retains its controlling interest, deeming these to be equity      transactions. The Statement is effective for annual periods beginning      after December 15, 2008, meaning it is effective for the Company July 1,      2009. The Company does not expect adoption of the Statement to have a      significant effect on its consolidated financial      statements.In      March 2008, FASB issued SFAS No. 161, “Disclosures about Derivative      Instruments and Hedging Activities — an amendment of FASB Statement No.      133.” This Statement requires enhanced disclosures about how and why an      entity uses derivative instruments, how derivative instruments and related      hedged items are accounted for, and how these activities affect its      financial position, financial performance, and cash flows. The Statement      is effective for financial statements issued for fiscal years and interim      period beginning after November 15, 2008, meaning it is effective for the      Company beginning July 1, 2009. The Company does not expect adoption of      the Statement to have a significant effect on its consolidated financial      statements.The      Company adopted the provisions of FASB Interpretation No. 48 (“FIN 48”),      “Accounting for Uncertainty in Income Taxes,” on July 1,      2007.  Implementation of the new Standard did not have a      material impact on the Company’s consolidated financial      statements.  The Company files income tax returns in the U.S.      federal jurisdiction and the state of Missouri.  As of June 30,      2008, the open tax years under FIN 48 are 2007, 2006, and      2005.  These tax years correspond to our fiscal years ended      2008, 2007, and 2006.    In      September 2006, the Emerging Issues Task Force (EITF) Issue 06-4,      “Accounting for Deferred Compensation and Postretirement Benefit Aspects      of Endorsement Split-Dollar Life Insurance Arrangements,” was      ratified. |   | This      EITF Issue addresses accounting for separate agreements which split life      insurance policy benefits between an employer and employee. The Issue      requires the employer to recognize a liability for future benefits payable      to the employee under these agreements. The effects of applying this Issue      must be recognized through either a change in accounting principle through      an adjustment to equity or through the retrospective application to all      prior periods. The consensus in this Issue is effective for fiscal years      beginning after December 15, 2007, meaning it is effective for the Company      beginning July 1, 2008. The Company does not expect adoption of the Issue      to have a significant effect on its consolidated financial      statements.    Effective      November 17, 2006, the FDIC implemented a one-time credit of $4.7 billion      to eligible institutions.  The purpose of the credit is to      recognize contributions made by certain institutions to capitalize the      Bank Insurance Fund and the Savings Association Insurance Fund, which have      now been merged into the Deposit Insurance Fund (DIF).  The Bank      is an eligible institution and received notice from the FDIC that its      share of the credit was $169,000.  The amount was not reflected      in the Company’s financial statements as it represented contingent future      credits against future insurance assessment payments.  As of      June 30, 2008, substantially all of the credit has been absorbed, and the      Company anticipates incurring additional expenses for DIF assessments      beginning in the second quarter of fiscal    2009. |
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| NOTE      2:  Securities    The      amortized cost, gross unrealized gains, gross unrealized      losses      and estimated fair value of securities available for sale      consisted      of the following:  |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|

|                                                                                                            |   | June      30, 2008 |       |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------|------------|
|                                                                                                            |   | AmortizedCost      |       |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | EstimatedFairValue |   |
| Investment      securities:                                                                                     |   |               |       |   |   |   |   |   |   |   |   |   |
|    U.S.      government and Federal      agency      obligations   |   | $                  | 3,992,999  |   |   | $ | 52,103 |   |   | $ | (25,660 | ) |   | $ | 4,019,442 |   |
|    Obligations      of states and      political      subdivisions |   |               | 6,299,763  |   |   |   | 7,195 |   |   |   | (276,075 | ) |   |   | 6,030,883 |   |
|    FHLMC      preferred stock                                                                    |   |               | 304,125    |   |   |   | - |   |   |   | (8,925 | ) |   |   | 295,200 |   |
|    Other      securities                                                                         |   |               | 1,889,424  |   |   |   | - |   |   |   | (325,979 | ) |   |   | 1,563,445 |   |
| TOTAL      INVESTMENT SECURITIES                                                                                |   |               | 12,486,311 |   |   |   | 59,298 |   |   |   | (636,639 | ) |   |   | 11,908,970 |   |
|                                                                                                            |   |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed      securities:                                                                                |   |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    FHLMC      certificates                                                                       |   |               | 13,114,487 |   |   |   | 2,658 |   |   |   | (291,529 | ) |   |   | 12,825,616 |   |
|    GNMA      certificates                                                                        |   |               | 127,583    |   |   |   | 108 |   |   |   | (807 | ) |   |   | 126,884 |   |
|    FNMA      certificates                                                                        |   |               | 11,247,033 |   |   |   | 11,441 |   |   |   | (165,909 | ) |   |   | 11,092,565 |   |
|    CMOs      issued by government agencies                                                       |   |               | 3,934,614  |   |   |   | 49,547 |   |   |   | (22,916 | ) |   |   | 3,961,245 |   |
| TOTAL      MORTGAGE-BACKED SECURITIES                                                                           |   |               | 28,423,717 |   |   |   | 63,754 |   |   |   | (481,161 | ) |   |   | 28,006,310 |   |
| TOTAL                                                                                                           |   | $                  | 40,910,028 |   |   | $ | 123,052 |   |   | $ | (1,117,800 | ) |   | $ | 39,915,280 |   |
|                                                                                                            |   |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                            |   | June      30, 2007 |       |
|                                                                                                            |   | AmortizedCost      |       |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | EstimatedFairValue |   |
| Investment      securities:                                                                                     |   |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    U.S.      government and Federal      agency      obligations   |   | $                  | 21,709,953 |   |   | $ | - |   |   | $ | (220,616 | ) |   | $ | 21,489,337 |   |
|    Obligations      of states and      political      subdivisions |   |               | 2,015,783  |   |   |   | 24,276 |   |   |   | (24,550 | ) |   |   | 2,015,509 |   |
|    Other      securities                                                                         |   |               | 661,025    |   |   |   | - |   |   |   | (5,000 | ) |   |   | 656,025 |   |
| TOTAL      INVESTMENT SECURITIES                                                                                |   |               | 24,386,761 |   |   |   | 24,276 |   |   |   | (250,166 | ) |   |   | 24,160,871 |   |
|                                                                                                            |   |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage-backed      securities:                                                                                |   |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    FHLMC      certificates                                                                       |   |               | 1,229,108  |   |   |   | 210 |   |   |   | (46,939 | ) |   |   | 1,182,379 |   |
|    GNMA      certificates                                                                        |   |               | 155,726    |   |   |   | 722 |   |   |   | (104 | ) |   |   | 156,344 |   |
|    FNMA      certificates                                                                        |   |               | 4,386,823  |   |   |   | 2,913 |   |   |   | (176,449 | ) |   |   | 4,213,287 |   |
|    CMOs      issued by government agencies                                                       |   |               | 5,278,853  |   |   |   | - |   |   |   | (108,146 | ) |   |   | 5,170,707 |   |
| TOTAL      MORTGAGE-BACKED SECURITIES                                                                           |   |               | 11,050,510 |   |   |   | 3,845 |   |   |   | (331,638 | ) |   |   | 10,722,717 |   |
| TOTAL                                                                                                           |   | $                  | 35,437,271 |   |   | $ | 28,121 |   |   | $ | (581,804 | ) |   | $ | 34,883,588 |   |

|     The      amortized cost and estimated fair 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, 2008 |       |
|----------------------------------------------------|--------|--------------------|------------|
|                                               |   | AmortizedCost      |       |   | EstimatedFairValue |   |
| Available      for Sale                            |   |               |       |   |   |   |
| Within      one year                               |   | $                  | 249,720    |   |   | $ | 254,280 |   |
| After      one but less than five years            |   |               | 1,637,451  |   |   |   | 1,663,035 |   |
| After      five but less than 10 years             |   |               | 2,995,918  |   |   |   | 2,990,488 |   |
| After      10 years                                |   |               | 7,603,222  |   |   |   | 7,001,167 |   |
|    Total      investment securities |   |               | 12,486,311 |   |   |   | 11,908,970 |   |
| Mortgage-backed      securities                    |   |               | 28,423,717 |   |   |   | 28,006,310 |   |
| TOTAL                                              |   | $                  | 40,910,028 |   |   | $ | 39,915,280 |   |

| The      carrying value of investment and mortgage-backed securities pledged as      collateral to secure public deposits and securities sold under agreements      to repurchase amounted to $37,886,510 and $33,455,667 and at June 30, 2008      and 2007, respectively.Certain      investments in debt and marketable equity securities are reported in the      financial statements at an amount less than their historical cost. Total      fair value of these investments at June 30, 2008 was $32 million, which is      approximately 79.5% of the Bank’s available for sale investment portfolio,      as compared to $33 million or approximately 94.9% of the Bank’s available      for sale investment portfolio at June 30, 2007. These declines primarily      resulted from recent changes in the credit markets.Based      on evaluation of available evidence, including recent changes      in |   | market      interest rates, credit rating information and information obtained from      regulatory filings, management believes the declines in fair value for      these securities are temporary.Should      the impairment of any of these securities become other than temporary, the      cost basis of the investment will be reduced and the resulting loss      recognized in net income in the period the other-than-temporary impairment      is identified.    The      following tables show our investments’ gross unrealized losses and      fair      value, aggregated by investment category and length of time that      individual      securities have been in a continuous unrealized loss position at      June      30, 2008 and 2007. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                       | Less      than 12 months | 12      months or more          | Total                                                                                  |
|--------------------------------------------|--------------------------|---------------------------------|----------------------------------------------------------------------------------------|
| Description      ofSecurities              | Fair      Value          | UnrealizedLosses                | Fair      Value                                                                        | UnrealizedLosses | Fair      Value | UnrealizedLosses |
| For      the year ended June 30, 2008      |                     |                            |                                                                                   |   |   |   |
|                                       |                     |                            |                                                                                   |   |   |   |
| U.S.      government agencies              | $  1,971,482   | $    25,660 | $              - | $          - | $  1,971,482 | $      25,660 |
| Mortgage-backed      securities            | 21,382,034               | 449,610                         | 1,407,530                                                                              | 31,551 | 22,789,564 | 481,161 |
| Other      securities                      | 6,976,246                | 610,979                         | -                                                                                      | - | 6,976,246 | 610,979 |
|                                       |                     |                            |                                                                                   |   |   |   |
| Total      temporarily impaired securities | $30,329,762              | $1,086,249                      | $1,407,530                                                                             | $31,551 | $31,737,292 | $1,117,800 |

|                                       | Less      than 12 months | 12      months or more | Total           |
|--------------------------------------------|--------------------------|------------------------|-----------------|
| Description      ofSecurities              | Fair      Value          | UnrealizedLosses       | Fair      Value | UnrealizedLosses | Fair      Value | UnrealizedLosses |
| For      the year ended June 30, 2007      |                     |                   |            |   |   |   |
|                                       |                     |                   |            |   |   |   |
| U.S.      Treasury                         | $-                       | $-                     | $500,938        | $890 | $500,938 | $890 |
| U.S.      government agencies              | 2,949,308                | 27,978                 | 18,039,092      | 191,748 | 20,988,400 | 219,726 |
| Mortgage-backed      securities            | 2,125,963                | 27,702                 | 7,760,000       | 303,936 | 9,885,963 | 331,638 |
| Other      securities                      | 1,483,269                | 21,152                 | 253,913         | 8,398 | 1,737,182 | 29,550 |
|                                       |                     |                   |            |   |   |   |
| Total      temporarily impaired securities | $6,558,540               | $76,832                | $26,553,943     | $504,972 | $33,112,483 | $581,804 |

----

|                           |   |   | June      30 |        |
|--------------------------------|--------|--------|--------------|-------------|
|                           |   |   | 2008         |        |   | 2007 |   |
| Real      estate loans:        |   |   |         |        |   |   |   |
|    Residential  |   |   | $            | 149,340,248 |   |   | $ | 135,287,992 |   |
|    Construction |   |   |         | 13,945,027  |   |   |   | 7,981,390 |   |
|    Commercial   |   |   |         | 85,859,482  |   |   |   | 77,723,332 |   |
| Consumer      loans            |   |   |         | 21,524,166  |   |   |   | 19,416,309 |   |
| Commercial                     |   |   |         | 81,574,995  |   |   |   | 76,053,308 |   |
|                           |   |   |         | 352,243,918 |   |   |   | 316,462,331 |   |
| Loans      in process          |   |   |         | (5,667,898  | ) |   |   | (1,913,191 | ) |
| Deferred      loan fees, net   |   |   |         | 60,958      |   |   |   | 51,486 |   |
| Allowance      for loan losses |   |   |         | (3,567,203  | ) |   |   | (2,537,659 | ) |
|                           | TOTAL  |   | $            | 343,069,775 |   |   | $ | 312,062,967 |   |

| Adjustable      rate loans included in the loan portfolio amounted to $118,302,376 and      $113,874,188 at June 30, 2008 and 2007, respectively.One-      to four-family residential real estate loans amounted to $136,732,435 and      $129,920,634 at June 30, 2008 and 2007,    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, restaurants and  farmland. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|                                            |   | June      30 |      |
|-------------------------------------------------|--------|--------------|-----------|
|                                            |   | 2008         |      |   | 2007 |   |   | 2006 |   |
| Balance,      beginning of period               |   | $            | 2,537,659 |   |   | $ | 2,058,144 |   |   | $ | 2,016,514 |   |
| Loans      charged-off                          |   |         | (93,755   | ) |   |   | (162,719 | ) |   |   | (577,938 | ) |
| Recoveries      of loans previously charged-off |   |         | 183,299   |   |   |   | 37,234 |   |   |   | 64,568 |   |
| Net      recoveries (charge-offs)               |   |         | 89,544    |   |   |   | (125,485 | ) |   |   | (513,370 | ) |
| Provision      charged to expense               |   |         | 940,000   |   |   |   | 605,000 |   |   |   | 555,000 |   |
| Balance,      end of period                     |   | $            | 3,567,203 |   |   | $ | 2,537,659 |   |   | $ | 2,058,144 |   |

| Total      loans past due 90 days or more and still accruing interest amounted to      $6,000 and $24,000 at June 30, 2008 and 2007,      respectively.The      Company had ceased recognition of interest income on loans with a book      value of $0 and $2,000 at June 30, 2008 and 2007, respectively. The      average balance of nonaccrual loans for the years ended June 30, 2008,      2007, and 2006 was $28,000, $47,000, and $272,000,      respectively.  The allowance for losses allocated to nonaccrual      loans at June 30, 2008 and 2007 was immaterial.  Interest income      recognized on these loans for the years ended June 30, 2008, 2007, and      2006 was immaterial.  Gross interest income would have been      immaterial for the years ended June 30, 2008, 2007, and 2006 if interest      payments had been received in accordance with the original      terms.  The Company 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, 2008 and 2007, none were considered      to be impaired. There were no impaired loans during the years ended June      30, 2008 and 2007. |   | Following      is a summary of loans to directors, executive officers and loans to      corporations in which executive officers and directors have a substantial      interest: Balance,      June 30, 2007                              $8,043,723    Additions                                       2,156,449    Repayments                                           (1,739,839)Balance,      June 30, 2008                              $8,460,333 These      loans were made on substantially the same terms as those prevailing at the      time for comparable transactions with unaffiliated      persons.  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE      4:  Premises and EquipmentFollowing      is a summary of premises and equipment: |   |   |
|------------------------------------------------------------------------------------------------------|--------|--------|

|                                   |   |   | June      30 |       |
|----------------------------------------|--------|--------|--------------|------------|
|                                   |   |   | 2008         |       |   | 2007 |   |
| Land                                   |   |   | $            | 3,448,083  |   |   | $ | 3,418,074 |   |
| Buildings      and improvements        |   |   |         | 6,016,459  |   |   |   | 5,884,266 |   |
| Furniture,      fixtures and equipment |   |   |         | 4,598,236  |   |   |   | 4,567,267 |   |
| Automobiles                            |   |   |         | 32,376     |   |   |   | 32,376 |   |
|                                   |   |   |         | 14,095,154 |   |   |   | 13,901,983 |   |
| Less      accumulated depreciation     |   |   |         | (5,890,523 | ) |   |   | (5,251,310 | ) |
|                                   | TOTAL  |   | $            | 8,204,631  |   |   | $ | 8,650,673 |   |

| NOTE      5:  DepositsDeposits      are summarized as follows:  |   |   |
|--------------------------------------------------------------------------------|--------|--------|

|                               |                            |   | June      30 |        |
|------------------------------------|---------------------------------|--------|--------------|-------------|
|                               |                            |   | 2008         |        |   | 2007 |   |
| Noninterest-bearing      accounts  |                            |   | $            | 19,220,977  |   |   | $ | 22,275,977 |   |
| NOW      accounts                  |                            |   |         | 37,150,005  |   |   |   | 31,122,878 |   |
| Money      market deposit accounts |                            |   |         | 12,104,527  |   |   |   | 7,211,517 |   |
| Savings      accounts              |                            |   |         | 73,423,195  |   |   |   | 78,908,351 |   |
|                               | TOTAL      TRANSACTION ACCOUNTS |   | $            | 141,898,704 |   |   | $ | 139,518,723 |   |

| Certificates:                                  |                |   |   |        |   |   |   |
|------------------------------------------------|---------------------|--------|--------|-------------|--------|--------|--------|
|    1.00      - 1.99%            |                |   | $      | 7,134,672   |   |   |   | - |   |
|    2.00      - 2.99%            |                |   |   | 33,105,497  |   |   |   | 1,086,670 |   |
|    3.00      - 3.99%            |                |   |   | 50,555,205  |   |   |   | 6,557,958 |   |
|    4.00      - 4.99%            |                |   |   | 48,413,758  |   |   |   | 27,805,696 |   |
|    5.00      - 5.99%            |                |   |   | 11,149,209  |   |   |   | 95,119,049 |   |
| Total      certificates, 3.62%                 |                |   |   |        |   |   |   |   |   |
|    and      4.94%, respectively |                |   |   | 150,358,341 |   |   |   | 130,569,373 |   |
|                                           | TOTAL      DEPOSITS |   | $      | 292,257,045 |   |   | $      | 270,088,096 |   |

| The      aggregate amount of certificates of deposit with a minimum denomination of      $100,000 was $58,181,336 and $41,448,245 at June 30,      2008 and 2007, respectively.  |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|

| Certificate      maturities at June 30, 2008 are summarized as follows:  |   |   |
|-------------------------------------------------------------------------------|--------|--------|

| July      1, 2008 to June 30, 2009 |   | $130,025,135 |
|------------------------------------|--------|--------------|
| July      1, 2009 to June 30, 2010 |   | 7,910,035    |
| July      1, 2010 to June 30, 2011 |   | 5,546,812    |
| July      1, 2011 to June 30, 2012 |   | 2,719,343    |
| July      1, 2012 to June 30, 2013 |   | 4,157,016    |
| Thereafter                         |   | -            |
|                               | TOTAL  | $150,358,341 |

| NOTE      6:  Securities Sold Under Agreements to      RepurchaseSecurities      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.  |   |  The      market value of the securities underlying the agreements at June 30, 2008      and 2007, was $24,854,028 and $18,307,912, respectively. The securities      sold under agreements to repurchase are under the Company’s      control.  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                           |   | June      30 |       |
|------------------------------------------------|--------|--------------|------------|
|                                           |   | 2008         |       |   | 2007 |   |
| Year-end      balance                          |   | $            | 21,803,513 |   |   | $ | 17,758,364 |   |
| Average      balance during the year           |   |         | 20,567,605 |   |   |   | 11,862,732 |   |
| Maximum      month-end balance during the year |   |         | 24,659,429 |   |   |   | 17,758,364 |   |
| Average      interest during the year          |   |         | 3.31       | % |   |   | 4.84 | % |
| Year-end      interest rate                    |   |         | 1.67       | % |   |   | 4.90 | % |

----

| NOTE      7:  Advances from Federal Home Loan BankAdvances      from Federal Home Loan Bank are summarized as follows:  |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|--------|

|                                     |                                 |         |         |        |
|------------------------------------------|--------------------------------------|--------------|--------------|-------------|
|                                     |                                 |         | June      30 |
| Maturity                                 | Call      Date orQuarterlyThereafter | InterestRate | 2008         | 2007        |
| Overnight      borrowings and short-term |                                 |         |         |        |
|   repurchase      agreements   | -                                    | 2.81%        | $5,550,000   | $-          |
| Overnight      borrowings and short-term |                                 |         |         |        |
|   repurchase      agreements   | -                                    | 5.48%        | -            | $7,000,000  |
| 08-30-07                                 | -                                    | 3.96%        | -            | 1,000,000   |
| 10-17-07                                 | -                                    | 4.91%        | -            | 2,000,000   |
| 10-26-09                                 | 09-01-03                             | 5.58%        | 10,000,000   | 10,000,000  |
| 01-20-10                                 | 07-20-03                             | 5.85%        | 5,000,000    | 5,000,000   |
| 10-27-10                                 | 10-27-03                             | 5.94%        | 9,000,000    | 9,000,000   |
| 12-09-10                                 | 12-09-05                             | 6.01%        | 10,000,000   | 10,000,000  |
| 10-30-12                                 | -                                    | 4.87%        | 3,000,000    | -           |
| 04-01-13                                 | -                                    | 3.65%        | 3,000,000    | -           |
| 01-30-15                                 | -                                    | 3.75%        | 3,000,000    | -           |
| 11-29-16                                 | 11-29-07                             | 3.93%        | 5,000,000    | 5,000,000   |
| 11-29-16                                 | 11-29-11                             | 4.42%        | 5,000,000    | 5,000,000   |
| 11-20-17                                 | 11-22-10                             | 3.87%        | 3,000,000    | -           |
| 11-29-17                                 | 11-29-12                             | 4.07%        | 2,500,000    | -           |
|                                     |                                 | TOTAL        | $64,050,000  | $54,000,000 |
| Weighted-average      rate               |                                 |         | 4.91%        | 5.42%       |

| In      addition to the above advances, the Bank had an available line of credit      amounting to $37,380,792 and $42,384,625, with FHLB at June 30, 2008 and      2007, respectively.Advances      from FHLB of Des Moines are secured by FHLB stock and one- to four-family      mortgage loans of $76,860,000 and $64,800,000 at June 30, 2008 and 2007,      respectively. The principal maturities of FHLB advances at June 30, 2008,      are at right:  |   | FHLB      Advance MaturitiesJuly      1, 2008 to June 30, 2009                 $ 5,550,000July      1, 2009 to June 30, 2010                  15,000,000July      1, 2010 to June 30, 2011                  19,000,000July      1, 2011 to June 30, 2012                           -July      1, 2012 to June 30, 2013                    6,000,000July      1, 2013 and thereafter                          18,500,000                                 total   $64,050,000  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE      8:  Subordinated DebtSouthern      Missouri Statutory Trust I issued $7.0 million of Floating Rate Capital      Securities (the “Trust Preferred Securities”) with a liquidation value of      $1,000 per share in March 2004. The securities are due in 30 years,      redeemable after five years and bear interest at a floating rate based on      LIBOR. At June 30, 2008, the current rate was 5.56%. The securities      represent undivided beneficial interests in the trust, which was      established by Southern Missouri for the purpose of issuing the      securities. The Trust Preferred Securities were sold in a private      transaction exempt from registration under the Securities Act of      1933, |   | as      amended (the “Act”) and have not been registered under the Act. The      securities may not be offered or sold in the United States absent      registration or an applicable exemption from registration      requirements.Southern      Missouri Statutory Trust I used the proceeds from the sale of the Trust      Preferred Securities to purchase Junior Subordinated Debentures of      Southern Missouri Bancorp. Southern Missouri Bancorp, Inc. used its net      proceeds for working capital and investment in its      subsidiaries.  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE      9:  Employee Benefits401(k). The      Bank has 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 2008, 2007, and 2006, there were no      contributions made to the plan. Employee      Stock Ownership Plan (ESOP). The      Bank established a tax-qualified ESOP in April 1994. The plan covers      substantially all employees who have attained the age of 21 and completed      one year of service.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 Bank makes discretionary      contributions to the ESOP. The ESOP expense for 2008, 2007, and 2006 was      $200,000, $190,000, and $180,000, respectively. The      number of ESOP shares at June 30, 2008 and 2007 were as      follows:                                                     2008            2007   Allocated      shares                   173,719         160,270 Unreleased      shares                                               -               -                  TOTAL      ESOP SHARES     173,719                160,270        Management      Recognition Plan (MRP). The      Bank adopted an MRP for the benefit of non-employee directors and two MRPs      for officers and key employees (who may also be directors) in April 1994.      During 2004, the Bank granted 5,000 MRP shares to employees; during 2007,      an additional 1,000 shares were granted; and during 2008, an additional      2,500 shares were awarded. The shares granted are in the form of      restricted stock payable at the rate of 20% of such shares per year.      During 2008, 1,300 MRP shares vested, which had been awarded in 2004,      2007, and 2008. 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      2008, 2007, and 2006, was $19,777, $13,147, and $10,890,      respectively. Stock      Option Plan. The      Company adopted a stock option plan in April 1994. The purpose of the plan      was 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 were 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 after June 30, 1999, the      vesting period ranged from the grant date up to a five year period. All      options expire ten years from the date of the grant. The 1994 stock option      plan expired in April 2004. In October 2003, a new stock option and      incentive plan was adopted (“2003 Plan”). Under the 2003 Plan, the Company      has granted 70,500 options to employees and      directors.In      December, 2004, the Financial Accounting Standards Board issued Statement      of Financial Accounting Standards (SFAS) No. 123R, “Share-Based Payment”      (SFAS 123R). SFAS 123R requires companies to recognize the cost of      employee services received in exchange for awards of equity instruments,      such as stock options and restricted stock, based on the fair value of      those awards at the date of grant, and eliminates the choice to account      for employee stock options under Accounting Principles Board Opinion No.      25, “Accounting for Stock Issued to Employees” (APB 25), which is how the      Company previously accounted for its stock options. The Company adopted      SFAS 123R effective July 1,      2005. As a result of adopting SFAS 123R, incremental stock-based      compensation expense recognized during fiscal 2006 was      $53,106.As      of June 30, 2008, there was $53,000 in remaining unrecognized compensation      expense related to nonvested stock options, which will be recognized over      the remaining weighted average vesting period. The aggregate intrinsic      value of stock options outstanding at June 30, 2008, was $320,000. The      aggregate intrinsic value of stock options exercisable at June 30, 2008,      was $313,000. The intrinsic value of options exercised in fiscal 2008 was      $327,000. The intrinsic value of options vested in fiscal 2008 was      $4,000.  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                    |   | Year      Ended June 30 |   |
|---------------------------------------------------------|--------|-------------------------|--------|
|                                                    |   | 2008                    |   |   | 2007 |   |   | 2006 |   |
|                                                    |   | WeightedAveragePrice    |   |   | Number |   |   | WeightedAveragePrice |   |   | Number |   |   | WeightedAveragePrice |   |   | Number |   |
|    Outstanding      at beginning of year |   | $                       | 10.73  |   |   |   | 176,500 |   |   | $ | 10.64 |   |   |   | 180,500 |   |   | $ | 10.70 |   |   |   | 188,515 |   |
|    Granted                               |   |                    | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 14.26 |   |   |   | 5,000 |   |
|    Exercised                             |   |                    | 8.08   |   |   |   | (70,000 | ) |   |   | 6.50 |   |   |   | (4,000 | ) |   |   | 6.50 |   |   |   | (3,515 | ) |
|    Forfeited                             |   |                    | 15.23  |   |   |   | (2,000 | ) |   |   | - |   |   |   | - |   |   |   | 15.23 |   |   |   | (9,500 | ) |
|    Outstanding      at year-end          |   | $                       | 12.43  |   |   |   | 104,500 |   |   | $ | 10.73 |   |   |   | 176,500 |   |   | $ | 10.64 |   |   |   | 180,500 |   |
| Options      exercisable at year-end                    |   | $                       | 11.88  |   |   |   | 86,800 |   |   | $ | 9.75 |   |   |   | 144,100 |   |   | $ | 9.10 |   |   |   | 134,400 |   |

| The      following is a summary of the assumptions used in the Black-Scholes      pricing model in determining the fair values of options      granted      during fiscal years 2008, 2007, and 2006 (no options were granted      in      fiscal 2008 or 2007):  |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|

|                                                                     |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                     |   |   |   |   |   |   |   |   |   |
| Assumptions:                                                             |   |   |   |   |   |   |   |   |   |
|    Expected      dividend yield                           |   |   | -      |   |   |   | -      |   |   |   | 2.52 | % |
|    Expected      volatility                               |   |   | -      |   |   |   | -      |   |   |   | 18.89 | % |
|    Risk-free      interest rate                           |   |   | -      |   |   |   | -      |   |   |   | 3.98 | % |
|    Weighted-average      expected life                    |   |   | -      |   |   |   | -      |   |   | 5      years |   |
|    Weighted-average      fair values                      |   |   |   |   |   |   |   |   |   |   |   |   |
|       options      granted during the year |   |   | -      |   |   |   | -      |   |   | $ | 3.43 |   |

| The      following table summarizes information about stock options under      the      plan outstanding at June 30, 2008:  |   |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|--------|

|                |    |   |              |   | Options      Outstanding                |   |                         | Options      Exercisable |   |
|---------------------|---------|--------|-------------------|--------|-----------------------------------------|--------|------------------------------|--------------------------|--------|
| Exercise      Price |    |   | NumberOutstanding |   | WeightedAverageRemainingContractualLife |   | WeightedAverageExercisePrice |                     |   | NumberExercisable |   |   | WeightedAverageExercise      Price |   |
| $                   | 6.5000  |   |              |   | 4,000                                   |   | 17.7      mo.                |                     | $      | 6.5000 |   |   |   | 4,000 |   |   | $ | 6.5000 |   |
|                | 6.7500  |   |              |   | 30,000                                  |   | 17.3      mo.                |                     |   | 6.7500 |   |   |   | 30,000 |   |   |   | 6.7500 |   |
|                | 15.2300 |   |              |   | 50,500                                  |   | 70.6      mo.                |                     |   | 15.2300 |   |   |   | 41,800 |   |   |   | 15.2300 |   |
|                | 15.3000 |   |              |   | 15,000                                  |   | 75.7      mo.                |                     |   | 15.3000 |   |   |   | 9,000 |   |   |   | 15.3000 |   |
|                | 14.2600 |   |              |   | 5,000                                   |   | 86.5      mo.                |                     |   | 14.2600 |   |   |   | 2,000 |   |   |   | 14.2600 |   |

| NOTE      10:  Income TaxesThe      components of net deferred tax assets (liabilities) are summarized      as      follows:  |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|

|                                                                    |                        |   | 2008   |      |   | 2007   |   |
|-------------------------------------------------------------------------|-----------------------------|--------|--------|-----------|--------|--------|--------|
| Deferred      tax assets:                                               |                        |   |   |      |   |   |   |
|    Provision      for losses on loans                    |                        |   | $      | 1,373,373 |   |   | $      | 900,049 |   |
|    Unrealized      loss of available for sale securities |                        |   |   | 368,046   |   |   |   | 204,851 |   |
|    Accrued      compensation and benefits                |                        |   |   | 121,319   |   |   |   | 154,965 |   |
|    Other                                                 |                        |   |   | 64,532    |   |   |   | 65,698 |   |
| Total      deferred tax assets                                          |                        |   |   | 1,927,270 |   |   |   | 1,325,563 |   |
|                                                                    |                        |   |   |      |   |   |   |   |   |
|                                                                    |                        |   |   |      |   |   |   |   |   |
| Deferred      tax liabilities:                                          |                        |   |   |      |   |   |   |   |   |
|    FHLB      stock dividends                             |                        |   |   | 188,612   |   |   |   | 188,612 |   |
|    Purchase      accounting adjustments                  |                        |   |   | 71,062    |   |   |   | 63,694 |   |
|    Depreciation                                          |                        |   |   | 211,550   |   |   |   | 284,405 |   |
| Total      deferred tax liabilities                                     |                        |   |   | 471,224   |   |   |   | 536,711 |   |
|                                                                    | NET      DEFERRED TAX ASSET |   | $      | 1,456,046 |   |   | $      | 788,852 |   |

|                                                                                                                                                 |                  |   | Year      Ended June 30 |      |
|------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------|--------|-------------------------|-----------|
|                                                                                                                                                 |                  |   | 2008                    |      |   | 2007 |   |   | 2006 |   |
| Tax      at statutory Federal rate                                                                                                                   |                  |   | $                       | 1,832,016 |   |   | $ | 1,384,776 |   |   | $ | 1,414,675 |   |
| Increase      (reduction) in taxes   resulting      from:                                                                             |                  |   |                    |      |   |   |   |   |   |   |   |   |   |
|       Nontaxable      municipal income                                                                                 |                  |   |                    | (56,886   | ) |   |   | (31,983 | ) |   |   | (17,879 | ) |
|       State      tax, net of Federal benefit                                                                           |                  |   |                    | 74,951    |   |   |   | 52,006 |   |   |   | 106,194 |   |
|       Cash      surrender value of bank         owned      life insurance |                  |   |                    | (99,026   | ) |   |   | (89,491 | ) |   |   | (84,863 | ) |
|       Other,      net                                                                                                  |                  |   |                    | 23,748    |   |   |   | (170,850 | ) |   |   | (41,482 | ) |
|                                                                                                                                                 | ACTUAL      PROVISION |   | $                       | 1,774,803 |   |   | $ | 1,144,458 |   |   | $ | 1,376,645 |   |

| NOTE      11:  Other Comprehensive (Loss) IncomeOther      comprehensive (loss) income components are as follows:  |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------|

|                                                                                                                                                                                                                              |   | Year      Ended June 30 |     |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|----------|
|                                                                                                                                                                                                                              |   | 2008                    |     |   | 2007 |   |   | 2006 |   |
| Unrealized      (losses) gains on   available      for sale securities:                                                                                                                                            |   |                    |     |   |   |   |   |   |   |
|       Unrealized      holding (losses) gains         arising      during period                                                                        |   | $                       | (434,981 | ) |   | $ | 542,101 |   |   | $ | (820,968 | ) |
|       Less:      reclassification         adjustments      for losses         realized      in net income |   |                    | (6,084   | ) |   |   | - |   |   |   | - |   |
|       Total      unrealized (losses) gains         on      securities                                                                                  |   |                    | (441,065 | ) |   |   | 542,101 |   |   |   | (820,968 | ) |
|       Defined      benefit pension plan         net      gain                                                                                          |   |                    | 31,495   |   |   |   | - |   |   |   |   |   |
|       Income      tax benefit (expense)                                                                                                                                                             |   |                    | 163,194  |   |   |   | (200,578 | ) |   |   | 303,758 |   |
| Other      comprehensive (loss) income                                                                                                                                                                                            |   | $                       | (246,376 | ) |   | $ | 341,523 |   |   | $ | (517,210 | ) |

| NOTE      12:  Stockholders’ Equity and Regulatory      CapitalThe      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, 2008, that the      Bank meets all capital adequacy requirements to which it is      subject.As      of June 30, 2008, 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 Company’s only significant      activity is ownership of the Bank, and, therefore, its capital, capital      ratios, and minimum required levels of capital are materially the same as      the Bank’s.The      following table summarizes the Bank’s actual and required regulatory      capital:  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (dollars      in thousands)                               |          |                                   |                                                                              |      |          |       |
|-----------------------------------------------------------|---------------|----------------------------------------|-----------------------------------------------------------------------------------|-----------|---------------|------------|
|                                                      | Actual        | For      CapitalAdequacy      Purposes | To      Be WellCapitalized      UnderPrompt      CorrectiveAction      Provisions |
| As      of June 30, 2008                                  | Amount        | Ratio                                  | Amount                                                                            | Ratio     | Amount        | Ratio      |
|   Total      Capital (to Risk-Weighted Assets)  | $      36,302 | 11.79%                                 | $      24,631                                                                     | >8.00% | $      30,789 | >10.00% |
|   Tier      I Capital (to Risk-Weighted Assets) | 32,735        | 10.63%                                 | 12,315                                                                            | >4.00% | 18,473        | >6.00%  |
|   Tier      I Capital (to Average Assets)       | 32,735        | 8.08%                                  | 16,214                                                                            | >4.00% | 20,267        | >5.00%  |
|                                                      |          |                                   |                                                                              |      |          |       |
| As      of June 30, 2007                                  |          |                                   |                                                                              |      |          |       |
|   Total      Capital (to Risk-Weighted Assets)  | $      32,420 | 11.81%                                 | $      21,954                                                                     | >8.00% | $      27,443 | >10.00% |
|   Tier      I Capital (to Risk-Weighted Assets) | 29,882        | 10.89%                                 | 10,977                                                                            | >4.00% | 16,466        | >6.00%  |
|   Tier      I Capital (to Average Assets)       | 29,882        | 8.10%                                  | 14,756                                                                            | >4.00% | 18,445        | >5.00%  |

| NOTE      13:  Commitments and Credit RiskStandby      Letters of Credit. In      the normal course of business, the Bank issues various financial standby,      performance standby, and commercial letters of credit for its customers.      As consideration for the letters of credit, the institution charges letter      of credit fees based on the face amount of the letters and the      creditworthiness of the counterparties. These letters of credit are      stand-alone agreements, and are unrelated to any obligation the depositor      has to the Bank.Standby      letters of credit are irrevocable conditional commitments issued by the      Bank to guarantee the performance of a customer to a third party.      Financial standby letters of credit are primarily issued to support public      and private borrowing arrangements, including commercial paper, bond      financing and similar transactions. Performance standby letters of credit      are issued to guarantee performance of certain customers under      non-financial contractual obligations. The credit risk involved in issuing      standby letters of credit is essentially the same as that involved in      extending loans to customers.The      Bank had total outstanding standby letters of credit amounting to $1.1      million and $696,000 at June 30, 2008 and 2007, respectively, with terms      ranging from 12 to 24 months. At June 30, 2008, the Bank’s deferred      revenue under standby letters of credit agreements was      nominal. 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. 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. Lines of credit are agreements to lend to a customer      as long as there is |   | no      violation of any condition established in the contract. Lines of credit      generally have fixed expiration dates. Since a portion of the line may      expire without being drawn upon, the total unused lines do not necessarily      represent future cash requirements. Each customer’s creditworthiness is      evaluated on a case-by-case basis. The amount of collateral obtained, if      deemed necessary, is based on management’s credit evaluation of the      counterparty. Collateral held varies but may include accounts receivable,      inventory, property, plant and equipment, commercial real estate and      residential real estate. Management uses the same credit policies in      granting lines of credit as it does for on-balance-sheet      instruments.The      Company had $50.4 million in commitments to extend credit at June 30,      2008, and $36.0 million at June 30, 2007.At      June 30, 2008, total commitments to originate fixed-rate loans with terms      in excess of one year were $8.5 million at tax-equivalent rates ranging      from 5.0% to 10.0%, with a weighted-average tax-equivalent rate of 6.83%.      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 $149,340,000 at June 30, 2008, are secured by      single and multi-family residential real estate in the Company’s primary      lending area.  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| NOTE      14:  Earnings Per ShareThe      following table sets forth the computations of basic and diluted      earnings      per common share:  |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|

|                                                                                                                                           | Year      Ended June 30                               |
|------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------|
|                                                                                                                                           | 2008                                                  | 2007 | 2006 |
| Net      income                                                                                                                                | $3,613,480                                            | $2,928,413 | $2,784,166 |
|    Denominator      for basic earnings      per      share -                                      |                                                  |   |   |
|       Weighted-average      shares         outstanding              | 2,199,928                                             | 2,225,658 | 2,224,409 |
|       Effect      of dilutive securities         Stock      options | 12,204                                                | 38,578 | 27,852 |
|    Denominator      for diluted      earnings      per share                                      | 2,212,132                                             | 2,264,236 | 2,252,261 |
|    Basic      earnings per common share                                                                                         | $        1.64 | $        1.32 | $        1.25 |
|    Diluted      earnings per common share                                                                                       | $        1.63 | $        1.29 | $        1.24 |

| NOTE      15:  Disclosures About Fair Value of Financial      InstrumentsThe      following table presents estimated fair values of the Company’s financial      instruments. The fair values of certain of these instruments were      calculated by discounting expected cash flows, which involves significant      judgments by management and uncertainties. Fair value is the estimated      amount at which financial assets or liabilities could be exchanged in a      current transaction between willing parties, other than in a forced or      liquidation sale.  |   | Because      no market exists for certain of these financial instruments and because      management does not intend to sell these financial instruments, the      Company does not know whether the fair values shown below represent values      at which the respective financial instruments could be sold individually      or in the aggregate.  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                       | 2008           |                | 2007      |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------|---------------------|-----------|
|                                                                                                                                                                                                                       | CarryingAmount |                | FairValue |   | CarryingAmount |   | FairValue |
|                                                                                                                                                                                                                       |           | (in      thousands) |      |   |   | (in      thousands) |   |
| Financial      Assets                                                                                                                                                                                                      |           |                |      |   |   |   |   |
|       Cash      and cash equivalents                                                                                                                                                         | $6,042         |                | $6,042    |   | $7,331 |   | $7,331 |
|       Interest-bearing      time deposits                                                                                                                                                    | 1,980          |                | 1,980     |   | - |   | - |
|       Investment      and mortgage-         backed      securities         available      for sale | 39,915         |                | 39,915    |   | 34,884 |   | 34,884 |
|       Stock      in FHLB                                                                                                                                                                     | 3,324          |                | 3,324     |   | 3,071 |   | 3,071 |
|       Loans      receivable, net                                                                                                                                                             | 343,070        |                | 344,330   |   | 312,063 |   | 311,240 |
|       Accrued      interest receivable                                                                                                                                                       | 3,012          |                | 3,012     |   | 2,248 |   | 2,248 |
|       Bank      owned life insurance                                                                                                                                                         | 7,290          |                | 7,290     |   | 6,999 |   | 6,999 |
| Financial      Liabilities                                                                                                                                                                                                 |           |                |      |   |   |   |   |
|       Deposits                                                                                                                                                                               | 292,257        |                | 289,214   |   | 270,088 |   | 268,236 |
|       Securities      sold under         agreements      to repurchase                                                                          | 21,804         |                | 21,804    |   | 17,758 |   | 17,758 |
|       Advances      from FHLB                                                                                                                                                                | 64,050         |                | 65,968    |   | 54,000 |   | 54,366 |
|       Accrued      interest payable                                                                                                                                                          | 1,200          |                | 1,200     |   | 1,406 |   | 1,406 |
|       Subordinated      Debt                                                                                                                                                                 | 7,217          |                | 7,217     |   | 7,217 |   | 7,217 |
| Unrecognized      financial instruments   (net      of contract amount)                                                                                                                                     |           |                |      |   |   |   |   |
|       Letters      of Credit                                                                                                                                                                 | -              |                | -         |   | - |   | - |
|       Lines      of Credit                                                                                                                                                                   | -              |                | -         |   | - |   | - |

| The      following methods and assumptions were used in estimating the fair values      of financial instruments:Cash      and cash equivalents and interest-bearing time deposits are valued at      their carrying amounts which approximates fair value.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 is valued at cost which 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 their carrying amount which      approximates fair value.The      fair value of fixed-maturity time deposits 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 is estimated by discounting maturities      using an estimate of the current market for similar      instruments.    The      fair value of subordinated debt is estimated using rates currently      available to the Company for debt with similar terms and      maturities.  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE      16:  Condensed Parent Company Only Financial      StatementsThe      following condensed balance sheets, statements of income and cash flows      for Southern Missouri Bancorp, Inc. should be read in conjunction with the      consolidated financial statements and the notes      thereto.  |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|

|                                            |                                                      |   | June      30 |       |
|-------------------------------------------------|-----------------------------------------------------------|--------|--------------|------------|
| Condensed      Balance Sheets                   |                                                      |   | 2008         |       |   | 2007 |   |
|                                            |                                                      |   |         |       |   |   |   |
| Assets                                          |                                                      |   |         |       |   |   |   |
|                                            |                                                      |   |         |       |   |   |   |
| Cash      and cash equivalents                  |                                                      |   | $            | 1,378,574  |   |   | $ | 1,870,317 |   |
| Premise      and equipment                      |                                                      |   |         | 2,109,667  |   |   |   | 2,079,658 |   |
| Other      assets                               |                                                      |   |         | 251,752    |   |   |   | 433,122 |   |
| Investment      in common stock of Bank         |                                                      |   |         | 33,987,344 |   |   |   | 31,626,094 |   |
|                                            | TOTAL      ASSETS                                         |   | $            | 37,727,337 |   |   | $ | 36,009,191 |   |
|                                            |                                                      |   |         |       |   |   |   |   |   |
| Liabilities      and Stockholders’ Equity |                                                      |   |         |       |   |   |   |   |   |
|                                            |                                                      |   |         |       |   |   |   |   |   |
| Accrued      expenses and other liabilities     |                                                      |   | $            | 38,688     |   |   | $ | 77,952 |   |
| Subordinated      debt                          |                                                      |   |         | 7,217,000  |   |   |   | 7,217,000 |   |
|                                            | TOTAL      LIABILITIES                                    |   |         | 7,255,688  |   |   |   | 7,294,952 |   |
|                                            |                                                      |   |         |       |   |   |   |   |   |
| Stockholders’      equity                 |                                                      |   |         | 30,471,649 |   |   |   | 28,714,239 |   |
|                                            | TOTAL      LIABILITIES ANDSTOCKHOLDERS’      EQUITY |   | $            | 37,727,337 |   |   | $ | 36,009,191 |   |

|                                                                                                                                                                             |            |   | Year      Ended June 30 |      |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------|--------|-------------------------|-----------|
| Condensed      Statements of Income                                                                                                                                              |            |   | 2008                    |      |   | 2007 |   |   | 2006 |   |
|                                                                                                                                                                             |            |   |                    |      |   |   |   |   |   |   |
| Interest      income                                                                                                                                                             |            |   | $                       | 23,843    |   |   | $ | 61,165 |   |   | $ | 85,272 |   |
| Interest      expense                                                                                                                                                            |            |   |                    | 539,017   |   |   |   | 594,357 |   |   |   | 512,074 |   |
|    Net      interest income                                                                                                                                       |            |   |                    | (515,174  | ) |   |   | (533,192 | ) |   |   | (426,802 | ) |
| Dividends      from Bank                                                                                                                                                         |            |   |                    | 1,600,000 |   |   |   | 1,200,000 |   |   |   | 1,200,000 |   |
|                                                                                                                                                                             |            |   |                    |      |   |   |   |   |   |   |   |   |   |
| Operating      expenses                                                                                                                                                          |            |   |                    | 316,897   |   |   |   | 294,479 |   |   |   | 301,372 |   |
|                                                                                                                                                                             |            |   |                    |      |   |   |   |   |   |   |   |   |   |
|    Income      before income taxes and      equity      in undistributed income      of      the Bank |            |   |                    | 767,929   |   |   |   | 372,329 |   |   |   | 471,826 |   |
|                                                                                                                                                                             |            |   |                    |      |   |   |   |   |   |   |   |   |   |
| Income      tax benefit                                                                                                                                                          |            |   |                    | 311,000   |   |   |   | 309,000 |   |   |   | 279,300 |   |
|                                                                                                                                                                             |            |   |                    |      |   |   |   |   |   |   |   |   |   |
| Income      before equity in undistributed      income      of the Bank                                                                            |            |   |                    | 1,078,929 |   |   |   | 681,329 |   |   |   | 751,126 |   |
|                                                                                                                                                                             |            |   |                    |      |   |   |   |   |   |   |   |   |   |
| Equity      in undistributed income      of      the Bank                                                                                          |            |   |                    | 2,534,551 |   |   |   | 2,247,084 |   |   |   | 2,033,040 |   |
|                                                                                                                                                                             | NET      INCOME |   | $                       | 3,613,480 |   |   | $ | 2,928,413 |   |   | $ | 2,784,166 |   |

|                                                                                                                                          |                                                            |   | Year      Ended June 30 |       |
|-----------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------|--------|-------------------------|------------|
| Condensed      Statements                                                                                                                     |                                                            |   | 2008                    |       |   | 2007 |   |   | 2006 |   |
| Cash      flows from operating activities:                                                                                                    |                                                            |   |                    |       |   |   |   |   |   |   |
|    Net      income                                                                                                             |                                                            |   | $                       | 3,613,480  |   |   | $ | 2,928,413 |   |   | $ | 2,784,166 |   |
|    Changes      in:                                                                                                            |                                                            |   |                    |       |   |   |   |   |   |   |   |   |   |
|       Equity      in undistributed income         of      the Bank |                                                            |   |                    | (2,534,551 | ) |   |   | (2,247,084 | ) |   |   | (2,033,040 | ) |
|       Other      adjustments, net                                                                               |                                                            |   |                    | (18,919    | ) |   |   | 32,480 |   |   |   | 58,329 |   |
|                                                                                                                                          | NET      CASH PROVIDED BYOPERATING      ACTIVITIES              |   |                    | 1,060,010  |   |   |   | 713,809 |   |   |   | 809,455 |   |
|                                                                                                                                          |                                                            |   |                    |       |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                                                                                    |                                                            |   |                    |       |   |   |   |   |   |   |   |   |   |
|    Purchase      of available for sale securities                                                                              |                                                            |   |                    | -          |   |   |   | (1,330,000 | ) |   |   | (1,450,000 | ) |
|    Investment      in real estate                                                                                              |                                                            |   |                    | (30,009    | ) |   |   | - |   |   |   | (69,327 | ) |
|    Proceeds      from sales and maturities of      available      for sale securities            |                                                            |   |                    | 161,025    |   |   |   | 2,618,975 |   |   |   | - |   |
|                                                                                                                                          | NET      CASH PROVIDED BY OR (USED IN)INVESTING      ACTIVITIES |   |                    | 131,016    |   |   |   | 1,288,975 |   |   |   | (1,519,327 | ) |
|                                                                                                                                          |                                                            |   |                    |       |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                                                                                    |                                                            |   |                    |       |   |   |   |   |   |   |   |   |   |
|    Dividends      on common stock                                                                                              |                                                            |   |                    | (884,115   | ) |   |   | (805,439 | ) |   |   | (804,038 | ) |
|    Exercise      of stock options                                                                                              |                                                            |   |                    | 565,625    |   |   |   | 26,000 |   |   |   | 22,848 |   |
|    Payments      to acquire treasury stock                                                                                     |                                                            |   |                    | (1,364,279 | ) |   |   | (397,020 | ) |   |   | - |   |
|                                                                                                                                          | NET      CASH USED INFINANCING      ACTIVITIES                  |   |                    | (1,682,769 | ) |   |   | (1,176,459 | ) |   |   | (781,190 | ) |
|                                                                                                                                          |                                                            |   |                    |       |   |   |   |   |   |   |   |   |   |
| Net      increase (decrease) in cash and   cash      equivalents                                                               |                                                            |   |                    | (491,743   | ) |   |   | 826,325 |   |   |   | (1,491,062 | ) |
| Cash      and cash equivalents at beginning   of      year                                                                     |                                                            |   |                    | 1,870,317  |   |   |   | 1,043,992 |   |   |   | 2,535,054 |   |
|                                                                                                                                          | CASH      AND CASH EQUIVALENTSAT      END OF YEAR               |   | $                       | 1,378,574  |   |   | $ | 1,870,317 |   |   | $ | 1,043,992 |   |

|                            |            | June      30, 2008 |
|---------------------------------|-----------------|--------------------|
|                            |            | FirstQuarter       | SecondQuarter | ThirdQuarter | FourthQuarter |
|                            |            |               |   |   |   |
| Interest      income            |            | $6,333             | $6,377 | $6,386 | $6,231 |
| Interest      expense           |            | 3,701              | 3,606 | 3,310 | 2,930 |
|                            |            |               |   |   |   |
| Net      interest income        |            | 2,632              | 2,771 | 3,076 | 3,301 |
|                            |            |               |   |   |   |
| Provision      for loan losses  |            | 110                | 90 | 350 | 390 |
| Noninterest      income         |            | 590                | 602 | 601 | 621 |
| Noninterest      expense        |            | 1,899              | 1,978 | 1,987 | 2,003 |
| Income      before income taxes |            | 1,213              | 1,305 | 1,340 | 1,529 |
| Income      tax expense         |            | 400                | 432 | 442 | 500 |
|                            | NET      INCOME | $813               | $873 | $898 | $1,029 |

|                            |            | June      30, 2007 |
|---------------------------------|-----------------|--------------------|
|                            |            | FirstQuarter       | SecondQuarter | ThirdQuarter | FourthQuarter |
|                            |            |               |   |   |   |
| Interest      income            |            | $5,686             | $5,802 | $5,920 | $6,141 |
| Interest      expense           |            | 3,197              | 3,388 | 3,465 | 3,570 |
|                            |            |               |   |   |   |
| Net      interest income        |            | 2,489              | 2,414 | 2,455 | 2,571 |
|                            |            |               |   |   |   |
| Provision      for loan losses  |            | 125                | 95 | 100 | 285 |
| Noninterest      income         |            | 577                | 548 | 516 | 565 |
| Noninterest      expense        |            | 1,797              | 1,803 | 1,889 | 1,969 |
| Income      before income taxes |            | 1,144              | 1,064 | 982 | 882 |
| Income      tax expense         |            | 404                | 341 | 330 | 69 |
|                            | NET      INCOME | $740               | $723 | $652 | $813 |

|                            |            | June      30, 2006 |
|---------------------------------|-----------------|--------------------|
|                            |            | FirstQuarter       | SecondQuarter | ThirdQuarter | FourthQuarter |
| Interest      income            |            | $4,750             | $5,016 | $5,187 | $5,410 |
| Interest      expense           |            | 2,401              | 2,690 | 2,782 | 2,890 |
|                            |            |               |   |   |   |
| Net      interest income        |            | 2,349              | 2,326 | 2,405 | 2,520 |
|                            |            |               |   |   |   |
| Provision      for loan losses  |            | 120                | 85 | 80 | 270 |
| Noninterest      income         |            | 540                | 533 | 505 | 566 |
| Noninterest      expense        |            | 1,732              | 1,729 | 1,833 | 1,734 |
| Income      before income taxes |            | 1,037              | 1,045 | 997 | 1,082 |
| Income      tax expense         |            | 356                | 366 | 352 | 303 |
|                            | NET      INCOME | $681               | $679 | $645 | $779 |

| CORPORATE      HEADQUARTERS531      Vine StreetPoplar      Bluff, Missouri 63901 COMPANY      WEBSITEwww.smbtonline.com SPECIAL      COUNSELSilver,      Freedman & Taff, LLPWashington,      D.C. 20007  |   | INDEPENDENT      REGISTEREDPUBLIC      ACCOUNTING FIRMBKD,      LLPSt.      Louis, Missouri 63102 COMMON      STOCKNasdaq      Stock MarketNasdaq      Symbol: SMBC  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  | Standing:  Rebecca      Brooks, Douglas Bagby, Charles Moffitt, Sammy Schalk, Ronnie      Black Seated:Greg      Steffens, James Tatum, Samuel Smith, Charles  Love |
|--------|--|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| DirectorsJames      W. TatumChairman      of the Board,Retired      Certified Public Accountant Samuel      H. SmithVice-Chairman      of the Board,Engineer      and Majority Owner,S.H.      Smith and Company, Inc. L.      Douglas BagbyCity      Manager, Poplar BluffGeneral      Manager,Municipal      Utilities of Poplar Bluff  |  Ronnie      D. BlackExecutive      Director,General      Association of General Baptists Sammy      A. SchalkPresident,Gamblin      Lumber Company Greg      A. SteffensPresident      and Chief Executive Officer,Southern      Missouri Bancorp, Inc. Rebecca      M. BrooksFinancial      Manager,McLane      Transport  |  Charles      R. LoveCertified      Public Accountant,Kraft,      Miles and Tatum Charles      R. MoffittAgency      Manager,Morse      Harwell JilesInsurance      Agency Leonard      W. EhlersDirector      Emeritus,Retired      Court Reporter,36th      Judicial Circuit  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| DirectorsSamuel      H. SmithChairman      of the Board,Engineer      and Majority Owner,S.H.      Smith and Company, Inc. L.      Douglas BagbyVice-Chairman      of the Board,City      Manager, Poplar BluffGeneral      Manager,Municipal      Utilities of Poplar Bluff Ronnie      D. BlackExecutive      Director,General      Association of General Baptists James      W. Tatum Retired      Certified Public Accountant  | Sammy      A. SchalkPresident,Gamblin      Lumber Company Greg      A. SteffensPresident      and Chief Executive Officer,Southern      Missouri Bancorp, Inc. Rebecca      M. BrooksFinancial      Manager,McLane      Transport Charles      R. LoveCertified      Public Accountant,Kraft,      Miles and Tatum Charles      R. MoffittAgency      Manager,Morse      Harwell JilesInsurance      Agency | Senior      OfficersGreg      A. SteffensPresident      andChief      Executive Officer Kimberly      A. CappsChief      Operations Officer William      D. HribovsekChief      Lending Officer Matthew      T. FunkeChief      Financial Officer Lora      L. DavesChief      of Credit Administration  |
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