10KSB

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
___________________________
FORM 10-KSB

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended June 30, 2002          OR
[   ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number:   0-23406

SOUTHERN MISSOURI BANCORP, INC. (Exact name of registrant as specified in its charter)

Missouri (State or other jurisdiction of incorporation or organization)	43-1665523 (I.R.S. Employer Identification No.)
531 Vine Street, Poplar Bluff, Missouri (Address of principal executive offices)	63901 (Zip Code)

Registrant's telephone number, including area code: (573) 785-1421

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g)of the Act: Common Stock, par value $0.01 per share(Title of Class)

            Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES   x      NO       

            Indicate by check mark whether disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or other information statements incorporated by reference in Part III of this Form 10-KSB or any amendments to this Form 10-KSB.       

            The registrant's revenues for the fiscal year ended June 30, 2002 were $17.9 million.

            As of September 10, 2002, there were issued and outstanding 1,209,735 shares of the registrant's common stock. The aggregate market value of the voting stock held by non-affiliates of the registrant on this date, computed by reference to the average of the bid and asked price of such stock, was $17.7 million (971,688 shares at $18.23). (The exclusion from such amount of the market value of the shares owned by any person shall not be deemed an admission by the registrant that such person is an affiliate of the registrant.)

DOCUMENTS INCORPORATED BY REFERENCE
            Part II of Form 10-KSB- Annual Report to Stockholders for the fiscal year ended June 30, 2002.
            Part III of Form 10-KSB - Portions of the Proxy Statement for the 2002 Annual Meeting of Stockholders.
            Transitional Small Business Disclosure Format (check one)   Yes            No   X  

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PART I

Item 1.            Description of Business

General

            Southern Missouri Bancorp, Inc. ("Company"), which changed its state of incorporation to Missouri on April 1, 1999, was originally incorporated in Delaware on December 30, 1993 for the purpose of becoming the holding company for Southern Missouri Savings Bank upon completion of Southern Missouri Savings Bank's conversion from a state chartered mutual savings and loan association to a state chartered stock savings bank. As part of the conversion in April 1994, the Company sold 1,803,201 shares of its common stock to the public. The Company's Common Stock is quoted on the National Association of Securities Dealers Automated Quotations ("NASDAQ") National Market System under the symbol "SMBC".

            Southern Missouri Savings Bank was originally chartered as a mutual Missouri savings and loan association in 1887. On June 20, 1995, it converted to a federally chartered stock savings bank and took the name Southern Missouri Savings Bank, FSB. On February 17, 1998, Southern Missouri Savings Bank converted from a federally chartered stock savings bank to a Missouri chartered stock savings bank and changed its name to Southern Missouri Bank and Trust Co. ("Bank") and ("Charter Conversion").

            As a result of the Charter Conversion, the primary regulator of the Bank changed from the Office of Thrift Supervision ("OTS") to the Missouri Division of Finance. The Bank's deposits continue to be insured up to applicable limits by the Savings Association Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation ("FDIC"). Notwithstanding the Bank's conversion to a state savings bank, the Company did not become a bank holding company regulated by the Federal Reserve Board ("FRB"), but remained an OTS-regulated savings and loan holding company as a result of the Bank's election (under Section 10(l) of the Home Owners Loan Act, as amended ("HOLA")) to be treated as an OTS-regulated savings association ("10(l) Election").

            The principal business of the Bank consists primarily of attracting retail deposits from the general public and using such deposits along with wholesale funding from the Federal Home Loan Bank of Des Moines ("FHLB") to invest primarily in one- to four-family residential mortgage loans. To a lesser extent, the Bank also finances mortgage loans secured by commercial real estate, and commercial non-mortgage business loans and consumer loans. These funds are also used to purchase mortgage-backed and related securities ("MBS"), U.S. Government Agency obligations and other permissible investments.

            At June 30, 2002, the Company had total assets of $266.3 million, total deposits of $188.9 million and stockholders' equity of $24.5 million. The Company has not engaged in any significant activity other than holding the stock of the Bank. Accordingly, the information set forth in this report, including financial statements and related data, relates primarily to the Bank. The Company's revenues are derived principally from interest earned on loans, investment securities, MBS, CMO's and, to a lesser extent, banking service charges, loan late charges and other fee income.

Forward Looking Statements

            When used in this Form 10-KSB or future filings by the Company with the Securities and Exchange Commission, in the Company's press releases or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases "would be", "will allow", "intends to", "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project", or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.

            The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and to advise readers that various factors, including regional and national economic conditions, substantial changes in levels of market interest rates, credit and other risks of lending and



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investment activities and competitive and regulatory factors, could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from those anticipated or projected.

            The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

Market Area

            The Bank provides its customers with a full array of community banking services and conducts its business from its headquarters in Poplar Bluff and seven additional full service offices located in Poplar Bluff, Van Buren, Dexter, Kennett, Doniphan and Qulin, Missouri. The Bank's primary market area includes all or portions of Butler, Carter, Dunklin, Ripley, Stoddard, and Wayne Counties, with Poplar Bluff being the economic center of the area. The Bank's market area has a population of approximately 175,000. The largest employer in the Bank's primary market area is Briggs & Stratton, who operates a small engine manufacturing facility and employs approximately 1,000 persons. Other major employers include Gates Rubber, Rowe Furniture, John Pershing VA Hospital, Three Rivers Healthcare, Nordyne, Poplar Bluff School District, Twin Rivers Regional Medical Center, Tyson Foods, and Arvin. The Bank's market area is primarily rural in nature and relies heavily on agriculture, with products including livestock, rice, timber, soybeans, wheat, melons, corn and cotton.

Competition

            The Bank faces intense competition attracting deposits (its primary source of lendable funds) and originating loans. Its most direct competition for savings deposits has come historically from commercial banks, other thrift institutions and credit unions located in its market area. The Bank is one of 22 financial institution groups located in its primary market area. The Bank has faced additional competition for investors' funds from short-term money market securities, other corporate and government securities and the equity markets. The Bank's competition for loans comes principally from other financial institutions, mortgage banking companies, mortgage brokers and life insurance companies. The Bank expects competition to continue to increase in the future as a result of legislative, regulatory and technological changes within the financial services industry. Technological advances, for example, have lowered barriers to market entry, allowed banks to expand their geographic reach by providing services over the Internet and made it possible for non-depository institutions to offer products and services that traditionally have been provided by banks. The Gramm-Leach-Bliley Act, which permits affiliation among banks, securities firms and insurance companies, also has changed the competitive environment in which the Bank conducts business.

Selected Consolidated Financial Information

            This information is incorporated by reference from pages 10 and 11 of the 2002 Annual Report to Stockholders attached hereto as Exhibit 13 ("Annual Report").

Yields Earned and Rates Paid

            This information contained under the section captioned "Yields Earned and Rates Paid" is incorporated herein by reference from page 17 of the Annual Report.

Rate/Volume Analysis

            This information is incorporated by reference from page 18 of the Annual Report.

Average Balance, Interest and Average Yields and Rates

            This information contained under the section captioned "Average Balance, Interest and Average Yields and Rates" is incorporated herein by reference from pages 15 and 16 of the Annual Report.

Lending Activities

            General. The Bank's primary focus in lending activities is on the origination of loans secured by mortgages on one- to four-family residences. To a lesser extent, the Bank also originates mortgage loans on commercial real estate,



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construction loans on residential and commercial properties, commercial business loans and consumer loans. The Bank has also occasionally purchased a limited amount of loan participation interests originated by other lenders within the Bank's market area and secured by properties generally located in the Bank's primary market area.

            Supervision of the loan portfolio is the responsibility of James W. Duncan, Executive Vice President and Chairman of the Loan Department. Loan officers have varying amounts of lending authority depending upon experience and types of loans. Loans beyond their authority are presented to the Officers Loan Committee, comprised of President Steffens, Loan Chairman Duncan and Senior Commercial Lender William D. Hribovsek, along with various appointed loan officers. Loans to one borrower (or group of borrwers), in aggregate, in excess of $500,000 require the approval of a majority of the Discount Committee, which consists of all Bank directors, prior to the closing of the loan. All loans are subject to ratification by the full Board of Directors.

            The aggregate amount of loans that the Bank is permitted to make under applicable federal regulations to any one borrower, including related entities, or the aggregate amount that the Bank could have invested in any one real estate project, is based on the Bank's capital levels. See "Regulation - Loans to One Borrower." At June 30, 2002, the maximum amount which the Bank could lend to any one borrower and the borrower's related entities was approximately $5.0 million. At June 30, 2002, the Bank's two largest extensions of credit to one entity were $4.5 million and $4.3 million, respectively. Both of these credits were secured primarily by commercial real estate and were performing according to their terms.

            Loan Portfolio Analysis. The following table sets forth the composition of the Bank's loan portfolio by type of loan and type of security as of the dates indicated.

			At June 30,
			2002		2001		2000
			Amount	Percent	Amount	Percent	Amount	Percent
			(Dollars in thousands)
Type of Loan:
Mortgage Loans:
	One-to four-family		$120,051	56.84%	$109,979	60.81%	$ 94,748	68.45%
	Commercial real estate		43,036	20.37	36,612	20.24	23,303	16.83
	Construction		3,083	1.46	3,375	1.87	5,704	4.12
	Total mortgage loans		$166,170	78.67	$149,966	82.92	$123,755	89.40
Other Loans:
	Automobile loans		14,305	6.77	7,406	4.10	6,263	4.52
	Second mortgage		789	0.37	1,980	1.09	1,279	0.92
	Loans secured by deposits		697	0.33	871	0.48	825	0.60
	Commercial business		29,273	13.86	22,288	12.32	7,350	5.31
	Other		2,988	1.42	1,564	0.87	1,287	0.93
		Total other loans	48,052	22.75	34,109	18.86	17,004	12.28
		Total loans	$214,222	101.42	$184,075	101.78	$140,759	101.68
Less:
	Undisbursed loans in process		$1,414	(0.67)	$ 1,728	(0.95)	$ 1,021	(0.73)
	Deferred fees and discounts		27	(0.01)	28	(0.02)	36	(0.03)
	Allowance for loan losses		1,569	(0.74)	1,462	(0.81)	1,277	(0.92)
		Net loans receivable	$211,212	100.00%	$180,857	100.00%	$138,425	100.00%
Type of Security:
Residential real estate
	One-to four-family		$121,451	57.50%	$110,880	61.31%	$ 94,761	68.45%
	Multi-family		1,683	0.80	2,414	1.33	3,100	2.24
Commercial real estate			37,623	17.81	31,909	17.65	22,237	16.06
Land			5,413	2.56	4,763	2.63	3,657	2.64
Savings accounts			697	0.33	871	0.48	825	0.60
Commercial			29,273	13.86	22,288	12.32	7,350	5.31
Consumer and other			18,082	8.56	10,950	6.06	8,829	6.38
		Total loans	$214,222	101.42	$184,075	101.78	$140,759	101.68
Less:
	Undisbursed loans in process		1,414	(0.67)	$ 1,728	(0.95)	$1,021	(0.73)
	Deferred fees and discounts		27	(0.01)	28	(0.02)	36	(0.03)
	Allowance for loan losses		1,569	(0.74)	1,462	(0.81)	1,277	(0.92)
		Net loans receivable	$211,212	100.00%	$180,857	100.00%	$138,425	100.00%

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            One- to Four-Family Residential Mortgage Lending. The Bank focuses its lending efforts primarily on originating loans for the acquisition or refinance of one- to four-family residences. These loans are originated as a result of customer and real estate agent referrals, existing and walk-in customers and from responses to the Bank's marketing campaigns. At June 30, 2002, net mortgage loans secured by one- to four-family residences totaled $120.1 million, or 56.9% of net loans receivable.

            The Bank currently offers both fixed-rate and adjustable-rate mortgage ("ARM") loans. During the year ended June 30, 2002, the Bank originated $10.0 million of ARM loans and $31.6 million of fixed-rate real estate loans which were secured by one- to four-family residences. Substantially all of the one- to four-family residential mortgage originations in the Bank's portfolio are located within the Bank's primary market area.

            The Bank generally originates one- to four-family residential mortgage loans in amounts up to 90% of the lower of the purchase price or appraised value of residential property. For loans originated in excess of 80%, the Bank charges a 25 basis point higher rate. The majority of new residential mortgage loans originated by the Bank conform to secondary market standards. The interest rates charged on these loans are competitively priced based on local market conditions, the availability of funding, and anticipated profit margins. Fixed and ARM loans originated by the Bank are amortized over periods as long as 30 years.

            The Bank currently originates ARM loans, which adjust annually, after an initial period of one, three or five years. Typically, originated ARM loans secured by owner occupied properties reprice at a margin of 2.75% to 3.00% over the weekly average yield on United States Treasury securities adjusted to a constant maturity of one year ("CMT"). Generally, ARM loans secured by non-owner occupied residential properties reprice at a margin of 3.00% to 3.75% over the CMT index. Current residential ARM loan originations are subject to annual and lifetime interest rate caps and floors. Historically, in order to entice customers into an ARM, or better meet customer needs, the Bank offers ARMs with initial rates below those which would prevail under the foregoing computations, based on market factors, funding costs and the rates and terms for similar loans offered by the Bank's competitors. As a consequence of using interest rate caps, discounted initial rates and a "CMT" or "lagging" loan index, the interest earned on the Bank's ARMs will react differently to changing interest rates than the Bank's cost of funds. At June 30, 2002, loans tied to the CMT index totaled $26.7 million.

            Until 1999, most of the owner occupied residential loans originated by the Bank repriced annually at a margin of 2.50% or 2.75% over the 11^th district cost of funds index or the Bank's internal cost of funds, while non-owner occupied residential loans typically repriced at a margin of 3.00% to 3.75% over these same indices. The maximum annual interest rate adjustment on these ARMs was typically limited to a 1.00% to 2.00% adjustment, while the maximum lifetime adjustment was generally limited to 5.00% to 6.00%. Generally, each of these indices are considered a "lagging" index because they adjust more slowly to changes in market interest rates than most other indices. At June 30, 2002, loans tied to these indices totaled $20.4 million.

            In underwriting one- to four-family residential real estate loans, the Bank evaluates the borrower's ability to meet debt service requirements at current as well as fully indexed rates for ARM loans, as well as the value of the property securing the loan. During fiscal 2002, most properties securing real estate loans made by the Bank had appraisals performed on them by independent fee appraisers approved and qualified by the Board of Directors. The Bank generally requires borrowers to obtain title insurance and fire, property and flood insurance (if indicated) in an amount not less than the amount of the loan. Real estate loans originated by the Bank generally contain a "due on sale" clause allowing the Bank to declare the unpaid principal balance due and payable upon the sale of the security property.

            Commercial Real Estate Lending. The Bank actively originates loans secured by commercial real estate including multi-family dwellings, land (improved and unimproved), strip shopping centers, retail establishments and other businesses generally located in the Bank's primary market area. At June 30, 2002, the Bank had $43.0 million in commercial real estate loans, which represented 20.4% of net loans receivable.

            Commercial real estate loans originated by the Bank generally are based on amortization schedules of up to 20 years with monthly principal and interest payments. Generally, the interest rate received on these loans adjusts at least annually after an initial period up to five years, based upon the Wall Street prime rate or the one year CMT. Current commercial real estate originations typically adjust monthly or quarterly based on the Wall Street prime rate. Generally,

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original commercial real estate loan amounts do not exceed 75% of the lower of the appraised value or purchase price of the secured property. Before credit is extended, the Bank analyzes the financial condition of the borrower, the borrower's credit history, and the reliability and predictability of the cash flow generated by the property and the value of the property itself. Personal guaranties are required from the borrower in addition to the secured property as collateral for such loans as well as the submission of updated financial information on the subject property and the guarantor on at least an annual basis. The Bank also generally requires appraisals on properties securing commercial real estate to be performed by a Board-approved independent certified fee appraiser.

            Generally, loans secured by commercial real estate involve a greater degree of credit risk than one- to four-family residential mortgage loans. These loans typically involve large balances to single borrowers or groups of related borrowers. Because payments on loans secured by commercial real estate are often dependent on the successful operation or management of the secured property, repayment of such loans may be subject to adverse conditions in the real estate market or the economy. If the cash flow from the project securing the Bank's loan is reduced (for example, if leases are not obtained or renewed), the borrower's ability to repay the loan may be impaired. See "Asset Quality."

            Construction Lending. The Bank originates real estate loans secured by property or land that is under construction or development. At June 30, 2002, the Bank had $3.1 million, or 1.5% of net loans receivable in construction loans outstanding.

            Construction loans originated by the Bank are generally secured by permanent mortgage loans for the construction of owner occupied residential real estate or to finance speculative construction secured by residential real estate, land development or owner-operated commercial real estate. At June 30, 2002, all construction loans were secured by residential real estate. During construction, these loans typically require monthly interest-only payments and have maturities ranging from 6 to 12 months. Once construction is completed, permanent construction loans are converted to monthly payments using amortization schedules of up to 30 years on residential and up to 20 years on commercial real estate.

            Speculative construction and land development lending generally affords the Bank an opportunity to receive higher interest rates and fees with shorter terms to maturity than those obtainable from residential lending. Nevertheless, construction and land development lending is generally considered to involve a higher level of credit risk than one- to four-family residential lending due to (i) the concentration of principal among relatively few borrowers and development projects, (ii) the increased difficulty at the time the loan is made of accurately estimating building or development costs and the selling price of the finished product, (iii) the increased difficulty and costs of monitoring and disbursing funds for the loan, (iv) the higher degree of sensitivity to increases in market rates of interest and changes in local economic conditions, and (v) the increased difficulty of working out problem loans. Due in part to these risk factors, the Bank may be required from time to time to modify or extend the terms of some of these types of loans. In an effort to reduce these risks, the application process includes a submission to the Bank of accurate plans, specifications and costs of the project to be constructed. These items are also used as a basis to determine the appraised value of the subject property. Loan amounts are limited to 85% of the lesser of current appraised value and/or the cost of construction.

            Consumer Lending. The Bank offers a variety of secured consumer loans, including direct and indirect automobile loans, second mortgages, mobile homes and loans secured by deposits. The Bank originates substantially all of its consumer loans in its primary market area. Usually, consumer loans are originated with fixed rates for terms of up to five years, with the exception of home equity lines of credit, which are variable, tied to the prime rate of interest and are for a period of ten years. At June 30, 2002, the Bank's consumer loan portfolio totaled $18.1 million, or 8.6% of net loans receivable.

            Direct and indirect automobile loans combined represent 79.1% of the Bank's installment loan portfolio at June 30, 2002, and totaled $14.3 million, or 6.8% of net loans receivable. Beginning in fiscal year 2002, the Bank implemented indirect lending relationships with several automobile dealerships. Through these dealer relationships, the dealer completes the application with the consumer, then submits it to the Bank for credit approval. At June 30, 2002, the Bank had $6.0 million of indirect automobile loans in its consumer portfolio. Typically, automobile loans are made for terms of up to 60 months for new vehicles and up to 48 months for used vehicles. Loans secured by automobiles have fixed rates and are generally made in amounts up to 100% of the purchase price of the vehicle.


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            Consumer loan terms vary according to the type and value of collateral, length of contract and creditworthiness of the borrower. The underwriting standards employed for consumer loans include employment stability, an application, a determination of the applicant's payment history on other debts, and an assessment of ability to meet existing and proposed obligations. Although creditworthiness of the applicant is a primary consideration, the underwriting process also includes a comparison of the value of the security, if any, in relation to the proposed loan amount.

            Consumer loans may entail greater credit risk than do residential mortgage loans, especially in the case of consumer loans, which are unsecured or are secured by rapidly depreciable or mobile assets, such as automobiles or mobile homes. In the event of repossession or default, there may be no secondary source of repayment or the underlying value of the collateral could be insufficient to repay the loan. In addition, consumer loan collections are dependent on the borrower's continuing financial stability, and thus are more likely to be affected by adverse personal circumstances. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans. The Bank's delinquency levels for these types of loans are reflective of these risks. See "Asset Classification."

            Commercial Business Lending. At June 30, 2002, the Bank also had $29.3 million in commercial business loans outstanding, or 13.9% of net loans receivable. The Bank's commercial business lending activities encompass loans with a variety of purposes and security, including loans to finance accounts receivable, inventory, equipment and operating lines of credit.

            The Bank currently offers both fixed and adjustable rate commercial business loans. At year end, the Bank had $15.6 million in fixed rate and $13.7 million of adjustable rate commercial business loans. The adjustable rate business loans can reprice daily, monthly or annually, in accordance with the Wall Street prime rate of interest. The Bank expects to continue to maintain or increase the current percentage of commercial business loans in its total loan portfolio.

            Commercial business loan terms vary according to the type and value of collateral, length of contract and creditworthiness of the borrower. Generally, commercial loans secured by fixed assets are amortized over periods up to five years, while commercial operating lines of credit are generally for a one year period. The Bank's commercial business loans are evaluated based on the loan application, a determination of the applicant's payment history on other debts, business stability and an assessment of ability to meet existing obligations and payments on the proposed loan. Although creditworthiness of the applicant is a primary consideration, the underwriting process also includes a comparison of the value of the security, if any, in relation to the proposed loan amount.

            Unlike residential mortgage loans, which generally are made on the basis of the borrower's ability to make repayment from his or her employment and other income, and which are secured by real property whose value tends to be more easily ascertainable, commercial business loans are of higher risk and typically are made on the basis of the borrower's ability to make repayment from the cash flow of the borrower's business. As a result, the availability of funds for the repayment of commercial business loans may be substantially dependent on the success of the business itself. Further, the collateral securing the loans may depreciate over time, may be difficult to appraise and may fluctuate in value based on the success of the business.

Loan Maturity and Repricing

            The following table sets forth certain information at June 30, 2002 regarding the dollar amount of loans maturing or repricing in the Bank's portfolio based on their contractual terms to maturity or repricing, but does not include scheduled payments or potential prepayments. Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are reported as due in one year or less. Mortgage loans, which have adjustable rates, are shown as maturing at their next repricing date. Listed loan balances are shown before deductions for undisbursed loan proceeds, unearned discounts, unearned income and allowance for loan losses.


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	Within One Year	After One Year Through 5 Years	After 5 Years Through 10 Years	After 10 Years	Total
	(Dollars in thousands)
One-to four-family	$30,595	$21,220	$5,000	$63,236	$120,051
Commercial real estate	19,815	20,361	428	2,432	43,036
Construction	3,083	--	--	--	3,083
Consumer	2,794	14,691	1,224	70	18,779
Commercial business	17,521	8,595	3,157	--	29,273
Total loans	$73,808	$64,867	$9,809	$65,738	$214,222

            The following table sets forth the dollar amount of all loans due more than one year after June 30, 2002, which have fixed interest rates and which have adjustable interest rates.

	Fixed Rates	Adjustable Rates
	(Dollars in thousands)
One-to four-family	$72,352	$17,103
Commercial real estate	15,721	7,499
Construction	--	--
Consumer	15,971	14
Commercial business	11,374	380
Total	$115,418	$24,996

Originations, Purchases and Servicing of Loans and Mortgage-Backed Securities

            Generally, real estate loans are originated by the Bank's staff of salaried loan officers. Loan applications are taken and processed at each of the Bank's full-service locations. The Bank started to offer secondary market loans to customers during fiscal year 2002.

            While the Bank originates both adjustable-rate and fixed-rate loans, the ability to originate loans is dependent upon the relative customer demand for loans in its market. In fiscal 2002, the Bank originated $123.0 million of loans, compared to $93.3 million and $57.4 million in fiscal 2001 and 2000, respectively. Of these loans, mortgage loans originated were $65.3 million, $57.3 million and $39.7 million in fiscal 2002, 2001 and 2000, respectively.

            From time to time, the Bank has purchased loan participations consistent with its loan underwriting standards. In fiscal 2002, the Bank purchased $3.9 million of new loans. At June 30, 2002, loan participations totaled $7.6 million, or 3.6% of net loans receivable. All of these participations were secured by properties located in Missouri. At June 30, 2002, all of such participations were performing in accordance to their respective terms. The Bank will evaluate purchasing additional loan participations, based in part on local loan demand and portfolio growth.

            In addition, the Bank has purchased MBS to complement lending activities and provide balance sheet flexibility for liquidity and asset/liability management. The Board believes that the lower yield carried by MBS is somewhat offset by the lower level of credit risk and the lower level of overhead required in connection with these assets, as compared to commercial real estate, multi-family and other types of loans. See "- Mortgage-Backed Securities."


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            The following table shows total mortgage loans originated, purchased, sold and repaid during the periods indicated.

				Year Ended June 30,
				2002	2001	2000
				(Dollars in thousands)
Total mortgage loans at beginning of period				$149,966	$123,755	$109,848
Loans originated:
	One-to four-family residential			41,641	33,271	24,191
	Multi-family residential and
		commercial real estate		18,331	19,770	8,441
	Construction loans			5,284	4,283	7,049
			Total loans originated	65,256	57,324	39,681
Loans purchased:
	Total loans purchased			3,871	12,823	---
Loans sold:
	Total loans sold			---	(8,179)	---
Mortgage loan principal repayments				(52,791)	(34,411)	(25,349)
Foreclosures				(132)	(1,346)	(425)
Net loan activity				16,204	26,211	13,907
	Total mortgage loans at end of period			$166,170	$149,966	$123,755

Loan Commitments

            The Bank issues commitments for one- to four-family residential mortgage loans and operating or working capital lines of credit. Such commitments may be oral or in writing with specified terms, conditions and at a specified rate of interest. The Bank had outstanding net loan commitments of approximately $20.8 million at June 30, 2002. See Note 16 of Notes to Consolidated Financial Statements contained in the Annual Report to Stockholders.

Loan Fees

            In addition, to interest earned on loans, the Bank receives income from fees in connection with loan originations, loan modifications, late payments and for miscellaneous services related to its loans. Income from these activities varies from period to period depending upon the volume and type of loans made and competitive conditions.

Asset Quality

            Delinquent Loans. Generally, when a borrower fails to make a required payment on mortgage or installment loans the Bank begins the collection process by mailing a computer generated notice to the customer. If the delinquency is not cured promptly, the customer is contacted again by notice or telephone. After an account secured by real estate becomes over 60 days past due, the Bank will send a 30-day demand notice to the customer which, if not cured or unless satisfactory arrangements have been made, will lead to foreclosure. For consumer loans, the Missouri Right-To-Cure Statute is followed, which requires issuance of specifically worded notices at specific time intervals prior to repossession or further collection efforts.


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            The following table sets forth the Bank's loan delinquencies by type and by amount at June 30, 2002.

		Loans Delinquent For:				Total Loans Delinquent 60 Days or More
		60-89 Days		90 Days and Over
		Numbers	Amounts	Numbers	Amounts	Numbers	Amounts
		(Dollars in thousands)
One-to four-family		11	$399	7	$273	18	$672
Commercial real estate		--	--	1	28	1	28
Commercial non-real estate		1	20	2	7	3	27
Mobile home		2	14	2	10	4	24
Other Consumer		8	52	7	18	15	70
	Totals	22	$485	19	$336	41	$821

            Non-Performing Assets. The table below sets forth the amounts and categories of non-performing assets in the Bank's loan portfolio. Loans are placed on non-accrual status when the collection of principal and/or interest become doubtful, and as a result, previously accrued interest income on the loan is taken out of current income. The Bank has no reserves for uncollected interest and does not accrue interest on non-accrual loans. A loan may be transferred back to accrual status once a satisfactory repayment history has been restored. Foreclosed assets held for sale include assets acquired in settlement of loans and are shown net of reserves.

            At June 30, 2002, the Bank had five loans on which interest was not being accrued in accordance with SFAS No. 114 as amended by SFAS No. 118. The Bank would have recorded interest income of $13,000, $0 and $51,000 on non-accrual loans during the years ended June 30, 2002, 2001 and 2000, respectively, if such loans had been performing in accordance with their terms during such periods. Interest income of approximately $1,000, $0 and $23,000 was recognized on these loans for the years ending June 30, 2002, 2001 and 2000, respectively.

























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            The following table sets forth information with respect to the Bank's non-performing assets as of the dates indicated. At the dates indicated, the Bank had no restructured loans within the meaning of SFAS 15.

	At June 30,
	2002	2001	2000	1999	1998
	(Dollars in thousands)
Nonaccruing loans:
One-to four-family	$     96	$    ---	$     38	$     35	$   182
Commercial real estate	28	---	185	86	344
Consumer	10	---	145	60	7
Commercial business	---	---	169	---	---
Total	$   134	$    ---	$   537	$   181	$   533
Loans 90 days past due    accruing interest:
One-to four-family	$   177	$     51	$     26	$   146	$   661
Commercial real estate	---	336	13	---	3
Consumer	13	38	---	83	140
Commercial business	7	50	---	27	---
Mobile homes	5	15	---	55	---
Total	$   202	$   490	$     39	$   311	$   804
Total nonperforming loans	$   336	$   490	$   576	$   492	$1,337
Foreclosed assets held for sale:
Real estate owned	$   383	$1,162	$   464	$   478	$   172
Other nonperforming assets	5	27	52	82	12
Total nonperforming assets	$   724	$1,679	$1,092	$1,052	$1,521
Total nonperforming loans     to net loans	0.16%	0.27%	0.42%	0.42%	1.12%
Total nonperforming loans     to net assets	0.13%	0.20%	0.31%	0.30%	0.86%
Total nonperforming assets    to total assets	0.27%	0.69%	0.59%	0.64%	0.98%

            Other Loans of Concern. In addition to the non-performing assets discussed above, there was also an aggregate of $3.4 million in net book value of loans (all were commercial lending relationships) with respect to which management has doubts as to the ability of the borrowers to continue to comply with present loan repayment terms which may ultimately result in the classification of such assets.

            Real Estate Owned. Real estate properties acquired through foreclosure or by deed in lieu of foreclosure are recorded at the lower of cost or fair value, less estimated disposition costs. If fair value at the date of foreclosure is lower than the balance of the related loan, the difference will be charged-off to the allowance for loan losses at the time of transfer. Management periodically updates real estate valuations and if the value declines, a specific provision for losses on such property is established by a charge to operations. At June 30, 2002, the Company's balance of real estate owned totaled $383,000 and included twenty-five properties secured primarily by real estate lots and three commercial lots. The balance on these commercial lots was $269,000.

            Asset Classification. Applicable regulations require that each insured institution review and classify its assets on a regular basis. In addition, in connection with examinations of insured institutions, regulatory examiners have authority to identify problem assets and, if appropriate, require them to be classified. There are three classifications for problem assets: substandard, doubtful and loss. Substandard assets must have one or more defined weaknesses and are


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characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified loss is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. When an insured institution classifies problem assets as loss, it charges off the balance of the assets. Assets, which do not currently expose the Bank to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses, may be designated as special mention. The Bank's determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the FDIC and the Missouri Division of Finance, which can order the establishment of additional loss allowances.

            In connection with the filing of its periodic reports with the FDIC and in accordance with its asset classification policy, the Bank regularly reviews its loan portfolio to determine whether any loans require classification in accordance with applicable regulations. On the basis of management's review of the assets of the Company, at June 30, 2002, classified assets totaled $5.2 million, or 2.0% of total assets as compared to $5.5 million, or 2.3% of total assets at June 30, 2001.

            The Bank has classified $5.1 million of its assets as substandard and $28,000 as doubtful. The largest classified commercial lending relationship at June 30, 2002 totaled $2.1 million and was performing in accordance with its terms. In addition, the Bank had classified four other commercial lending relationships, which in the aggregate totaled $2.0 million. The other borrowing relationships were classified due to concerns over whether the property securing the Bank's loans or the borrower generated sufficient cash flow to amortize the loans in accordance with their terms.

            Allowance for Loan Losses. The Bank's allowance for loan losses is established through a provision for loan losses based on management's evaluation of the risk inherent in the loan portfolio and changes in the nature and volume of loan activity, including those loans which are being specifically monitored. Such evaluation, which includes a review of loans for which full collectability may not be reasonably assured, considers among other matters, the estimated fair value of the underlying collateral, economic conditions, historical loan loss experience and other factors that warrant recognition in providing for an adequate provision for loan losses. These provisions for loan losses are charged against earnings in the year they are established. The Bank had an allowance for loan losses at June 30, 2002, of $1.6 million, which represented 220% of nonperforming assets as compared to $1.5 million or 87% of nonperforming assets at June 30, 2001. See Note 4 of Notes to Consolidated Financial Statements contained in the Annual Report, included as Exhibit 13.

            Although management believes that it uses the best information available to determine the allowance, unforeseen market conditions could result in adjustments and net earnings could be significantly affected if circumstances differ substantially from assumptions used in making the final determination. Future additions to the allowance will likely be the result of periodic loan, property and collateral reviews and thus cannot be predicted with certainty in advance.



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            The following table sets forth an analysis of the Bank's allowance for loan losses for the periods indicated. Where specific loan loss reserves have been established, any difference between the loss reserve and the amount of loss realized has been charged or credited to current income.

		Year Ended June 30,
		2002	2001	2000	1999	1998
		(Dollars in thousands)
Allowance at beginning of period		$1,462	$1,277	$1,191	$1,295	$   706
Recoveries
One-to four-family		---	15	1	2	1
Commercial real estate		8	1	---	---	---
Consumer		15	31	71	31	42
Mobile homes		14	6	39	58	89
	Total recoveries	37	53	111	91	132
Charge offs:
One-to four-family		24	76	29	28	6
Commercial real estate		13	51	---	10	---
Commercial business		95	191	---	---	---
Consumer		119	294	172	286	116
Mobile homes		29	16	39	106	204
	Total charge offs	280	628	240	430	326
	Net charge offs	(243)	(575)	(129)	(339)	(194)
Acquired allowance for losses		---	250	---	---	---
Provision for loan losses		350	510	215	235	783
	Balance at end of period	$1,569	$1,462	$1,277	$1,191	$1,295
Ratio of allowance to total loans
	outstanding at the end of the
	period	0.73%	0.79%	0.91%	0.99%	1.07%
Ratio of net charge offs to
	average loans outstanding
	during the period	0.12%	0.35%	0.10%	0.29%	0.17%

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            The following table sets forth the breakdown of the allowance for loan losses by loan category for the periods indicated.

	At June 30,
	2002		2001		2000		1999		1998
	Amount	Percent of Loans in Each Category to Total Loans	Amount	Percent of Loans in Each Category to Total Loans	Amount	Percent of Loans in Each Category to Total Loans	Amount	Percent of Loans in Each Category to Total Loans	Amount	Percent of Loans in Each Category to Total Loans
	(Dollars in thousands)
One-to four-family	$   237	56.04%	$   293	59.75%	$   307	67.31%	$   253	72.23%	$   372	68.87%
Construction	24	1.44	16	1.83	21	4.05	17	2.94	20	2.24
Commercial real estate	602	20.09	657	19.89	529	16.55	604	15.77	612	18.60
Consumer	254	8.77	165	6.42	174	6.87	164	7.83	253	9.36
Commercial business	450	13.66	268	12.11	223	5.22	33	1.23	17	0.93
Unallocated	2	N/A	63	N/A	23	N/A	120	N/A	21	N/A
Total allowance for    loan losses	$1,569	100.00%	$1,462	100.00%	$1,277	100.00%	$1,191	100.00%	$1,295	100.00%

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Investment Activities

            General. Under Missouri law, the Bank is permitted to invest in various types of liquid assets, including U.S. Government and State of Missouri obligations, securities of various federal agencies, certain certificates of deposit of insured banks and savings institutions, banker's acceptances, repurchase agreements, federal funds, commercial paper, investment grade corporate debt securities and obligations of States and their political sub-divisions. Generally, the investment policy of the Company is to invest funds among various categories of investments and repricing characteristics based upon the Bank's need for liquidity, to provide collateral for borrowings and public unit deposits, to help reach financial performance targets and to help maintain asset/liability management objectives.

            The Company's investment portfolio is managed in accordance with the Bank's investment policy which was adopted by the Board of Directors of the Bank and is implemented by members of the asset/liability management committee which consists of the President and three outside directors.

            Investment purchases and/or sales must be authorized by the appropriate party, depending on the aggregate size of the investment transaction, prior to any investment transaction. The Board of Directors reviews all investment transactions. Investment purchases are identified as either held-to-maturity ("HTM") or available-for-sale ("AFS") at the time of purchase. Debt securities classified as "HTM" are reported at amortized cost only if the reporting entity has the positive intent and ability to hold these securities to maturity. The Company does not have any investment securities classified as held to maturity at June 30, 2002. Securities classified as "AFS" must be reported at fair value with unrealized gains and losses recorded as a separate component of stockholders' equity. At June 30, 2002, AFS securities totaled $32.8 million (excluding FHLB stock). For information regarding the amortized cost and market values of the Company's investments, see Note 3 of Notes to Consolidated Financial Statements contained in the Annual Report.

            Effective April 1, 1999, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and hedging activities. The statement further requires that all derivatives should be recognized as either assets or liabilities and measured at the fair value. The accounting for changes in the fair value, or gains and losses of a derivative depends on the use or the derivative and resulting designation. Presently, the Company has no derivative instruments and no outstanding hedging activities. Management does not intend to purchase derivative instruments or enter into hedging activities.

            Investment and Other Securities. At June 30, 2002, the Company's investment securities portfolio totaled $12.5 million, or 4.7% of total assets as compared to $11.0 million, or 4.5% of total assets at June 30, 2001. During 2002, the Bank had $11.5 million in maturities and $13.0 million in security purchases. Of the securities that matured, $10.6 million were called for early redemption. At June 30, 2002, the investment securities portfolio included $7.1 million in agency bonds and $3.1 million in municipal bonds, $8.1 million of which is subject to early redemption at the option of the issuer, and $2.4 million in FHLB stock. Based on the projected maturities, the weighted average life of the investment securities portfolio at June 30, 2002, excluding FHLB stock, was 14 months.

            Mortgage-Backed Securities. At June 30, 2002, MBS totaled $22.6 million, or 8.5%, of total assets as compared to $26.2 million, or 10.9% of total assets at June 30, 2001. During fiscal 2002, the Bank had maturities of $13.2 million and had purchases of $13.1 million in MBS. At June 30, 2002, the MBS portfolio included $1.3 million in adjustable-rate MBS, $6.0 in fixed-rate MBS and $15.3 million in fixed rate collateralized mortgage obligations (CMOs), which passed the Federal Financial Institutions Examination Council's sensitivity test. Based on recent prepayment rates, the weighted average life of the MBS and CMOs at June 30, 2002 was 33 months.




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Investment Securities Analysis

            The following table sets forth the Company's investment securities AFS portfolio at carrying value and FHLB stock at the dates indicated.

	At June 30,
	2002		2001		2000
	Carrying Value	Percent of Portfolio	Carrying Value	Percent of Portfolio	Carrying Value	Percent of Portfolio
	(Dollars in thousands)
U.S. government agencies	$  7,080	56.64%	$  4,966	44.95%	$17,746	74.55%
State and political subdivisions	3,070	24.56	3,931	35.59	4,208	17.68
FHLB stock	2,350	18.80	2,150	19.46	1,850	7.77
Total	$12,500	100.00%	$11,047	100.00%	$23,804	100.00%

            The following table sets forth the maturities and weighted average yields of AFS debt securities in the Company's investment securities portfolio at June 30, 2002.

		Securities Available for Sale June 30, 2002
		Amortized Cost	Book/ Estimated Market Value	Weighted Average Yield
		(Dollars in thousands)
U.S. government agencies:
	Due within 1 year	$ ---	$ --	---%
	Due after 1 year but within 5 years	1,027	1,051	4.72
	Due after 5 years but within 10 years	5,960	6,029	4.54
	Total	6,987	7,080	4.57
State and political subdivisions:
	Due within 1 year	870	883	5.77
	Due after 1 year but within 5 years	1,640	1,706	5.11
	Due after 5 years but within 10 years	441	481	6.07
	Total	2,951	3,070	5.45
Total Available for Sale		$9,938	$10,150	4.83%

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            The following table sets forth certain information at June 30, 2002 regarding the dollar amount of MBS and CMOs in the Bank's portfolio based on their contractual terms to maturity, but does not include scheduled payments or potential prepayments. MBS, which have adjustable rates, are shown at amortized cost as maturing at their next repricing date.

	At June 30, 2002
	(Dollars in thousands)
Amounts due:
Within 1 year	$ 1,263
After 1 year through 3 years	---
After 3 years through 5 years	---
After 5 years	21,049
Total	$22,312

            The following table sets forth the dollar amount of all MBS and CMOs at amortized cost due, based on their contractual terms to maturity, one year after June 30, 2002, which have fixed interest rates and have floating or adjustable rates.

	At June 30, 2002
	(Dollars in thousands)
Interest rate terms on amounts due after 1 year:
Fixed	$21,049
Adjustable	1,263
Total	$22,312

            The following table sets forth certain information with respect to each security (other than U.S. Government and agency securities) at the dates indicated.

		At June 30,
		2002		2001		2000
		Carrying Value	Market Value	Carrying Value	Market Value	Carrying Value	Market Value
		(Dollars in thousands)
FHLMC certificates		$ 1,361	$ 1,361	$ 1,831	$ 1,831	$ ---	$ ---
GNMA certificates		906	906	1,450	1,450	1,937	1,937
FNMA certificates		5,004	5,004	476	476	586	586
Collateralized mortgage obligations issued
	by government agencies	14,369	14,369	20,746	20,746	10,434	10,434
Collateralized mortgage obligations issued
	by private issuer	969	969	1,721	1,721	---	---
	Total	$22,609	$22,609	$26,224	$26,224	$12,957	$12,957

Deposit Activities and Other Sources of Funds

            General. The Company's primary sources of funds are deposits, borrowings, payment of principal and interest on loans, MBS and CMOs, interest and principal received on investment securities and other short-term investments, and funds provided from operating results. Loan repayments are a relatively stable source of funds, while deposit inflows and outflows and loan prepayments are significantly influenced by general market interest rates and overall economic conditions.


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            Borrowings, including FHLB advances, have been used at times to provide additional liquidity. Borrowings are used on an overnight or short-term basis to compensate for periodic fluctuations in cash flows, and are used on a longer term basis to fund loan growth and to help manage the Company's sensitivity to fluctuating interest rates.

            Deposits. Substantially all of the Bank's depositors are residents of the State of Missouri. Deposits are attracted from within the Bank's market area through the offering of a broad selection of deposit instruments, including checking accounts, negotiable order of withdrawal ("NOW") accounts, money market deposit accounts, saving accounts, certificates of deposit and retirement savings plans. Deposit account terms vary according to the minimum balance required, the time periods the funds may remain on deposit and the interest rate, among other factors. In determining the terms of its deposit accounts, the Bank considers current market interest rates, profitability to the Bank, managing interest rate sensitivity and its customer preferences and concerns. The Bank's Asset/Liability Committee regularly reviews its deposit mix and pricing. In order to help manage interest rate risk exposure from increased fixed rate lending, the average maturity of deposits has been extended. Certificates of deposit with maturities over two years increased from $4.8 million at June 30, 2001 to $19.6 million at June 30, 2002.

            The Bank will periodically promote a particular deposit product as part of the Bank's overall marketing plan. Deposit products have been promoted through various mediums, which include radio and newspaper advertisements. The emphasis of these campaigns is to increase consumer awareness and market share of the Bank.





















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            The flow of deposits is influenced significantly by general economic conditions, changes in prevailing interest rates, and competition. The Bank has become more susceptible to short-term fluctuations in deposit flows, as customers have become more interest rate conscious. Based on its experience, the Bank believes that its deposits are relatively stable sources of funds. However, the ability of the Bank to attract and maintain certificates of deposit, and the rates paid on these deposits, has been and will continue to be significantly affected by market conditions.

Weighted Average Interest Rate	Term	Category	Minimum		Percentage of Total Deposits
			Amount	Balance
				(In thousands)
0.00%	None	Non-interest Bearing	$100	$ 10,207	5.40%
0.79	None	NOW Accounts	100	19,477	10.31
2.33	None	Savings Accounts	100	56,038	29.66
2.20	None	Money Market Deposit Accounts	1,000	18,974	10.04
		Certificates of Deposit
2.09%	91-day	Fixed-term/Fixed-rate	500	722	0.38
1.99	91-day	IRA Fixed-term/Fixed-rate	500	33	0.02
2.25	5 month	Fixed-term/Fixed-rate	500	1,318	0.70
2.38	6 month	Fixed-term/Fixed-rate	500	9,414	4.98
2.40	6 month	IRA Fixed-term/Fixed-rate	500	1,089	0.58
2.24	7 month	Fixed-term/Fixed-rate	500	556	0.29
2.77	9 month	Fixed-term/Fixed-rate	500	4,112	2.18
2.72	9 month	IRA Fixed-term/Fixed-rate	500	1,826	0.97
3.15	11 month	Fixed-term/Fixed-rate	500	6,797	3.60
3.23	11 month	IRA Fixed-term/Fixed-rate	500	1,234	0.65
3.18	12 month	Fixed-term/Fixed-rate	500	17,330	9.17
2.88	12 month	IRA Fixed-term/Fixed-rate	500	2,942	1.56
3.03	13 month	Fixed-term/Fixed-rate	500	360	0.19
2.72	14 month	Fixed-term/Fixed-rate	500	5	---
3.32	15 month	Fixed-term/Fixed-rate	500	1,753	0.93
3.75	18 month	Fixed-term/Fixed-rate	500	1,695	0.90
3.41	18 month	IRA Fixed-term/Fixed-rate	500	527	0.28
4.93	24 month	Fixed-term/Fixed-rate	500	4,429	2.34
5.30	24 month	IRA Fixed-term/Fixed-rate	500	721	0.38
1.70	24 month	IRA Fixed-term/Variable rate	500	578	0.31
3.15	25 month	Fixed-term/Fixed-rate	500	518	0.27
6.15	29 month	Fixed-term/Fixed-rate	500	14	---
5.06	30 month	Fixed-term/Fixed-rate	500	709	0.37
3.94	35 month	Fixed-term/Fixed-rate	500	1,792	0.95
3.94	35 month	IRA Fixed-term/Fixed-rate	500	225	0.12
4.66	36 month	Fixed-term/Fixed-rate	500	7,168	3.79
5.32	36 month	IRA Fixed-term/Fixed-rate	500	3,604	1.91
4.87	48 month	Fixed-term/Fixed-rate	500	1,025	0.54
4.96	48 month	IRA Fixed-term/Fixed-rate	500	152	0.08
4.94	55 month	Fixed-term/Fixed-rate	500	5,700	3.02
4.94	55 month	Fixed-term/Fixed-rate	500	766	0.41
5.08	60 month	Fixed-term/Fixed-rate	500	3,744	1.98
5.47	60 month	IRA Fixed-term/Fixed-rate	500	1,339	0.71
7.95	96 month	Fixed-term/Fixed-rate	500	54	0.03
				$188,947	100.00%

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            The following table indicates the amount of the Bank's jumbo certificates of deposit by time remaining until maturity as of June 30, 2002. Jumbo certificates of deposit require minimum deposits of $100,000 and rates paid on such accounts are negotiable.

Maturity Period	Amount
	(Dollars in thousands)
Three months or less	$ 5,451
Over three through six months	2,780
Over six through twelve months	2,038
Over 12 months	9,751
Total	$20,020

Time Deposits by Rates

            The following table sets forth the time deposits in the Bank classified by rates at the dates indicated.

	At June 30,
	2002	2001	2000
	(Dollars in thousands)
1.00 - 1.99%	$ 1,087	$ ---	$ ---
2.00 - 2.99%	37,450	---	---
3.00 - 3.99%	14,356	1,788	---
4.00 - 4.99%	17,579	19,547	28,951
5.00 - 5.99%	8,882	38,771	37,008
6.00 - 6.99%	4,832	12,326	23,948
7.00 - 7.99%	12	8,093	52
8.00 - 8.99%	53	58	66
Total	$84,251	$80,583	$90,025

            The following table sets forth the amount and maturities of all time deposits at June 30, 2002.

	Amount Due
	Less Than One Year	1-2 Years	2-3 Years	3-4 Years	After 4 Years	Total	Percent of Total Certificate Accounts
	(Dollars in thousands)
1.00 - 1.99%	$   790	$     297	$      ---	$      ---	$      ---	$1,087	1.29%
2.00 - 2.99%	35,223	2,157	70	---	---	37,450	44.45
3.00 - 3.99%	10,093	1,108	3,093	27	35	14,356	17.04
4.00 - 4.99%	4,293	886	5,298	536	6,566	17,579	20.87
5.00 - 5.99%	3,118	2,027	880	323	2,534	8,882	10.54
6.00 - 6.99%	3,278	1,290	67	197	---	4,832	5.74
7.00 - 7.99%	12	---	---	---	---	12	0.01
8.00 - 8.99%	53	---	--	---	---	53	0.06
Total	$56,860	$7,765	$9,408	$1,083	$9,135	$84,251	100.00%

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Deposit Flow

            The following table sets forth the balance of savings deposits in the various types of savings accounts offered by the Bank at the dates indicated.

	At June 30,
	2002			2001			2000
	Amount	Percent of Total	Increase (Decrease)	Amount	Percent of Total	Increase (Decrease)	Amount	Percent of Total	Increase (Decrease)
	(Dollars in thousands)
Noninterest bearing	$  10,207	5.40%	$       476	$    9,731	5.62%	$    7,682	$    2,049	1.65%	$       (267)
NOW checking	19,477	10.31	3,497	15,980	9.22	4,571	11,409	9.21	2,297
Regular savings accounts	56,038	29.66	9,746	46,292	26.72	39,427	6,865	5.54	(485)
Money market deposit	18,974	10.04	(1,721)	20,695	11.94	7,123	13,572	10.95	350
Fixed-rate certificates    which mature(1):
Within one year	56,586	29.95	(10,630)	67,216	38.79	(15,673)	82,889	66.89	6,271
Within three years	16,869	8.93	5,508	11,361	6.56	5,343	6,018	4.86	(3,752)
After three years	10,218	5.41	9,069	1,149	0.66	31	1,118	0.90	(648)
Variable-rate certificates    which mature within    one year	274	0.14	(583)	857	0.49	857	---	---	---
Variable-rate certificates    which mature within    two years	304	0.16	304	---	---	---	---	---	---
Total	$188,947	100.00%	$15,666	$173,281	100.00%	$49,361	$123,920	100.00%	$3,766

_____________

(1) At June 30, 2002, 2001 and 2000, certificates in excess of $100,000 totaled $20.0, $12.9 million and $20.5 million, respectively.

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            The following table sets forth the savings activities of the Bank for the periods indicated.

	At June 30,
	2002	2001	2000
	(Dollars in thousands)
Beginning Balance	$173,281	$123,920	$120,154
Net increase (decrease) before interest credited	11,338	43,689	(412)
Interest credited	4,328	5,672	4,178
Net increase (decrease) in savings deposits	15,666	49,361	3,766
Ending balance	$188,947	$173,281	$123,920

            In the unlikely event the Bank is liquidated, depositors will be entitled to payment of their deposit accounts prior to any payment being made to the Company as the sole stockholder of the Bank.

            Borrowings. As a member of the FHLB of Des Moines, the Bank has the ability to apply for FHLB advances. These advances are available under various credit programs, each of which has its own maturity, interest rate and repricing characteristics. Additionally, FHLB advances have prepayment penalties as well as limitations on size or term. In order to utilize FHLB advances, the Bank must be a member of the FHLB system, have sufficient collateral to secure the requested advance and own stock in the FHLB equal to 5% of the amount borrowed. See "REGULATION - The Bank -- Federal Home Loan Bank System."

            Although deposits are the Bank's primary and preferred source of funds, the Bank actively uses FHLB advances. The Bank's general policy has been to utilize borrowings to meet short-term liquidity needs, or to provide a longer-term source of funding loan growth when other cheaper funding sources are unavailable or to aide in asset/liability management. As of June 30, 2002, the Bank had $47.0 million in FHLB advances, of which $37.0 million had an original term of ten years, subject to early redemption by the FHLB after an initial period of one to five years and $10.0 million in borrowings, all of which had fixed rates and original maturities of four to six years. In order for the Bank to borrow from the FHLB, it has pledged $56.4 million of its residential loans to the FHLB and has purchased $2.4 million in FHLB stock. At June 30, 2002, the Bank had additional borrowing capacity from the FHLB of $48.7 million as compared to $45.2 million at June 30, 2001.














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            The following table sets forth certain information regarding short-term borrowings by the Bank at the end of and during the periods indicated:

			Year Ended June 30,
			2002	2001	2000
			(Dollars in thousands)
Year end balances
	Short-term FHLB advances		$     ---	$     ---	$19,000
	Securities sold under agreements to repurchase		4,311	4,115	---
		Total short-term borrowings	$4,311	$4,115	$19,000
	Weighted average rate at year end		1.75%	3.25%	6.64%

		Year Ended June 30,
		2002	2001	2000
		(Dollars in thousands)
Short term FHLB advances
	Daily average balance	$       3	$  2,025	$  8,869
	Weighted average interest rate	2.10%	6.59%	5.95%
	Maximum outstanding at any month end	$1,000	$23,500	$19,000
Securities sold under agreements to repurchase
	Daily average balance	$4,694	$3,486	$     ---
	Weighted average interest rate	2.13%	2.84%	---%
	Maximum outstanding at any month end	$5,453	$5,169	$     ---

Subsidiary Activities

            The Bank has one subsidiary, SMS Financial Services, Inc., which has one note receivable totaling $423,000 from the sale of the insurance agency in May 1999. The activities of the subsidiary are not significant to the financial condition or results of the Bank's operations.









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REGULATION

The Bank

            General. As a state-chartered, federally insured savings bank, the Bank is subject to extensive regulation. Lending activities and other investments must comply with various statutory and regulatory requirements, including prescribed minimum capital standards. The Bank is regularly examined by the FDIC and the Missouri Division of Finance and files periodic reports concerning the Bank's activities and financial condition with its regulators. The Bank's relationship with depositors and borrowers also is regulated to a great extent by both federal law and the laws of Missouri, especially in such matters as the ownership of savings accounts and the form and content of mortgage documents.

            Federal and state banking laws and regulations govern all areas of the operation of the Bank, including reserves, loans, mortgages, capital, issuance of securities, payment of dividends and establishment of branches. Federal and state bank regulatory agencies also have the general authority to limit the dividends paid by insured banks and bank holding companies if such payments should be deemed to constitute an unsafe and unsound practice. The respective primary federal regulators of the Company and the Bank have authority to impose penalties, initiate civil and administrative actions and take other steps intended to prevent banks from engaging in unsafe or unsound practices.

            State Regulation and Supervision. As a state-chartered savings bank, the Bank is subject to applicable provisions of Missouri law and the regulations of the Missouri Division of Finance adopted thereunder. Missouri law and regulations govern the Bank's ability to take deposits and pay interest thereon, to make loans on or invest in residential and other real estate, to make consumer loans, to invest in securities, to offer various banking services to its customers, and to establish branch offices. Under state law, savings banks in Missouri also generally have all of the powers that federal mutual savings banks have under federal laws and regulations. The Bank is subject to periodic examination and reporting requirements by and of the Missouri Division of Finance.

            Federal Securities Law. The stock of the Company is registered with the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As such, the Company is subject to the information, proxy solicitation, insider trading restrictions and other requirements of the SEC under the Exchange Act.

            The Company's stock held by persons who are affiliates (generally officers, directors and principal stockholders) of the Company may not be resold without registration or unless sold in accordance with certain resale restrictions. If the Company meets specified current public information requirements, each affiliate of the Company is able to sell in the public market, without registration, a limited number of shares in any three-month period.

            Federal Reserve System. The Federal Reserve Board ("FRB") requires all depository institutions to maintain non-interest bearing reserves at specified levels against their transaction accounts (checking, NOW and Super NOW checking accounts). At June 30, 2002, the Bank was in compliance with these reserve requirements.

            Savings Banks are authorized to borrow from the Federal Reserve Bank "discount window," but FRB regulations require associations to exhaust other reasonable alternative sources of funds, including FHLB borrowings, before borrowing from the FRB.

            Federal Home Loan Bank System. The Bank is a member of the FHLB of Des Moines, which is one of 12 regional FHLBs that administers the home financing credit function of savings associations. Each FHLB serves as a reserve or central bank for its members within its assigned region. It is funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB System. It makes loans to members (i.e., advances) in accordance with policies and procedures established by the board of directors of the FHLB, which are subject to the oversight of the Federal Housing Finance Board. All advances from the FHLB are required to be fully secured by sufficient collateral as determined by the FHLB. In addition, all long-term advances are required to provide funds for residential home financing. As a member, the Bank is required to purchase and maintain stock in the FHLB of Des Moines. At June 30, 2002, the Bank had $2.4 million in FHLB stock, which was in compliance with this requirement. The Bank is paid a quarterly dividend on this stock which averaged 3.4% in 2002.


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            Under federal law, the FHLBs are required to provide funds for the resolution of troubled savings associations and to contribute to low- and moderately priced housing programs through direct loans or interest subsidies on advances targeted for community investment and low- and moderate-income housing projects. These contributions have adversely affected the level of FHLB dividends paid and could continue to do so in the future. These contributions could also have an adverse effect on the value of FHLB stock in the future. A reduction in value of the Bank's FHLB stock may result in a corresponding reduction in the Bank's capital.

            Deposit Insurance. The FDIC is an independent federal agency that insures the deposits, up to prescribed statutory limits, of depository institutions. The FDIC currently maintains two separate insurance funds: the Bank Insurance Fund ("BIF") and the SAIF. As insurer of the Bank's deposits, the FDIC has examination, supervisory and enforcement authority over the Bank.

            The Bank's accounts are insured by the SAIF to the maximum extent permitted by law. The Bank pays deposit insurance premiums based on a risk-based assessment system established by the FDIC. Under applicable regulations, institutions are assigned to one of three capital groups that are based solely on the level of an institution's capital -- "well capitalized," "adequately capitalized," and "undercapitalized" -- which are defined in the same manner as the regulations establishing the prompt corrective action system, as discussed below. These three groups are then divided into three subgroups, which reflect varying levels of supervisory concern, from those which are considered to be healthy to those which are considered to be of substantial supervisory concern. The matrix so created results in nine assessment risk classifications, with rates that until September 30, 1996 ranged from 0.23% for well capitalized, financially sound institutions with only a few minor weaknesses to 0.31% for undercapitalized institutions that pose a substantial risk of loss to the SAIF unless effective corrective action is taken.

            Pursuant to the Deposit Insurance Funds Act ("DIF Act"), which was enacted on September 30, 1996, the FDIC imposed a special assessment on each depository institution with SAIF-assessable deposits, which resulted in the SAIF achieving its designated reserve ratio. In connection therewith, the FDIC reduced the assessment schedule for SAIF members, effective January 1, 1997, to a range of 0% to 0.27%, with most institutions, including the Bank, paying 0%. This assessment schedule is the same as that for the BIF, which reached its designated reserve ratio in 1995. In addition, since January 1, 1997, SAIF members are charged an assessment based on SAIF-assessable deposits for the purpose of paying interest on the obligations issued by the Financing Corporation ("FICO") in the 1980s to help fund the thrift industry cleanup. The FICO assessment is currently equal to about 1.72 basis points for each $100 in domestic deposits for SAIF and BIF insured institutions.

            The DIF Act provides for the merger of the BIF and the SAIF into the Deposit Insurance Fund on January 1, 1999, but only if no insured depository institution is a savings association on that date. The DIF Act contemplates the development of a common charter for all federally chartered depository institutions and the abolition of separate charters for national banks and federal savings associations. It is not known what form the common charter may take and what effect, if any, the adoption of a new charter would have on the operation of the Bank.

            The FDIC may terminate the deposit insurance of any insured depository institution if it determines after a hearing that the institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, order or any condition imposed by an agreement with the FDIC. It also may suspend deposit insurance temporarily during the hearing process for the permanent termination of insurance, if the institution has no tangible capital. If insurance of accounts is terminated, the accounts at the institution at the time of termination, less subsequent withdrawals, shall continue to be insured for a period of six months to two years, as determined by the FDIC. Management is aware of no existing circumstances that could result in termination of the deposit insurance of the Bank.

            Prompt Corrective Action. Under the FDIA, each federal banking agency is required to implement a system of prompt corrective action for institutions that it regulates. The federal banking agencies have promulgated substantially similar regulations to implement this system of prompt corrective action. Under the regulations, an institution shall be deemed to be (i) "well capitalized" if it has a total risk-based capital ratio of 10.0% or more, has a Tier I risk-based capital ratio of 6.0% or more, has a leverage ratio of 5.0% or more and is not subject to specified requirements to meet and maintain a specific capital level for any capital measure; (ii) "adequately capitalized" if it has a total risk-based capital ratio of 8.0% or more, has a Tier I risk-based capital ratio of 4.0% or more, has a leverage ratio



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of 4.0% or more (3.0% under certain circumstances) and does not meet the definition of "well capitalized;" (iii) "undercapitalized" if it has a total risk-based capital ratio that is less than 8.0%, has a Tier I risk-based capital ratio that is less than 4.0% or has a leverage ratio that is less than 4.0% (3.0% under certain circumstances); (iv) "significantly undercapitalized" if it has a total risk-based capital ratio that is less than 6.0%, has a Tier I risk-based capital ratio that is less than 3.0% or has a leverage ratio that is less than 3.0%; and (v) "critically undercapitalized" if it has a ratio of tangible equity to total assets that is equal to or less than 2.0%.

            A federal banking agency may, after notice and an opportunity for a hearing, reclassify a well capitalized institution as adequately capitalized and may require an adequately capitalized institution or an undercapitalized institution to comply with supervisory actions as if it were in the next lower category if the institution is in an unsafe or unsound condition or has received in its most recent examination, and has not corrected, a less than satisfactory rating for asset quality, management, earnings or liquidity. (The FDIC may not, however, reclassify a significantly undercapitalized institution as critically undercapitalized.)

            An institution generally must file a written capital restoration plan that meets specified requirements, as well as a performance guaranty by each company that controls the institution, with the appropriate federal banking agency within 45 days of the date that the institution receives notice or is deemed to have notice that it is undercapitalized, significantly undercapitalized or critically undercapitalized. Immediately upon becoming undercapitalized, an institution shall become subject to various mandatory and discretionary restrictions on its operations.

            At June 30, 2002, the Bank was categorized as "well capitalized" under the prompt corrective action regulations of the FDIC.

            Standards for Safety and Soundness. The federal banking regulatory agencies have prescribed, by regulation, standards for all insured depository institutions relating to: (i) internal controls, information systems and internal audit systems; (ii) loan documentation; (iii) credit underwriting; (iv) interest rate risk exposure; (v) asset growth; (vi) asset quality; (vii) earnings; and (viii) compensation, fees and benefits ("Guidelines"). The Guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. If the FDIC determines that the Bank fails to meet any standard prescribed by the Guidelines, the agency may require the Bank to submit to the agency an acceptable plan to achieve compliance with the standard. FDIC regulations establish deadlines for the submission and review of such safety and soundness compliance plans.

            Capital Requirements. The FDIC's minimum capital standards applicable to FDIC-regulated banks and savings banks require the most highly-rated institutions to meet a "Tier 1" leverage capital ratio of at least 3% of total assets. Tier 1 (or "core capital") consists of common stockholders' equity, noncumulative perpetual preferred stock and minority interests in consolidated subsidiaries minus all intangible assets other than limited amounts of purchased mortgage servicing rights and certain other accounting adjustments. All other banks must have a Tier 1 leverage ratio of at least 100-200 basis points above the 3% minimum. The FDIC capital regulations establish a minimum leverage ratio of not less than 4% for banks that are not the most highly rated or are anticipating or experiencing significant growth.

            The FDIC's capital regulations require higher capital levels for banks which exhibit more than a moderate degree of risk or exhibit other characteristics which necessitate that higher than minimum levels of capital be maintained. Any insured bank with a Tier 1 capital to total assets ratio of less than 2% is deemed to be operating in an unsafe and unsound condition pursuant to Section 8(a) of the FDIA unless the insured bank enters into a written agreement, to which the FDIC is a party, to correct its capital deficiency. Insured banks operating with Tier 1 capital levels below 2% (and which have not entered into a written agreement) are subject to an insurance removal action. Insured banks operating with lower than the prescribed minimum capital levels generally will not receive approval of applications submitted to the FDIC. Also, inadequately capitalized state nonmember banks will be subject to such administrative action as the FDIC deems necessary.

            FDIC regulations also require that banks meet a risk-based capital standard. The risk-based capital standard requires the maintenance of total capital (which is defined as Tier 1 capital and Tier 2 or supplementary capital) to risk weighted assets of 8% and Tier 1 capital to risk-weighted assets of 4%. In determining the amount of risk-weighted


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assets, all assets, plus certain off balance sheet items, are multiplied by a risk-weight of 0% to 100%, based on the risks the FDIC believes are inherent in the type of asset or item. The components of Tier 1 capital are equivalent to those discussed above under the 3% leverage requirement. The components of supplementary capital currently include cumulative perpetual preferred stock, adjustable-rate perpetual preferred stock, mandatory convertible securities, term subordinated debt, intermediate-term preferred stock and allowance for possible loan and lease losses. Allowance for possible loan and lease losses includable in supplementary capital is limited to a maximum of 1.25% of risk-weighted assets. Overall, the amount of capital counted toward supplementary capital cannot exceed 100% of Tier 1 capital. The FDIC includes in its evaluation of a bank's capital adequacy an assessment of the exposure to declines in the economic value of the bank's capital due to changes in interest rates. However, no measurement framework for assessing the level of a bank's interest rate risk exposure has been codified. In the future, the FDIC will issue a proposed rule that would establish an explicit minimum capital charge for interest rate risk, based on the level of a bank's measured interest rate risk exposure.

            An undercapitalized, significantly undercapitalized, or critically undercapitalized institution is required to submit an acceptable capital restoration plan to its appropriate federal banking agency. The plan must specify (i) the steps the institution will take to become adequately capitalized, (ii) the capital levels to be attained each year, (iii) how the institution will comply with any regulatory sanctions then in effect against the institution and (iv) the types and levels of activities in which the institution will engage. The banking agency may not accept a capital restoration plan unless the agency determines, among other things, that the plan "is based on realistic assumptions, and is likely to succeed in restoring the institution's capital" and "would not appreciably increase the risk...to which the institution is exposed."

            The FDIA provides that the appropriate federal regulatory agency must require an insured depository institution that is significantly undercapitalized or is undercapitalized and either fails to submit an acceptable capital restoration plan within the time period allowed or fails in any material respect to implement a capital restoration plan accepted by the appropriate federal banking agency to take one or more of the following actions: (i) sell enough shares, including voting shares, to become adequately capitalized; (ii) merge with (or be sold to) another institution (or holding company), but only if grounds exist for appointing a conservator or receiver; (iii) restrict certain transactions with banking affiliates as if the "sister bank" requirements of Section 23A of the Federal Reserve Act ("FRA") did not exist; (iv) otherwise restrict transactions with bank or non-bank affiliates; (v) restrict interest rates that the institution pays on deposits to "prevailing rates" in the institution's region; (vi) restrict asset growth or reduce total assets; (vii) alter, reduce or terminate activities; (viii) hold a new election of directors; (ix) dismiss any director or senior executive officer who held office for more than 180 days immediately before the institution became undercapitalized; (x) employ "qualified" senior executive officers; (xi) cease accepting deposits from correspondent depository institutions; (xii) divest certain non-depository affiliates which pose a danger to the institution; (xiii) be divested by a parent holding company; and (xiv) take any other action which the agency determines would better carry out the purposes of the Prompt Corrective Action provisions. See "-- Prompt Corrective Action."

            The FDIC has adopted the Federal Financial Institutions Examination Council's recommendation regarding the adoption of Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Specifically, the agencies determined that net unrealized holding gains or losses on available for sale debt and equity securities should not be included when calculating core and risk-based capital ratios.
            FDIC capital requirements are designated as the minimum acceptable standards for banks whose overall financial condition is fundamentally sound, which are well-managed and have no material or significant financial weaknesses. The FDIC capital regulations state that, where the FDIC determines that the financial history or condition, including off-balance sheet risk, managerial resources and/or the future earnings prospects of a bank are not adequate and/or a bank has a significant volume of assets classified substandard, doubtful or loss or otherwise criticized, the FDIC may determine that the minimum adequate amount of capital for that bank is greater than the minimum standards established in the regulation.

            The Bank's management believes that, under the current regulations, the Bank will continue to meet its minimum capital requirements in the foreseeable future. However, events beyond the control of the Bank, such as a downturn in the economy in areas where the Bank has most of its loans, could adversely affect future earnings and, consequently, the ability of the Bank to meet its capital requirements.


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            The table below sets forth the Bank's capital position relative to its FDIC capital requirements at June 30, 2002. The definitions of the terms used in the table are those provided in the capital regulations issued by the FDIC.

	At June 30, 2002
	Amount	Percent of Adjusted Total Assets(1)
	(Dollars in thousands)
Tier 1 (leverage) capital	$19,511	7.58%
Tier 1 (leverage) capital requirement(2)	10,385	4.0
Excess	$  9,126	3.5%
Tier 1 risk adjusted capital	$19,511	11.3%
Tier 1 risk adjusted capital requirement	6,894	4.0
Excess	$12,617	7.3%
Total risk-based capital	$21,080	12.2%
Total risk-based capital requirement	13,788	8.0
Excess	$  7,292	4.2%

__________________

(1)

For the Tier 1 (leverage) capital and Missouri regulatory capital calculations, percent of total average assets of $260 million. For the Tier 1 risk-based capital and total risk-based capital calculations, percent of total risk-weighted assets of $112 million.

(1)

As a Missouri-chartered savings bank, the Bank is subject to the capital requirements of the FDIC and the Missouri Division of Finance. The FDIC requires state-chartered savings banks, including the Bank, to have a minimum leverage ratio of Tier 1 capital to total assets of at least 3%, provided, however, that all institutions, other than those (i) receiving the highest rating during the examination process and (ii) not anticipating any significant growth, are required to maintain a ratio of 1% to 2% above the stated minimum, with an absolute total capital to risk-weighted assets of at least 8%. The Bank has not been notified by the FDIC of any leverage capital requirement specifically applicable to it.

            Loans to One Borrower. As a result of the 10(1) Election made by the Bank in connection with the Charter Conversion (see "Item 1. Description of Business - General,") the Bank remains subject to the loans to one borrower regulations applicable to federal savings associations.

            Activities and Investments of Insured State-Chartered Banks. The FDIA generally limits the activities and equity investments of FDIC-insured, state-chartered banks to those that are permissible for national banks. Under regulations dealing with equity investments, an insured state bank generally may not directly or indirectly acquire or retain any equity investment of a type, or in an amount, that is not permissible for a national bank. An insured state bank is not prohibited from, among other things, (i) acquiring or retaining a majority interest in a subsidiary, (ii) investing as a limited partner in a partnership the sole purpose of which is direct or indirect investment in the acquisition, rehabilitation or new construction of a qualified housing project, provided that such limited partnership investments may not exceed 2% of the bank's total assets, (iii) acquiring up to 10% of the voting stock of a company that solely provides or reinsures directors', trustees' and officers' liability insurance coverage or bankers' blanket bond group insurance coverage for insured depository institutions, and (iv) acquiring or retaining the voting shares of a depository institution if certain requirements are met.

            Subject to certain regulatory exceptions, FDIC regulations provide that an insured state-chartered bank may not, directly, or indirectly through a subsidiary, engage as "principal" in any activity that is not permissible for a national bank unless the FDIC has determined that such activities would pose no risk to the insurance fund of which it is a member and the bank is in compliance with applicable regulatory capital requirements. Any insured state-chartered bank directly or indirectly engaged in any activity that is not permitted for a national bank or for which the FDIC has granted and exception must cease the impermissible activity.


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            Affiliate Transactions. The Company and the Bank are legal entities separate and distinct. Various legal limitations restrict the Bank from lending or otherwise supplying funds to the Company (an "affiliate"), generally limiting such transactions with the affiliate to 10% of the bank's capital and surplus and limiting all such transactions to 20% of the bank's capital and surplus. Such transactions, including extensions of credit, sales of securities or assets and provision of services, also must be on terms and conditions consistent with safe and sound banking practices, including credit standards, that are substantially the same or at least as favorable to the bank as those prevailing at the time for transactions with unaffiliated companies.

            Federally insured banks are subject, with certain exceptions, to certain restrictions on extensions of credit to their parent holding companies or other affiliates, on investments in the stock or other securities of affiliates and on the taking of such stock or securities as collateral from any borrower. In addition, such banks are prohibited from engaging in certain tie-in arrangements in connection with any extension of credit or the providing of any property or service.

            Qualified Thrift Lender Test. As a result of the 10(l) Election made by the Bank in connection with its conversion to a state savings bank (see Item 1. Description of Business -- General"), the Bank remains subject to the qualified thrift lender ("QTL") test applicable to federal savings associations.

            All savings associations are required to meet a QTL test to avoid certain restrictions on their operations. A savings institution that fails to become or remain a QTL shall either convert to a national bank charter or be subject to the following restrictions on its operations: (i) the Bank may not make any new investment or engage in activities that would not be permissible for national banks; (ii) the Bank may not establish any new branch office where a national bank located in the savings institution's home state would not be able to establish a branch office; (iii) the Bank shall be ineligible to obtain new advances from any FHLB; and (iv) the payment of dividends by the Bank shall be subject to the rules regarding the statutory and regulatory dividend restrictions applicable to national banks. Also, beginning three years after the date on which the savings institution ceases to be a QTL, the savings institution would be prohibited from retaining any investment or engaging in any activity not permissible for a national bank and would be required to repay any outstanding advances to any FHLB. In addition, within one year of the date on which a savings association controlled by a company ceases to be a QTL, the company must register as a bank holding company and become subject to the rules applicable to such companies. A savings institution may requalify as a QTL if it thereafter complies with the QTL test.

            Currently, the QTL test requires that either an institution qualify as a domestic building and loan association under the Internal Revenue Code or that 65% of an institution's "portfolio assets" (as defined) consist of certain housing and consumer-related assets on a monthly average basis in nine out of every 12 months. Assets that qualify without limit for inclusion as part of the 65% requirement are loans made to purchase, refinance, construct, improve or repair domestic residential housing and manufactured housing; home equity loans; mortgage-backed securities (where the mortgages are secured by domestic residential housing or manufactured housing); FHLB stock; direct or indirect obligations of the FDIC; and loans for educational purposes, loans to small businesses and loans made through credit cards. In addition, the following assets, among others, may be included in meeting the test subject to an overall limit of 20% of the savings institution's portfolio assets: 50% of residential mortgage loans originated and sold within 90 days of origination; 100% of consumer loans; and stock issued by FHLMC or FNMA. Portfolio assets consist of total assets minus the sum of (i) goodwill and other intangible assets, (ii) property used by the savings institution to conduct its business, and (iii) liquid assets up to 20% of the institution's total assets. At June 30, 2002, the Bank was in compliance with the QTL test.

            Community Reinvestment Act. Banks are also subject to the provisions of the Community Reinvestment Act of 1977 ("CRA"), which requires the appropriate federal bank regulatory agency, in connection with its regular examination of a bank, to assess the bank's record in meeting the credit needs of the community serviced by the bank, including low and moderate income neighborhoods. The regulatory agency's assessment of the bank's record is made available to the public. Further, such assessment is required of any bank which has applied, among other things, to establish a new branch office that will accept deposits, relocate an existing office or merge or consolidate with, or acquire the assets or assume the liabilities of, a federally regulated financial institution. The Bank received a "satisfactory" rating during its most recent CRA examination.


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            Dividends. Dividends from the Bank constitute the major source of funds for dividends, which may be paid by the Company. The amount of dividends payable by the Bank to the Company depends upon the Bank's earnings and capital position, and is limited by federal and state laws, regulations and policies.

            The amount of dividends actually paid during any one period will be strongly affected by the Bank's management policy of maintaining a strong capital position. Federal law further provides that no insured depository institution may make any capital distribution (which would include a cash dividend) if, after making the distribution, the institution would be "undercapitalized," as defined in the prompt corrective action regulations. Moreover, the federal bank regulatory agencies also have the general authority to limit the dividends paid by insured banks if such payments should be deemed to constitute an unsafe and unsound practice.

The Company

            General. As a result of the 10(l) Election made by the Bank, in connection with the charter conversion, the Company is a savings and loan holding company regulated by the OTS (for as long as the Bank satisfies the QTL test) rather than a bank holding company regulated by the Federal Reserve Board. Accordingly, the Company is subject to OTS regulations and filing requirements.

            Holding Company Acquisitions. The HOLA and OTS regulations issued thereunder generally prohibit a savings and loan holding company, without prior OTS approval, from acquiring more than 5% of the voting stock of any other savings association or savings and loan holding company or controlling the assets thereof. They also prohibit, among other things, any director or officer of a savings and loan holding company, or any individual who owns or controls more than 25% of the voting shares of such holding company, from acquiring control of any savings association not a subsidiary of such savings and loan holding company, unless the acquisition is approved by the OTS.

            Holding Company Activities. As a unitary savings and loan holding company, the Company generally is not subject to activity restrictions under the HOLA. If the Company acquires control of another savings association as a separate subsidiary other than in a supervisory acquisition, it would become a multiple savings and loan holding company. There generally are more restrictions on the activities of a multiple savings and loan holding company than on those of a unitary savings and loan holding company. The HOLA provides that, among other things, no multiple savings and loan holding company or subsidiary thereof which is not an insured association shall commence or continue for more than two years after becoming a multiple savings and loan association holding company or subsidiary thereof, any business activity other than: (i) furnishing or performing management services for a subsidiary insured institution, (ii) conducting an insurance agency or escrow business, (iii) holding, managing, or liquidating assets owned by or acquired from a subsidiary insured institution, (iv) holding or managing properties used or occupied by a subsidiary insured institution, (v) acting as trustee under deeds of trust, (vi) those activities previously directly authorized by regulation as of March 5, 1987 to be engaged in by multiple holding companies or (vii) those activities authorized by the Federal Reserve Board as permissible for bank holding companies, unless the OTS by regulation, prohibits or limits such activities for savings and loan holding companies. Those activities described in (vii) above also must be approved by the OTS prior to being engaged in by a multiple savings and loan holding company.

            Qualified Thrift Lender Test. The HOLA provides that any savings and loan holding company that controls a savings association that fails the QTL test, as explained under "-- The Bank -- Qualified Thrift Lender Test," must, within one year after the date on which the Bank ceases to be a QTL, register as and be deemed a bank holding company subject to all applicable laws and regulations.






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TAXATION

Federal Taxation

            General. The Company and the Bank report their income on a fiscal year basis using the accrual method of accounting and are subject to federal income taxation in the same manner as other corporations with some exceptions, including particularly the Bank's reserve for bad debts discussed below. The following discussion of tax matters is intended only as a summary and does not purport to be a comprehensive description of the tax rules applicable to the Bank or the Company.

            Bad Debt Reserve. Historically, savings institutions, such as the Bank used to be, which met certain definitional tests primarily related to their assets and the nature of their business ("qualifying thrift"), were permitted to establish a reserve for bad debts and to make annual additions thereto, which may have been deducted in arriving at their taxable income. The Bank's deductions with respect to "qualifying real property loans," which are generally loans secured by certain interest in real property, were computed using an amount based on the Bank's actual loss experience, or a percentage equal to 8% of the Bank's taxable income, computed with certain modifications and reduced by the amount of any permitted additions to the non-qualifying reserve. Due to the Bank's loss experience, the Bank generally recognized a bad debt deduction equal to 8% of taxable income.

            The thrift bad debt rules were revised by Congress in 1996. The new rules eliminated the 8% of taxable income method for deducting additions to the tax bad debt reserves for all thrifts for tax years beginning after December 31, 1995. These rules also required that all institutions recapture all or a portion of their bad debt reserves added since the base year (last taxable year beginning before January 1, 1988). The Bank has no post-1987 reserves subject to recapture. For taxable years beginning after December 31, 1995, the Bank's bad debt deduction is determined under the experience method using a formula based on actual bad debt experience over a period of years. The unrecaptured base year reserves will not be subject to recapture as long as the institution continues to carry on the business of banking. In addition, the balance of the pre-1988 bad debt reserves continue to be subject to provisions of present law referred to below that require recapture in the case of certain excess distributions to shareholders.

            Distributions. To the extent that the Bank makes "nondividend distributions" to the Company, such distributions will be considered to result in distributions from the balance of its bad debt reserve as of December 31, 1987 (or a lesser amount if the Bank's loan portfolio decreased since December 31, 1987) and then from the supplemental reserve for losses on loans ("Excess Distributions"), and an amount based on the Excess Distributions will be included in the Bank's taxable income. Nondividend distributions include distributions in excess of the Bank's current and accumulated earnings and profits, distributions in redemption of stock and distributions in partial or complete liquidation. However, dividends paid out of the Bank's current or accumulated earnings and profits, as calculated for federal income tax purposes, will not be considered to result in a distribution from the Bank's bad debt reserve. The amount of additional taxable income created from an Excess Distribution is an amount that, when reduced by the tax attributable to the income, is equal to the amount of the distribution. Thus, if the Bank makes a "nondividend distribution," then approximately one and one-half times the Excess Distribution would be includable in gross income for federal income tax purposes, assuming a 34% corporate income tax rate (exclusive of state and local taxes). See "REGULATION" for limits on the payment of dividends by the Bank. The Bank does not intend to pay dividends that would result in a recapture of any portion of its tax bad debt reserve.

            Corporate Alternative Minimum Tax. The Internal Revenue Code imposes a tax on alternative minimum taxable income ("AMTI") at a rate of 20%. In addition, only 90% of AMTI can be offset by net operating loss carry-overs. AMTI is increased by an amount equal to 75% of the amount by which the Bank's adjusted current earnings exceeds its AMTI (determined without regard to this preference and prior to reduction for net operating losses). For taxable years beginning after December 31, 1986, and before January 1, 1996, an environmental tax of 0.12% of the excess of AMTI (with certain modification) over $2.0 million is imposed on corporations, including the Bank, whether or not an Alternative Minimum Tax is paid.

            Dividends-Received Deduction. The Company may exclude from its income 100% of dividends received from the Bank as a member of the same affiliated group of corporations. The corporate dividends-received deduction is generally 70% in the case of dividends received from unaffiliated corporations with which the Company and the Bank


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will not file a consolidated tax return, except that if the Company or the Bank owns more than 20% of the stock of a corporation distributing a dividend, then 80% of any dividends received may be deducted.

Missouri Taxation

            Missouri-based savings banks, such as the Bank, are subject to a special financial institutions tax, based on net income without regard to net operating loss carryforwards, at the rate of 7% of net income. This tax is in lieu of certain other state taxes on thrift institutions, on their property, capital or income, except taxes on tangible personal property owned by the Bank and held for lease or rental to others and on real estate, contributions paid pursuant to the Unemployment Compensation Law of Missouri, social security taxes, sales taxes and use taxes. In addition, the Company is entitled to credit against this tax all taxes paid to the State of Missouri or any political subdivision except taxes on tangible personal property owned by the Bank and held for lease or rental to others and on real estate, contributions paid pursuant to the Unemployment Compensation Law of Missouri, social security taxes, sales and use taxes, and taxes imposed by the Missouri Financial Institutions Tax Law. Missouri savings banks are not subject to the regular state corporate income tax.

Audits

            There have not been any IRS audits of the Company's Federal income tax returns or audits of the Bank's state income tax returns during the past five years.

            For additional information regarding taxation, see Note 12 of Notes to Consolidated Financial Statements contained in the Annual Report.

Personnel

            As of June 30, 2002, the Company had 82 full-time employees and 12 part-time employees. The Company believes that employees play a vital role in the success of a service company and that the Company's relationship with its employees is good. The employees are not represented by a collective bargaining unit.




















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Item 2.            Description of Properties

            The following table sets forth certain information regarding the Bank's offices as of June 30, 2002.

Location	Year Opened	Building Net Book Value as of June 30, 2002	Land Owned/ Leased	Building Owned/
	(Dollars in thousands)
Main Office
531 Vine Street Poplar Bluff, Missouri	1966	$576	Owned	Owned
Branch Offices
Highway 60 Van Buren, Missouri	1982	135	Owned	Owned
1330 Highway 67 Poplar Bluff, Missouri	1976	---	Leased(1)	Owned
Highway PP Poplar Bluff, Missouri	2001	918	Owned	Owned
Business 60 West Dexter, Missouri	1979	200	Owned	Owned
301 First Street Kennett, Missouri	1982	1,012	Owned	Owned
302 Washington Doniphan, Missouri	2001	958	Owned	Owned
Highway 53 Quiln, Missouri	2000	67	Owned	Owned

______________________

(1) Lease expires on November 30, 2014.

Item 3.            Legal Proceedings

            In the opinion of management, the Bank is not a party to any pending claims or lawsuits that are expected to have a material effect on the Bank's financial condition or operations. Periodically, there have been various claims and lawsuits involving the Bank mainly as a defendant, such as claims to enforce liens, condemnation proceedings on properties in which the Bank holds security interests, claims involving the making and servicing of real property loans and other issues incident to the Bank's business. Aside from such pending claims and lawsuits, which are incident to the conduct of the Bank's ordinary business, the Bank is not a party to any material pending legal proceedings that would have a material effect on the financial condition or operations of the Bank.

Item 4.            Submission of Matters to a Vote of Security Holders

            No matters were submitted to a vote of security holders during the quarter ended June 30, 2002.




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PART II
Item 5.            Market for the Registrant's Common Equity and Related Stockholder Matters

            The information contained in the section captioned "Common Stock" in the Annual Report is incorporated herein by reference.

Item 6.            Management's Discussion and Analysis or Plan of Operation

            The information contained in the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report is incorporated herein by reference.

Item 7.            Financial Statements

Independent Auditors' Report*
(a)	Consolidated Statements of Financial Condition as of June 30, 2002 and 2001*
(b)	Consolidated Statements of Income for the Years Ended June 30, 2002, 2001 and 2000*
(c)	Consolidated Statements of Stockholders' Equity For the Years Ended June 30, 2002, 2001 and 2000*
(d)	Consolidated Statements of Cash Flows For the Years Ended June 30, 2002, 2001 and 2000*
(e)	Notes to Consolidated Financial Statements*

* Contained in the Annual Report filed as an exhibit hereto and incorporated herein by reference. All schedules have been omitted as the required information is either inapplicable or contained in the Consolidated Financial Statements or related Notes contained in the Annual Report.

Item 8.            Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

            No disagreement with the Company's independent accountants on accounting and financial disclosure has occurred during the two most recent fiscal years.



PART III

Item 9.            Directors, Executive Officers, Promoters and Control Persons; Compliance with
                       Section 16(a) of the Exchange Act

Directors

            Information concerning the Directors of the Company is incorporated herein by reference from the definitive proxy statement for the annual meeting of shareholder to be held in October 2002, a copy of which will be filed not later than 120 days after the close of the fiscal year.

Executive Officers

            Information concerning the Executive Officers of the Company is incorporated herein by reference from the definitive proxy statement for the annual meeting of shareholders to be held in October 2002, except for information contained under the heading "Report of the Audit Committee," a copy of which will be field not later than 120 days after the close of the fiscal year.


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Section 16(b) Compliance

            Section 16(a) of the Securities Exchange Act of 1934 requires that the Company's directors and executive officers, and persons who own more than 10% of the Company's Common Stock, file with the SEC initial reports of ownership and reports of changes in ownership of the Company's Common Stock. Officers, directors and greater than 10% shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

            Southern Missouri Bancorp is aware of the late filing of a Form 4 for Thadis R. Seifert relating to Mr. Seifert's purchase of 2,000 shares of Company common stock in February, 2001. In addition, a Form 4 representing the purchase of 76 shares by Mr. Bagby over a period of time through the reinvestment of dividends earned on Southern Missouri Bancorp common stock was not filed in a timely manner. Except as set forth above, to the Company's knowledge no other late reports occurred during the fiscal year ended June 30, 2002. All other Section 16(a) filing requirements applicable to our executive officers, directors and greater than 10% beneficial owners were complied with.

Item 10.            Executive Compensation

            Information concerning executive compensation is incorporated herein by reference from the definitive proxy statement for the annual meeting of shareholders to be held in October 2002, except for information contained under the heading "Report of the Audit Committee," a copy of which will be filed not later than 120 days after the close of the fiscal year.

Item 11.            Security Ownership of Certain Beneficial Owners and Management

            Information concerning security ownership of certain beneficial owners and management is incorporated herein by reference from the definitive proxy statement for the annual meeting of shareholders to be held in October 2002, except for information contained under the heading "Report of the Audit Committee," a copy of which will be filed not later than 120 days after the close of the fiscal year.

Equity Compensation Plan Information

Plan Category	Number of securities to be issued upon exercise of outstanding options warrants and rights	Weighted-average exercise price of outstanding options warrants and rights	Number of Securities remaining available for future issuance under equity compensation plans
Equity Compensation Plans Approved By Security Holders	98,257	$13.67	47,050
Equity Compensation Plans Not Approved By Security Holders	---	---	---

Item 12.            Certain Relationships and Related Transactions

            Information concerning certain relationships and related transactions is incorporated herein by reference from the definitive proxy statement for the annual meeting of shareholders to be held in October 2002, except for information contained under the heading "Report of the Audit Committee," a copy of which will be filed not later than 120 days after the close of the fiscal year.


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Item 13.            Controls and Procedures

            In the year ended June 30, 2002, the Company did not make any significant changes in, nor take any corrective actions regarding, its internal controls or other factors that could significantly affect these controls. The Company periodically reviews its internal controls for effectiveness, but did not conduct such a review during this period. In the future, the Company plans to conduct an evaluation of its disclosure controls and procedures each quarter.

Item 14.            Exhibits, List and Reports on Form 8-K

            (a)            Exhibits

                        See Index to Exhibits.

            (b)            Report on Form 8-K

                        No reports on Form 8-K were filed during the quarter ended June 30, 2002.






































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SIGNATURES

            Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		SOUTHERN MISSOURI BANCORP, INC.
Date: September 30, 2002	By:	/s/ Greg A. Steffens Greg A. Steffens President (Duly Authorized Representative)

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

By:	/s/ Thadis R. Seifert Thadis R. Seifert Chairman of the Board of Directors	September 30, 2002
By:	/s/ Greg A. Steffens Greg A. Steffens President (Principal Executive and Financial and Accounting Officer)	September 30, 2002
By:	/s/ Leonard W. Ehlers Leonard W. Ehlers Director and Vice Chairman	September 30, 2002
By:	/s/ Samuel H. Smith Samuel H. Smith Director and Secretary	September 30, 2002
By:	/s/ James W. Tatum James W. Tatum Vice President and Director	September 30, 2002
By:	/s/ Ronnie D. Black Ronnie D. Black Director	September 30, 2002
By:	/s/ L. Douglas Bagby L. Douglas Bagby Director	September 30, 2002
By:	/s/ Sammy A. Schalk Sammy A. Schalk Director	September 30, 2002

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CERTIFICATION
I, Greg A. Steffens, certify that:

1. I have reviewed this annual report on Form 10-KSB of Southern Missouri Bancorp, Inc.;
    
2. Based on my knowledge, this annual report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
    
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report.

Date: September 30, 2002 By: /s/ Greg A. Steffens Greg A. Steffens
President
(Principal Executive and Principal Financial
  and Accounting Officer)

CERTIFICATION
            Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned hereby certifies in his capacity as an officer of Southern Missouri Bancorp, Inc. (the "Company") that the Annual Report of the Company on Form 10-KSB for the fiscal year ended June 30, 2002 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statements included in such report.

Date: September 30, 2002 By: /s/ Greg A. Steffens Greg A. Steffens
President
(Principal Executive and Principal Financial
  and Accounting Officer)

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Index to Exhibits

Regulation S-B Exhibit Number	Document			Reference to Prior Filing or Exhibit Number Attached Hereto
3(i)	Certificate of Incorporation of the Registrant			++
3(ii)	Bylaws of the Registrant			++
10	Material contracts:
	(a)	Registrant's 1994 Stock Option Plan		*
	(b)	Southern Missouri Savings Bank, FSB Management Recognition and Development Plans		*
	(c)	Employment Agreements:		**
		(i)	Greg A. Steffens	**
		(ii)	James W. Duncan	****
	(d)	Director's Retirement Agreements
		(i)	Robert A. Seifert	***
		(ii)	Thadis R. Seifert	***
		(iv)	Leonard W. Ehlers	***
		(v)	James W. Tatum	***
		(vi)	Samuel H. Smith	***
		(vii)	Sammy A. Schalk	****
		(viii)	Ronnie D. Black	****
		(ix)	L. Douglas Bagby	****
	(e)	Tax Sharing Agreement		***
11	Statement Regarding Computation of Per Share Earnings			11
13	2002 Annual Report to Stockholders			13
21	Subsidiaries of the Registrant			21
23	Consent of Auditors			23

_______________________

*	Filed as an exhibit to the Registrant's 1994 annual meeting proxy statement dated October 21, 1994.
**	Filed as an exhibit to the Registrant's Annual Report on Form 10-KSB for the year ended June 30, 1999.
***	Filed as an exhibit to the Registrant's Annual Report on Form 10-KSB for the year ended June 30, 1995.
****	Filed as an exhibit to the registrant's Report on Form 10-QSB for the quarter ended December 31, 2000.
++	Filed as an exhibit to the Registrant's Annual Report on Form 10-KSB for the year ended June 30, 1999.

End.

EX-11

EXHIBIT 11

Statement Regarding Computation of Per Share Earnings


SOUTHERN MISSOURI BANCORP, INC. AND SUBSIDIARY STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS

			Year Ended June 30,
			2002	2001	2000
			(Dollars in thousands)
Basic
	Average shares outstanding		1,192,612	1,229,652	1,277,562
	Net income		$2,308,903	$1,548,602	$1,320,169
	Basic earnings per share		$1.94	$1.26	$1.03
Diluted
	Average shares outstanding		1,192,612	1,229,652	1,277,562
Net effect of dilutive stock options - based on the treasury stock method using the period end market price, if greater than average market price			22,397	10,507	13,496
		Total	1,215,009	1,240,159	1,291,058
	Net income		$2,308,903	$1,548,602	$1,320,169
	Diluted earnings per share		$1.90	$1.25	$1.02

EX-13

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CORPORATE PROFILE

Southern Missouri Bancorp, Inc. is the holding company for Southern Missouri Bank & Trust, Co. (Southern Missouri Bank). Its stock is traded on the NASDAQ Stock Market under the symbol SMBC. While the company's history goes back 115 years, the past 3 years have truly marked a new era in company focus and performance.

In recent years, the bank's management team has succeeded in generating substantial growth through a strategy of continuing to build the bank's traditional core businesses of home loans and traditional deposit products, while at the same time increasing its geographic footprint and successfully introducing new, higher-margin products.

TABLE OF CONTENTS

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

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FINANCIAL HIGHLIGHTS

	2002		2001		Change(%)
Earnings (dollars in thousands)
Net interest income	$     8,854		$     6,671		32.7
Provision for possible loan losses	350		510		(31.4	)
Other income	874		1,447		(39.6	)
Other expense	5,872		5,219		12.5
Income taxes	1,197		840		42.5
Net income	2,309		1,549		49.1
Per Common Share
Net income:
Basic	$       1.94		$       1.26		54.0
Diluted	1.90		1.25		52.0
Shareholders' equity (diluted book value)	20.34		18.53		9.8
Closing market price	19.25		14.00		37.5
Cash dividends declared	.50		.50		0.0
At Year-End (dollars in thousands)
Total assets	$  266,288		$  240,494		10.8
Earning assets	252,596		226,815		11.4
Loans	211,212		180,857		16.8
Nonperforming assets	719		1,659		(56.7	)
Reserves as a percent of nonperforming loans	466.2	%	299.1	%
Deposits	$  188,947		$  173,281		9.0
Shareholders' equity	24,511		23,582		3.9
Financial Ratios
Return on shareholders' equity	9.77	%	6.86	%
Return on assets	.91		.71
Net interest margin	3.67		3.22
Efficiency ratio	60.37		64.29
Allowance for possible loan losses to loans	.73		.79
Equity to average assets at year-end	9.29		10.29
Other Data(1)
Common shares outstanding	1,803,201		1,803,201
Average common and equivalent     shares outstanding	1,215,009		1,240,159
Shareholders of record	314		313
Full-time equivalent employees	87		83
Assets per employee (in thousands)	$     3,061		$     2,897
Banking offices	8		8

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

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LETTER TO SHAREHOLDERS

Dear Shareholder:

All the heavy groundwork undertaken by management during our first three years here made fiscal 2002 a year of excellent growth for the company, and a very enjoyable year for us as we see all our hard work rewarded by this year's performance.

     Earnings per share rose 52%, from $1.25 to $1.90. Net income rose 49%, from $1,548,602 to $2,308,903. Total loans, total deposits and total assets all continued their trends upward.

     On a personal level, I am satisfied with the growth in our earnings per share and I am optimistic about the company's future. Before coming to my current position, it was my good fortune to be actively involved in orchestrating similar improvements at another Missouri institution. We are on track to accomplish the same thing here.

     The hard part -- staging for growth -- is behind us. Momentum is beginning to build and the main task now is to stay on the solid course we have laid out for our company's future. Our confidence in the company's future is reflected by the 12% dividend increase authorized by the board for the first quarter of 2003 from $0.125 to $.14 a share.

Improving ROE
This year, we have surpassed our peers on this most closely watched and important measurement.



(1) Peer data compares SMBC fiscal year-end figures (June) with the average of publicly traded peers' most recent fiscal year-end figures (December).

(2) Peer data information is based on the average of the latest data available from SNL DataSource's Index of Missouri publicly traded thrifts.

Return On Equity vs. Peer Banks

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THIS TEAM CAME TOGETHER...

Pictured at right are the five managers who have been at the helm of Southern Missouri Bank for the past three years.      Greg Steffens, CEO, was chosen by the board because he had been on a team that accomplished, at a similar-size bank in Missouri, the goals of business growth and profitability that had been set for Southern Missouri. Having spent much of his career as a bank regulator, Greg has personally examined dozens of Midwestern financial institutions and seen first-hand which strategies work and which don't.      Since coming together as a team at Southern Missouri Bank, this group has put the bank firmly on a path of growth. The list below shows some of their more significant accomplishments in the three short years they've been here.

Left to right, Jim Duncan, Adrian Rushing, Greg Steffens, Bill Hribovsek, Kimberly Capps

...MADE THESE CHANGES...

Improved Operations Automated check processing Converted to new data processing system Streamlined loan processing	Improved Services Introduced Cash Management Expanded Commercial Lending Introduced Money Market Passbooks Established Telephone Banking Established Internet Banking & Bill Pay	Improved Offices Sold two under-performing offices Purchased two Commerce Bank offices Built new PP Highway office Built new Doniphan office

...AND PRODUCED THESE RESULTS

Growth Is The Goal By more effectively selling services we have always offered, and selectively adding higher-margin services, we are aiming for continued growth.

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LETTER TO SHAREHOLDERS

   The economic downturn felt in many other parts of the country has not been as severe in Southeast Missouri. Businesses in this area are generally doing well. This has helped us get off to a very good start with our re-energized commercial lending business. Home loans continue to be our primary business, and the low mortgage rates available throughout the year have produced growth in that area, too.

   Our performance compared to our peer banks continues to improve. We now stand in the top quintile on growth and have surpassed our peer groups Return On Equity. This is what we and most industry analysts believe is the single most important measure of overall success.

   We remain the region's leading provider of home loans, growing that business 26% in the past three years from $95 million to $120 million. Home loans continue to be the foundation for our company because they are relatively low risk and offer solid growth opportunity. Historically, homes have retained their value, which makes them excellent collateral. Borrowers tend not to walk away from these loans because that would mean walking away from their homes.

AMERICAN BANKER THE FINANCIAL SERVICES DAILYJuly 10, 2002 "Flight To Safety" Driving Capital To Small Banks"
The "flight to safety" that has followed controversies involving Enron Corp., Global Crossing, and WorldCom Inc. has pumped up the share prices of small banks and savings institutions. Across the country, community institutions' stocks, once thinly traded, have surged thanks to what Nickolas J. Barbarine, a partner in Hovde Financial LLC in Washington, called "value plays" by wealthy investors and fund managers.	...To be sure, bank stocks have generally been outperforming the broader markets since the technology bubble burst two years ago. But while there are signs that large-bank stocks may have peaked in recent months, investors continue to flock to community banks, analysts and fund managers say. Reprinted with permission. Copyright American Banker 2002.	Stock Price Climbs 38% Even though our stock price rose from $14.00 a share to $19.25 a share this past year, our PE ratio remains low compared to the average of our peers. (1) Peer data information is based on the average of the latest data available from SNL DataSource's Index of Missouri publicly traded thrifts.

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Growth On Top
Of Growth
Increasing our consumer/ home loans and deposit business, while building our newer commercial loan and Money Market Passbook business has made this a year of greater growth and profitability.

Adding Money Market Passbook accounts to our deposit offerings, and commercial loans to our lending mix, has improved our profitability and contributed to the 57 basis point increase in interest rate spread during 2002.

(1) Peer data compares SMBC fiscal year-end figures (June) with the average of publicly traded peers' most recent fiscal year-end figures (December).

(2) Peer data information is based on the average of the latest data available from SNL DataSource's Index of Missouri publicly traded thrifts.

opportunity. Historically, homes have retained their value, which makes them excellent collateral. Borrowers tend not to walk away from these loans because that would mean walking away from their homes.

   Without reducing our focus on home loans, we have placed more emphasis on making loans to businesses in our community. In the past three years, we doubled our commercial real estate loans and business loans grew from 1% of our total loans ($1 million) to 14% ($29 million).

   Our offerings to area businesses now extend well beyond financing and include cash management and business checking services.

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LETTER TO SHAREHOLDERS

Today, Southern Missouri Bank is much different than it was when we began managing it three years ago.

In the past three years, deposits grew 58% from $120 million to $189 million. Not only did our established deposit products - CDs, checking and savings - grow substantially, our new Money Market Passbook product reached $48 million and now represents 25% of our total deposits.

   Recent changes had a positive impact on this year's performance. Our new location at PP Highway makes us the first bank to provide full-service banking in this high-growth area of Poplar Bluff. Last Fall, we moved our Doniphan branch to a new location, giving us a stronger presence in that market. This year also saw the introduction of Internet Banking & Bill Pay, Telephone Banking and Cash Management for our customers.

   Southern Missouri Bank is clearly a very different organization than it was when we began managing it three years ago. Today, we are a growing, full-service bank that can offer our customers everything they could get at any "big bank" because we now have the operational underpinnings required to manage all that efficiently. But unlike the big banks, we continue to give our customers the local, friendly, and responsive service they want from their bank.

Greater Efficiency
While management has succeeded in producing strong revenue growth, it has at the same time exercised control over expenses, which has improved our efficiency this year.

(1) Peer data compares SMBC fiscal year-end figures (June) with the average of publicly traded peers' most recent fiscal year-end figures (December).

(2) Peer data information is based on the average of the latest data available from SNL DataSource's Index of Missouri publicly traded thrifts.

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Loan Quality
Improvement
We now have a higher percentage of commercial loans. Commercial Loans have higher inherent credit risk than home loans. Yet, our overall loan quality has improved significantly.

(1) Peer data compares SMBC fiscal year-end figures (June) with the average of publicly traded peers' most recent fiscal year-end figures (December).

   In the year ahead, we plan to continue growing both our "foundation" services (home loans, CDs, checking and savings) and our newer services (commercial loans, cash management, business checking and Money Market Passbooks). At the same time, we will seek opportunities to further grow our market presence - either by purchasing other institutions or branches of other institutions.

   This has been a truly enjoyable year for me. Our excellent team of dedicated employees continues to excel in meeting the challenges placed before them. Also, our sincere thanks to our customers who show their trust in us by choosing us to be their bank. It's always exciting to see things working out as planned and to know that what has been done once before, can be done again.

/s/ Greg Steffens

Greg Steffens
President
Southern Missouri Bancorp, Inc. Please join us . . .
...at our 2002 annual meeting, where shareholders and those considering investing in Southern Missouri Bancorp, Inc. will hear management cover this year's performance in detail and discuss our plans for continued growth.

The annual meeting will be on Monday, October 21, 9 a.m., at the Chamber of Commerce Building in Poplar Bluff.

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COMMON SHARE DATA

The common stock of the Company is listed on the Nasdaq Stock Market under the symbol "SMBC". The following bar graph sets forth the high, low and closing trade prices of the common stock, cash dividends and other information for the last three years.

The following table sets forth per share market price and dividend information for the Company's common stock. As of August 1, 2002, there were approximately 314 stockholders of record. This does not reflect the number of persons or entities who hold stock in nominee or "street name."

2002	High	Low	Close	Book Value At End Of Period	Market Price To Book Value	Dividends Declared
4th Quarter (6-30-02)	$19.93	$16.94	$19.25	$20.34	94.64%	$0.125
3rd Quarter (3-31-02)	$17.22	$15.75	$17.00	$19.77	85.99%	$0.125
2nd Quarter (12-31-01)	$16.45	$14.70	$16.20	$19.30	83.94%	$0.125
1st Quarter (9-30-01)	$15.75	$13.75	$15.25	$19.12	79.76%	$0.125
2001
4th Quarter (6-30-01)	$14.15	$13.00	$14.00	$18.53	75.55%	$0.125
3rd Quarter (3-31-01)	$14.00	$13.00	$13.88	$18.25	76.05%	$0.125
2nd Quarter (12-31-00)	$13.63	$12.25	$13.63	$18.02	75.64%	$0.125
1st Quarter (9-30-00)	$13.25	$12.50	$12.65	$17.55	72.08%	$0.125
2000
4th Quarter (6-30-00)	$13.11	$10.68	$12.75	$17.17	74.26%	$0.125
3rd Quarter (3-31-00)	$13.13	$10.88	$11.56	$17.16	67.38%	$0.125
2nd Quarter (12-31-99)	$13.46	$10.89	$12.81	$16.69	76.77%	$0.125
1st Quarter (9-30-99)	$14.25	$12.09	$13.63	$16.59	82.13%	$0.125

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

	At Or For The Years Ended June 30
	2002	2001	2000
Average common shares outstanding	1,215,009	1,240,159	1,291,058
Year-end common shares outstanding	1,803,201	1,803,201	1,803,201
Shareholders of record	314	313	350

(1) Per NASDAQ National Market System

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Financial Review

BUSINESS OF THE COMPANY AND THE BANK

   Southern Missouri Bancorp, Inc. (Southern Missouri or Company) is a Missouri corporation and owns all of the outstanding stock of Southern Missouri Bank & Trust Co. (SMBT or the Bank). The Company's earnings are primarily dependent on the operations of the Bank. As a result, the following discussion relates primarily to the operations of the Bank.

   The Bank was originally chartered by the State of Missouri in 1887 and converted from a state-chartered stock savings and loan association to a Federally-chartered stock savings bank effective June 20, 1995. Then, effective February 17, 1998, the Bank converted its charter to a state-chartered stock savings bank. The Bank's deposit accounts are insured up to a maximum of $100,000 by the Savings Association Insurance Fund (SAIF), which is administered by the Federal Deposit Insurance Corporation (FDIC).

   The Bank's primary business is the origination of mortgage loans secured by one- to four-family residences. The Bank currently conducts its business through its home office located in Poplar Bluff and seven full service branch facilities in Poplar Bluff, Van Buren, Dexter, Kennett, Doniphan, and Qulin, Missouri. Lending activities are funded through the attraction of deposit accounts consisting of certificate accounts with terms of 60 months or less, passbook accounts, money market deposit accounts and advances from the Federal Home Loan Bank of Des Moines. The Bank also originates mortgage loans on commercial real estate, construction loans on single-family residences and commercial properties, commercial business loans, consumer loans, and loans secured by deposit accounts.

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(dollars in thousands)

	At June 30
Financial Condition Data:	2002	2001	2000	1999	1998
Total assets	$ 266,288	$ 240,494	$ 184,391	$ 164,972	$ 155,947
Loans receivable, net	211,212	180,857	138,425	118,249	119,083
Mortgage-backed securities	22,609	26,224	12,957	16,900	14,154
Cash, interest-bearing deposits   and investment securities	18,763	19,607	26,425	25,048	18,324
Deposits	188,947	173,281	123,920	120,155	109,410
Borrowings	51,311	41,115	37,000	20,550	21,069
Stockholders' equity	$ 24,511	$ 23,582	$ 21,457	$ 22,629	24,112

(dollars in thousands)

	For The Year Ended June 30
Operating Data:	2002	2001	2000	1999	1998
Interest income	$ 16,993	$ 16,161	$ 12,290	$ 11,414	$ 11,444
Interest expense	8,139	9,490	6,919	6,247	6,212
Net interest income	8,854	6,671	5,371	5,167	5,232
Provision for loan losses	350	510	215	235	783
Net interest income after   provision for loan losses	8,504	6,161	5,156	4,932	4,449
Noninterest income	874	1,447	612	1,255	797
Noninterest expense	5,872	5,219	3,758	3,682	3,660
Income before income taxes	3,506	2,389	2,010	2,505	1,586
Income tax expense	1,197	840	690	860	522
Net income	$ 2,309	$ 1,549	$ 1,320	$ 1,645	$ 1,064
Basic earnings per common share	$ 1.94	$ 1.26	$ 1.03	$ 1.23	$ .69
Diluted earnings per common share	$ 1.90	$ 1.25	$ 1.02	$ 1.20	$ .67
Dividends per share	$ .50	$ .50	$ .50	$ .50	$ .50

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Financial Review (continued)

	At June 30
Other Data:	2002	2001	2000	1999	1998
Number of:
Real estate loans	2,952	2,910	2,811	2,920	3,035
Deposit accounts	15,975	15,630	12,887	13,189	12,762
Full service offices	8	8	8	8	8

	At Or For The Year Ended June 30
Key Operating Ratios:	2002	2001	2000	1999	1998
Return on assets (net income   divided by average assets)	.91%	.71%	.77%	1.02%	.67%
Return on average equity (net   income divided by average equity)	9.77	6.86	5.98	7.30	4.06
Average equity to average assets	9.29	10.29	12.84	14.01	16.40
Interest rate spread (spread between   weighted average rate on all interest-   earning assets and all interest-   bearing liabilities)	3.33	2.76	2.60	2.76	2.67
Net interest margin (net interest   income as a percentage of average   interest-earning assets)	3.67	3.22	3.22	3.32	3.39
Noninterest expense to average assets	2.31	2.38	2.16	2.29	2.29
Average interest-earning assets to   interest-bearing liabilities	110.15	110.26	115.02	114.15	117.76
Allowance for loan losses to total   loans at end of period	.73	.79	.91	.99	1.07
Allowance for loan losses to   nonperforming loans	466.22	299.08	237.79	658.09	243.01
Net charge-offs to average out-   standing loans during the period	.12	.35	.10	.29	.17
Ratio of nonperforming assets   to total assets	.27	.69	.59	.64	.98
Dividend payout ratio	25.46	39.72	48.53	39.95	72.29

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Financial Review (continued)

Management's Discussion and Analysis of Financial Condition
and Results of Operations

   Southern Missouri Bancorp, Inc. is a Missouri corporation originally organized for the principal purpose of becoming the holding company of Southern Missouri Savings Bank. The Bank converted from a Federally-chartered stock savings bank to a state-chartered stock savings bank effective February 17, 1998, and subsequently changed its name to Southern Missouri Bank & Trust Co. The Company's state of incorporation changed from Delaware to Missouri effective April 1, 1999. The principal business of SMBT consists primarily of attracting deposits from the general public and using such deposits along with wholesale funding from the Federal Home Loan Bank of Des Moines (FHLB) to finance mortgage loans secured by one-to four-family residences and, to a lesser extent, consumer loans, commercial real estate loans, and commercial business loans. These funds have also been used to purchase investment securities, mortgage-backed securities (MBS), U.S. government and federal agency obligations and other permissible securities.    The revenues of Southern Missouri are derived principally from interest earned on loans and, to a lesser extent, from interest earned on investment securities and MBS. Southern Missouri's operations are significantly influenced by general economic conditions including monetary and fiscal policies of the U.S. government and the Federal Reserve Bank. Additionally, Southern Missouri is subject to policies and regulations issued by financial institution regulatory agencies, including the Federal Deposit Insurance Corporation, the Office of Thrift Supervision (OTS) and the Missouri Division of Finance. Each of these factors may influence interest rates, loan demand, prepayment rates and deposit flows. Interest rates available on competing investments as well as general market interest rates influence the Bank's cost of funds. Lending activities are affected by the demand for financing real estate and other types of loans, which in turn is affected by the interest rates at which such financing may be offered. The Bank intends to continue to focus on its lending programs for one-to four-family residential real estate, commercial mortgage, business and consumer financing on loans secured by properties or collateral located in Southeastern Missouri. FORWARD-LOOKING STATEMENTS    Except for the historical information contained herein, the matters discussed in this annual report may be deemed to be forward-looking statements, which we believe are within the meaning of the Private Securities Litigation Reform Act of 1995. These matters involve risks and uncertainties, including changes in economic conditions in Southern Missouri's market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in Southern Missouri's market area and price competition for loans and deposits. Actual strategies and results in future periods may differ materially from those currently expected. These forward-looking statements represent Southern Missouri's judgment as of the date of this report. Southern Missouri disclaims, however, any intent or obligation to update these forward-looking statements. FINANCIAL CONDITION The Company's total assets increased $25.8 million, or 10.8%, to $266.3 million at June 30, 2002, as compared to $240.5 million at June 30, 2001. The growth was primarily due to a $30.4 million, or 16.8%, increase in the loan portfolio, partially offset by a $4.5 million decline in cash balances and investments. The growth in the loan portfolio exceeded the Company's growth targets and was comprised principally of $10.1 million in one-to four-family real estate, $7.0 million in commercial business, $6.4 million in commercial real estate and $6.0 million in indirect dealer paper. The loan growth was primarily funded by deposit growth of $15.7 million, or 9.0%, from $173.3 million to $188.9 million, an increase in FHLB advances of $10.0 million, or 27.0%, from $37.0 million to $47.0 million, and by the $2.4 million, or 6.6%, decrease in the investment portfolio from $35.1 million to $32.8 million.    Allowance for loan losses increased $108,000, or 7.4%, from $1.5 million at June 30, 2001, to $1.6 million at June 30, 2002. The allowance for loan losses at June 30, 2002, represented 0.7% of loans receivable and 466.2% of nonperforming loans, as compared to respective balances of 0.8% and 299.1% at June 30, 2001 (see Provision for Loan Losses).    Premises and equipment increased $775,000 after depreciation expense, to $5.8 million at June 30, 2002, from $5.1 million at June 30, 2001, due to the completion of a new branch office in Doniphan and upgrades in information technology systems.    Intangible assets generated through branch acquisitions decreased $255,000 to $3.4 million as of June 30, 2002, and will continue to be amortized in accordance with Statement of Financial Accounting Standard (SFAS) No. 72.    Total deposits increased $15.7 million, or 9.0%, to $188.9 million at June 30, 2002, from $173.3 million at June 30, 2001. The increase was primarily due to growth in savings accounts and certificates of deposit of $9.7 million and $3.7 million, respectively. The growth in savings accounts was mostly due to the continued success of the money market passbook account (MMPA) introduced in the prior year. The cost of interest-bearing deposits declined to 2.79% at June 30, 2002, as compared to 4.08% at June 30, 2001, due in part to the decline in interest rates.    During 2001, the Company introduced a new savings account, the MMPA. The MMPA is designed to give customers a yield similar to those available from 6 to 12 month CDs, while allowing the depositor immediate access to their funds. At June 30, 2002, the MMPA had attracted $48.3 million in deposits as compared to $39.6 million at June 30, 2001. FHLB advances increased $10.0 million, or 27.0%, from $37.0 million at June 30, 2001, to $47.0 million at June 30, 2002. The outstanding advances have fixed interest rates and may be subject to early redemption from the issuer. At June 30, 2002, the advances had a weighted average cost of 5.62% and a weighted average maturity of 6.9 years as compared to a weighted average cost of 5.73% and a weighted average maturity of 8.8 years at June 30, 2001. The average cost of deposits declined at a faster pace than FHLB advances due to the FHLB advances average maturity being longer.    The Company's stockholders' equity increased by $929,000, or 3.9% to $24.5 million at June 30, 2002, from $23.6 million at June 30, 2001. This increase was primarily due to net income of $2.3 million, partially offset by the repurchase of $1.1 million in common stock and the payment of cash dividends of $588,000. The Company has approximately 50,000 shares of common stock remaining to be purchased under its current stock repurchase program.

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Financial Review (continued)

RESULTS OF OPERATIONS    Southern Missouri's results of operations are primarily dependent on the level of its net interest income, noninterest income, and its ability to control operating expenses. Net interest income is dependent primarily on the difference or spread between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities, as well as the relative amounts of such assets and liabilities. Southern Missouri, like other financial institutions, is also subject to interest rate risk to the degree that its interest-earning assets mature or reprice at different times, or on a varying basis, from its interest-bearing liabilities.    Southern Missouri's noninterest income consists primarily of fees charged on transaction and loan accounts. Southern Missouri's operating expenses include: employee compensation and benefits, occupancy expenses, legal and professional fees, federal deposit insurance premiums, amortization of intangible assets and other general and administrative expenses. COMPARISON OF THE YEARS ENDED JUNE 30, 2002 AND 2001    Net Income.  Southern Missouri's net income increased $760,000, or 49.1%, to $2.3 million for fiscal 2002 when compared to the results of the prior fiscal year. The prior year's results included a $399,000 after tax gain on the sale of two branches. Exclusive of the sale, net income for fiscal 2002 would have exceeded the prior year by $1.1 million. The improvement in net income was primarily due to increased net interest income and the reduction in provision for loan losses, partially offset by higher noninterest expense and provisions for income taxes.    Net Interest Income.  Net interest income increased $2.2 million, or 32.7%, to $8.9 million for fiscal 2002 when compared to the prior fiscal year. The increase was primarily due to the 57 basis point increase in the average interest rate spread between interest-earning assets and interest-bearing liabilities and the $34.3 million increase in average interest-earning assets, partially offset by a $31.4 million increase in average interest-bearing liabilities. The increase in the average interest rate spread was primarily due to the overall decline in average interest rates as interest-bearing liabilities repriced downward at shorter intervals than the yield earned on interest-earning assets.    This past fiscal year, the Company operated in an economy that experienced declining interest rates and a change in the shape of the yield curve as short-term interest rates dropped at a faster pace than longer-term interest rates causing a steepening of the yield curve to a more traditional shape. During fiscal 2002, the Federal Reserve Bank dropped its targeted federal fund rate from 3.75% to the current 1.75%. These changes contributed to the improvement in the Company's average net interest rate spread.    Interest Income.  Interest income increased $832,000, or 5.2%, to $17.0 million for fiscal 2002 when compared to the prior fiscal year. The increase was primarily due to the $34.3 million increase in the average balance of interest-earning assets, partially offset by the 77 basis point decline in the average yield earned on these assets, from 7.81% to 7.04%.    Interest income on loans receivable increased by $1.2 million, or 8.5% to $15.0 million for fiscal 2002 when compared to the prior fiscal year. The increase was primarily due to a $30.8 million increase in average loans receivable, partially offset by a 71 basis point decline in the average yield on the loans. Interest income on the investment and mortgage-backed security portfolio decreased by $225,000 or 10.6%, to $1.9 million for fiscal 2002 when compared to the prior fiscal year. The decrease was primarily due to a 108 basis point decrease in the average yield on these investments, partially offset by higher average balances of $2.9 million. Other interest income decreased $114,000 in fiscal 2002 as compared to the prior year mostly due to lower yields earned on these assets.    Interest Expense.  Interest expense decreased $1.4 million, or 14.2%, to $8.1 million for fiscal 2002 as compared to the prior fiscal year. The decrease was primarily due to the 134 basis point decrease in the average rate paid on interest-bearing liabilities from 5.05% in fiscal 2001 as compared to 3.71% in fiscal 2002, partially offset by the $31.4 million increase in the average balance of interest-bearing liabilities used to fund loan growth.    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 potential loan losses based on prior loss experience, known and inherent risks in the loan 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 $350,000 for fiscal 2002 as compared to $510,000 for the prior fiscal year. The decrease in loan loss provision was primarily due to the decline in non-performing assets and loan delinquencies. At June 30, 2002, classified assets totaled $5.2 million as compared to $5.5 million at June 30, 2001. The largest classified assets were two loans to one borrower secured by commercial real estate property, which totaled $2.1 million as of June 30, 2002, and both of which were current at that date.    The above provision was made based on management's analysis of the various factors which affect the loan portfolio and management's desire to maintain the allowance at a level considered adequate. Management performs a detailed analysis of the loan portfolio, including types of loans, the historical 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. Such loans bear an inherently higher level of credit risk than one-to four-family residential real estate loans. While management believes the allowance for loan losses at June 30, 2002, 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 actual losses will not exceed the allowance.

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Financial Review (continued)

   Noninterest Income.  Noninterest income increased $61,000, or 7.5% to $874,000 for fiscal 2002, as compared to the $813,000 earned during fiscal 2001, exclusive of the $634,000 gain on the sale of the two branches in fiscal 2001. The increase was primarily due to an expanded customer base and the implementation of other fee-related services.    Noninterest Expense.  Noninterest expense increased $653,000, or 12.5%, to $5.9 million for fiscal 2002, as compared to the prior fiscal year. The increase was primarily due to increased expenses for compensation and benefits and occupancy of $379,000 and $340,000, respectively. Increased compensation expense was primarily due to increased staffing levels and higher compensation. Increased occupancy expense was primarily due to increased depreciation expense due to the Company's investments in premises and equipment the past two years.    Provision for Income Taxes.  Provision for income taxes increased $357,000 to $1.2 million for fiscal 2002, as compared to the prior fiscal year. The increase was attributed to increased pre-tax income. COMPARISON OF THE YEARS ENDED JUNE 30, 2001 AND 2000    Net Income.  Southern Missouri's net income totaled $1.5 million during fiscal 2001, which represented a $228,000, or 17.3% increase from the results of the prior year. Increased earnings were primarily due to the gain realized on the sale of the two branches and increased net interest income, partially offset by higher noninterest expense and an increase in the provision for loan losses.    Net Interest Income.  Net interest income increased $1.3 million, or 24.2%, to $6.7 million for fiscal 2001, when compared to the prior fiscal year. The increase was primarily due to the 16 basis point increase in the average interest rate spread between interest-earning assets and interest-bearing liabilities, and the $40.2 million increase in average interest-earning assets, partially offset by a $42.7 million increase in average interest-earning liabilities and a 5% decline in the ratio of interest-earning assets to interest-bearing liabilities from 113% to 115%. The decline was primarily the result of the acquisition, which included the addition of intangible assets, and premises and equipment, which are non-earning assets.    Interest Income.  Interest income for fiscal 2001 increased $3.9 million, up 31.5% to $16.2 million from the $12.3 million earned during the prior fiscal year. The increase was mostly attributed to a $40.2 million or 24.1% increase in average interest-earning assets as well as a 44 basis point increase in the average yield earned on these assets, to 7.81% from 7.37%. A general rise in average interest rates and an increased concentration of higher yielding commercial loans contributed to the increase.    Interest Expense. Interest expense for fiscal 2001 increased $2.6 million or 37.2% to $9.5 million from $6.9 million during the prior fiscal year. The increase was largely due to a $42.7 million, or 29.5% increase in average interest-bearing liabilities and a 28 basis point increase in the average cost of these liabilities, to 5.05%, from 4.77%.    Provision for Loan Losses. The provision for loan losses for fiscal 2001 was $510,000, as compared to $215,000 for the prior fiscal year. The increase in the provision was the result of loan growth, the resolution of several problem loans and the recent slow down of national economic conditions. At June 30, 2001, classified assets totaled $5.5 million, as compared to $4.0 million at June 30, 2000. The increase in classified assets related primarily to the deterioration in the financial condition of three customers with loans primarily secured by commercial real estate, one of which was resolved through foreclosure. The largest classified asset consisted of a commercial real estate relationship, which totaled $2.4 million as of June 30, 2001 and was current at that date performing in accordance with its terms.    Noninterest Income.  Noninterest income for fiscal 2001 increased $835,000 from the prior year. Exclusive of the $634,000 pre-tax gain realized on the sale of branches, noninterest income increased $201,000, to $813,000 as compared to the $612,000 earned during the same period of the prior year. The increase was primarily due to a $113,000 increase in banking service charges, a $46,000 increase in other customer charges and an $11,000 gain realized on the sale of available for sale securities versus a $21,000 loss during the prior year. Overall, increased banking and other customer service charges were the result of a revised fee structure, changes in the philosophy on the assessment of service charges and an increased customer base from the branch acquisitions.

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Financial Review (continued)

   Noninterest Expense.  Noninterest expense for fiscal 2001 increased $1.5 million, to $5.2 million, as compared to $3.8 million expended for the prior year. The increase was primarily due to increased expenses for compensation and benefits, occupancy, advertising, amortization of intangible assets and other expense of $413,000, $224,000, $71,000, $215,000 and $352,000, respectively. In addition, fiscal 2001 expenses included a $125,000 provision for loss on impairment of premises and equipment, which consisted of a $51,000 write down on the carrying value of computer equipment and a $75,000 expense related to an adjustment in the carrying value of the Company's former office in Kennett. Increased compensation expense was primarily due to increased staffing levels due to the acquisition, the addition of several loan officers, increased support staff and transitional labor cost related to the acquisition and opening of a new branch. Increased occupancy expense was primarily due to an increase in depreciation expense due to increased investment in premises and equipment. Increased advertising expense was due to promotions related to the branch acquisition, a new branch opening and the offering of the new MMPA. Other expense increased due to $85,000 in data processing conversion costs, $63,000 in check issuance charges for customers of the acquired branches, $128,000 in expenses related to repossessions and foreclosures and overall growth of the Company.    Provision for Income Taxes.  The provision for income taxes for fiscal 2001 was $840,000, as compared to the $690,000 for the prior fiscal year. The increase was attributed to increased income. ASSET/LIABILITY MANAGEMENT    The goal of the Company's asset/liability management strategy is to manage the interest rate sensitivity of both interest-earning assets and interest-bearing liabilities in order to maximize net interest income without exposing the Company to an excessive level of interest rate risk. The Company employs various strategies intended to manage the potential effect that changing interest rates have on future operating results. The primary asset/liability management strategy had been to focus on matching the repricing intervals of interest-earning assets and interest-bearing liabilities. At times, however, depending on the level of general interest rates, the relationship between long- and short-term interest rates, market conditions and competitive factors, the Company may determine to increase its interest rate risk position somewhat in order to maintain its net interest margin.    In an effort to manage the increased interest rate risk resulting from its fixed-rate lending, the Bank has utilized long-term (up to 10 year maturities) FHLB advances, subject to early redemption and has promoted long term CDs to fund a portion of the fixed-rate residential loan originations and to extend the average maturity of the CD portfolio. Other elements of the Company's current asset/liability strategy include: (i) increasing loans receivable through the origination of adjustable-rate residential loans, when available, (ii) increasing originations of commercial real estate and commercial business loans, which typically provide higher yields and shorter repricing periods, but inherently increase credit risk, (iii) expanding the consumer loan portfolio, (iv) limiting the price volatility of the investment portfolio by reducing the weighted average maturity, (v) active solicitation of less rate-sensitive deposits, (vi) offering competitively priced money market accounts and CDs with maturities of up to five years. The degree to which each segment of the strategy is achieved will affect profitability and exposure to interest rate risk.    During the last four years, Southern Missouri expanded its loan products to include fixed-rate loans for residential financing based on an amortization schedule of up to 30 years. This, as well as more competitive pricing and an increase in customer preferences for fixed-rate residential financing, led to fixed-rate originations of $31.6 million during fiscal 2002 and $24.6 million during fiscal 2001. At June 30, 2002, fixed-rate loans with remaining maturities in excess of 10 years totaled $66.4 million or 31.4% of loans receivable, as compared to $46.4 million, or 25.7% of loans receivable at the end of the prior year. At June 30, 2002 the weighted average life of the investment portfolio was 1.6 years as compared to 2.1 years at June 30, 2001. During fiscal 2002, CDs with maturities over two years increased from $4.8 million on June 30, 2001, to $19.6 million at June 30, 2002. The additional $10.0 million in FHLB advances during the fiscal 2002 had a weighted-average maturity of 5.1 years. AVERAGE BALANCE, INTEREST AND AVERAGE YIELDS AND RATES    The following table sets forth certain information relating to the Company's average interest-earning assets and interest-bearing liabilities and reflects the average yield on assets and the average cost of liabilities for the periods indicated. These yields and costs are derived by dividing income or expense by the average month-end balance of assets or liabilities, respectively, for the periods 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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Financial Review (continued)

(dollars in thousands)

	2002				2001				2000
Year Ended June 30	Average Balance	Interest and Dividends	Yield/ Cost		Average Balance	Interest and Dividends	Yield/ Cost		Average Balance	Interest and Dividends	Yield/ Cost
Interest-earning assets:
Mortgage loans (1)	$ 158,032	$ 12,026	7.61	%	$ 140,690	$ 11,361	8.08	%	$ 114,109	$ 8,784	7.70	%
Other loans (1)	38,404	2,952	7.69		24,993	2,445	9.78		12,139	1,109	9.14
Total net loans	196,436	14,978	7.62		165,683	13,806	8.33		126,248	9,893	7.84
Mortgage-backed securities	26,421	1,393	5.27		15,812	1,002	6.34		14,180	867	6.11
Investment securities (2)	10,964	501	4.57		18,681	1,117	5.98		23,546	1,455	6.18
Other interest-earning assets	7,578	121	1.60		6,875	236	3.43		2,869	75	2.61
TOTAL INTEREST- EARNING ASSETS (1)	241,399	16,993	7.04		207,051	16,161	7.81		166,843	12,290	7.37
Other noninterest-earning assets	12,976	-			12,445	-			5,158	-
TOTAL ASSETS	$ 254,375	$ 16,993			$ 219,496	$ 16,161			$ 172,001	$ 12,290
Interest-bearing liabilities:
Savings accounts	$ 55,461	$ 1,509	2.72		$ 19,757	$ 794	4.02		$ 6,920	$ 175	2.53
Now accounts	19,012	191	1.00		16,150	389	2.41		9,377	240	2.56
Money market accounts	19,143	467	2.44		19,298	777	4.03		15,703	606	3.86
Certificates of deposit	78,830	3,463	4.39		92,959	5,308	5.71		86,346	4,402	5.10
TOTAL INTEREST- BEARING DEPOSITS	172,446	5,630	3.26		148,164	7,268	4.91		118,346	5,423	4.58
Borrowings
Securities sold under     agreements to repurchase	4,122	88	2.13		3,486	99	2.84		-	-	-
FHLB advances	42,583	2,421	5.69		36,139	2,123	5.87		26,705	1,496	5.60
TOTAL INTEREST- BEARING LIABILITIES	219,151	8,139	3.71		187,789	9,490	5.05		145,051	6,919	4.77
Noninterest-bearing     demand deposits	8,258	-			6,417	-			2,889	-
Other liabilities	3,342	-			2,702	-			1,973	-
TOTAL LIABILITIES	230,751	8,139			196,908	9,490			149,913	6,919
Stockholders' equity	23,624	-			22,588	-			22,088	-
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 254,375	$ 8,139			$ 219,496	$ 9,490			$ 172,001	$ 6,919
Net interest income	-	$ 8,854	-		-	$ 6,671	-		-	$ 5,371	-
Interest rate spread (3)	-	-	3.33	%	-	-	2.76	%	-	-	2.60	%
Net interest margin (4)	-	-	3.67	%	-	-	3.22	%	-	-	3.22	%
Ratio of average interest-earning     assets to average interest-bearing     liabilities	110.15%	-	-		110.26%	-	-		115.02%	-	-

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

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Financial Review(continued)

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

	At June 30,		For Year Ended June 30,
	2002		2002		2001		2000
Weighted-average yield on loan portfolio	7.19	%	7.62	%	8.33	%	7.84	%
Weighted-average yield on mortgage-backed   securities	5.14		5.27		6.34		6.11
Weighted-average yield on investment   securities (1)	4.44		4.57		5.98		6.18
Weighted-average yield on other   interest-earning assets	1.35		1.60		3.43		2.61
Weighted-average yield on all   interest-earning assets	6.73		7.04		7.81		7.37
Weighted-average rate paid on deposits	2.79		3.26		4.91		4.58
Weighted-average rate, paid on securities   sold under agreements to repurchase	1.75		2.13		2.84		-
Weighted-average rate paid on FHLB   advances	5.62		5.69		5.87		5.60
Weighted-average rate paid on all   interest-bearing liabilities	3.36		3.71		5.05		4.77
Interest rate spread (spread between weighted   average rate on all interest-earning assets   and all interest-bearing liabilities)	3.37		3.33		2.76		2.60
Net interest margin (net interest income   as a percentage of average interest-   earning assets)	-		3.67		3.22		3.22

(1) Includes Federal Home Loan Bank stock.

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Financial Review (continued)

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

	Years Ended June 30, 2002 Compared to 2001 Increase (Decrease) Due to								Increase (Decrease) Due to 2001 Compared to 2000 Years Ended June 30,
(dollars in thousands)	Rate		Volume		Rate/ Volume		Net		Rate		Volume		Rate/ Volume		Net
Interest-earnings assets:
Loans receivable (1)	$ (1,176	)	$ 2,562		$ (214	)	$ 1,172		$ 619		$ 3,092		$ 202		$ 3,913
Mortgage-backed     securities	(169	)	673		(113	)	391		33		100		2		135
Investment securities	(263	)	(461	)	108		(616	)	(40	)	(216	)	(82	)	(338	)
Other interest-     earning deposits	(126	)	24		(13	)	(115	)	24		104		33		161
Total net change in   income on interest-   earning assets	(1,734	)	2,798		(232	)	832		636		3,080		155		3,871
Interest-bearing liabilities:
Deposits	(2,019	)	691		(315	)	(1,643	)	645		972		229		1,846
Securities sold under     agreements to repurchase	(25	)	18		(4	)	(11	)	0		0		99		99
FHLB advances	(65	)	379		(11	)	303		72		528		26		626
Total net change in expense on   interest-bearing liabilities	(2,109	)	1,088		(330	)	(1,351	)	717		1,500		354		2,571
Net change in net   interest income	$ 375		$ 1,710		$ 98		$ 2,183		$ (81	)	$ 1,580		$ (199	)	$ 1,300

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

INTEREST RATE SENSITIVITY ANALYSIS

   The following table sets forth as of June 30, 2002, management's estimates of the projected changes in net portfolio value and net interest income in the event of 1%, 2% and 3%, instantaneous, permanent increases or decreases in market interest rates.

	Net Portfolio			NPV as % of PV of Assets
	$ Amount	$ Change	% Change	NPV Ratio	Change
Change in Rates	(dollars in thousands)
+300 bp	21,060	(3,384)	(14)	8.20	-84 bp
+200 bp	22,768	(1,676)	(7)	8.70	-34 bp
+100 bp	23,742	(702)	(3)	8.92	-12 bp
0 bp	24,444	-		9.04	-
-100 bp	24,529	85	4	8.94	-10 bp
-200 bp	23,005	(1,439)	(6)	8.31	-73 bp
-300 bp	21,363	(3,081)	(13)	7.65	-139 bp

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Financial Review (continued)

   Computations in the table above are based on prospective effects of hypothetical changes in interest rates and are based on an internally generated model using the actual maturity and repricing schedules for SMBT's loans and deposits, adjusted by management's assumptions for prepayment rates and deposit runoff. Further, the computations do not consider any reactions that the Bank may undertake in response to changes in interest rates. These projected changes should not be relied upon as indicative of actual results in any of the aforementioned interest rate changes.    Management cannot accurately predict future interest rates or their effect on the Bank's NPV and net interest income in the future. Certain shortcomings are inherent in the method of analysis presented in the computation of NPV and net interest income. For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types of assets and liabilities may lag behind changes in market interest rates. Additionally, most of Southern Missouri's loans have features which restrict changes in interest rates on a short-term basis and over the life of the asset. Further, in the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the foregoing table. Finally, the ability of many borrowers to service their debt may decrease in the event of an interest rate increase. LIQUIDITY AND CAPITAL RESOURCES    Southern Missouri's primary potential sources of funds include deposit growth, securities sold under agreements to repurchase, FHLB advances, amortization and prepayment of loan principal, investment maturities and sales, and ongoing operating results. While scheduled loan repayments and maturing investments are relatively predictable, deposit flows and loan prepayment rates are significantly influenced by factors outside of the Bank's control, including general economic conditions and competition. Southern Missouri 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, 2002, the Bank had outstanding commitments to extend credit of $20.4 million (including $1.4 million on lines of credit). 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, 2002, Southern Missouri increased deposits, FHLB advances and securities sold under agreements to repurchase by $15.7 million, $10.0 million and $196,000, respectively. During the prior year, Southern Missouri increased deposits and securities sold under agreements to repurchase by $49.4 million and $4.1 million, respectively, while the level of FHLB advances remained stable. At June 30, 2002, the Bank had additional borrowing capacity from the FHLB of $48.7 million as compared to $45.2 million at June 30, 2001.    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, 2002, the Bank had $56.9 million in CDs maturing within one year and $104.7 million in other deposits without a specified maturity. Management believes that most maturing interest-bearing liabilities will be retained or replaced by new interest-bearing liabilities. Also at June 30, 2002, the Bank had $18.0 million in FHLB advances subject to early redemption within one year.

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Financial Review (continued)

REGULATORY CAPITAL    Federally insured savings banks are required to maintain a minimum level of regulatory capital. FDIC regulations established capital requirements, including a leverage (or core capital) requirement and a risk-based capital requirement. The FDIC is also authorized to impose capital requirements in excess of these standards on individual institutions on a case-by-case basis.    At June 30, 2002, SMBT exceeded regulatory capital requirements with core and risk-based capital of $21.1 million and $19.5 million, or 7.5% and 12.2% of adjusted total assets and risk-weighted assets, respectively. These capital levels exceeded minimum requirements of 4.0% and 8.0% for adjusted total assets and risk-weighted assets, by approximately $9.1 million and $7.3 million, respectively. Under regulatory guidelines, SMBT was considered well-capitalized at June 30, 2002. IMPACT OF INFLATION    The consolidated financial statements and related data presented herein have been prepared in accordance with U.S. generally accepted accounting principles, which require the measurement of financial position and operating results in historical dollars without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on the operations of the Company is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, changes in interest rates generally have a more significant impact on a financial institution's performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services. In the current interest rate environment, liquidity and maturity structure of the Company's assets and liabilities are critical to the maintenance of acceptable performance levels. IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS    See Note 1 of Notes to Consolidated Financial Statements for a discussion of the impact of recent accounting pronouncements.

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Independent Auditors' Report

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Consolidated Statements of Financial Condition
June 30, 2002 and 2001

Southern Missouri Bancorp, Inc. and Subsidiary

Assets	2002		2001
Cash and cash equivalents	$ 8,612,714		$ 10,710,122
Investment and mortgage-backed   securities: (Note 3)
Available for sale - at estimated market value     (amortized cost $32,249,517 and $34,728,747     at June 30, 2002 and 2001, respectively)	32,758,857		35,121,355
Stock in FHLB of Des Moines	2,350,000		2,150,000
Loans receivable, net (Note 4)	211,211,588		180,856,594
Accrued interest receivable (Note 5)	1,559,674		1,601,830
Foreclosed real estate, net (Note 6)	383,346		1,162,156
Premises and equipment (Note 7)	5,843,680		5,068,808
Intangible assets, net	3,369,448		3,624,706
Prepaid expenses and other assets	198,282		198,462
TOTAL ASSETS	$ 266,287,589		$ 240,494,033
Liabilities and Stockholders' Equity
Deposits (Note 8)	$ 188,946,856		$ 173,281,419
Securities sold under agreements to repurchase (Note 9)	4,311,237		4,115,142
Advances from FHLB of Des Moines (Note 10)	47,000,000		37,000,000
Advances from borrowers for taxes and insurance	170,610		280,112
Accounts payable and other liabilities	776,513		1,095,738
Accrued interest payable	571,168		1,139,134
TOTAL LIABILITIES	241,776,384		216,911,545
Commitments and contingencies (Note 15)	-		-
Preferred stock, $.01 par value; 500,000 shares   authorized; none issued and outstanding	-		-
Common stock, $.01 par value; 3,000,000 shares   authorized; 1,803,201 shares issued	18,032		18,032
Additional paid-in capital	17,456,872		17,450,851
Retained earnings-substantially restricted	17,093,398		15,372,440
Treasury stock of 592,966 shares in 2002 and   530,621 shares in 2001, at cost	(10,122,620	)	(9,164,892	)
Unearned employee benefits	(255,361	)	(341,287	)
Accumulated other comprehensive income	320,884		247,344
TOTAL STOCKHOLDERS' EQUITY	24,511,205		23,582,488
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 266,287,589		$ 240,494,033

See accompanying notes to consolidated financial statements.

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Consolidated Statements of Income
Years Ended June 30, 2002, 2001 and 2000

Southern Missouri Bancorp, Inc. and Subsidiary

Interest income:	2002	2001		2000
Loans receivable	$ 14,978,086	$ 13,806,477		$ 9,893,254
Investment securities	500,637	1,116,939		1,455,486
Mortgage-backed securities	1,393,518	1,002,102		866,792
Other interest-earning assets	121,181	235,556		74,631
TOTAL INTEREST INCOME	16,993,422	16,161,074		12,290,163
Interest expense:
Deposits (Note 8)	5,630,403	7,268,120		5,422,703
Securities sold under agreements     to repurchase	88,092	99,087		-
Advances from FHLB	2,421,396	2,122,810		1,496,250
Total interest expense	8,139,891	9,490,017		6,918,953
Net interest income	8,853,531	6,671,057		5,371,210
Provision for loan losses (Note 4)	350,000	510,000		215,000
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	8,503,531	6,161,057		5,156,210
Noninterest income:
Gain on sale of investment     securities, available for sale	-	11,121		14,500
Gain (loss) on sale of mortgage-backed     securities, available for sale	1,366	-		(35,705	)
Banking service charges	487,682	503,452		390,949
Loan late charges	109,534	92,328		72,726
Gain on sale of branches	-	633,538		-
Other	275,759	206,383		169,405
TOTAL NONINTEREST INCOME	874,341	1,446,822		611,875
Noninterest expense:
General and administrative:
Compensation and benefits	2,997,782	2,618,465		2,205,770
Occupancy and equipment	1,134,642	794,172		570,283
SAIF deposit insurance premium	31,255	27,516		47,842
Professional fees	211,374	205,177		175,920
Advertising	161,422	169,302		97,887
Postage and office supplies	255,646	218,252		165,350
Amortization of intangible assets	255,258	214,519		-
Provision for loss on impairment       of premises and equipment	-	125,338		-
Other	824,890	846,536		494,864
TOTAL NONINTEREST EXPENSE	5,872,269	5,219,277		3,757,916
Income before income taxes	3,505,603	2,388,602		2,010,169
Income taxes (Note 12)
Current	1,126,700	850,000		775,300
Deferred	70,000	(10,000	)	(85,300	)
	1,196,700	840,000		690,000
NET INCOME	$ 2,308,903	$ 1,548,602		$ 1,320,169
Basic earnings per common share	$     1.94	$     1.26		$     1.03
Diluted earnings per common share	$     1.90	$     1.25		$     1.02

See accompanying notes to consolidated financial statements.

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Consolidated Statements of Stockholders' Equity
Years Ended June 30, 2002, 2001 and 2000

Southern Missouri Bancorp, Inc. and Subsidiary

	Common Stock	Additional Paid-in Capital		Retained Earnings		Treasury Stock		Unearned Employee Benefits		Accumulated Other Comprehensive Income		Total Stockholders' Equity
BALANCE AT JUNE 30, 1999	$ 18,032	$17,545,544		$13,759,488		$(7,911,655	)	$(531,068	)	$(250,879	)	$22,629,462
Net income				1,320,169								1,320,169
Change in unrealized gain (loss)   on available for sale securities										(379,077	)	(379,077	)
Total comprehensive income												941,092
Purchase of treasury stock						(1,762,530	)					(1,762,530	)
Dividends paid ($.50 per share)				(640,700	)							(640,700	)
Release of ESOP awards		23,023						84,021				107,044
MRP expense, net								20,210				20,210
MRP shares awarded		9,750						(9,750	)			-
Exercise of stock options		(60,483	)			222,492						162,009
BALANCE AT JUNE 30, 2000	18,032	17,517,834		14,438,957		(9,451,693	)	(436,587	)	(629,956	)	21,456,587
Net income				1,548,602								1,548,602
Change in unrealized gain (loss)   on available for sale securities										877,300		877,300
TOTAL COMPREHENSIVE INCOME												2,425,902
Purchase of treasury stock						(10,646	)					(10,646	)
Dividends paid ($.50 per share)				(615,119	)							(615,119	)
Release of ESOP awards		25,128						81,876				107,004
MRP expense, net								13,424				13,424
Exercise of stock options		(92,111	)			297,447						205,336
BALANCE AT JUNE 30, 2001	18,032	17,450,851		15,372,440		(9,164,892	)	(341,287	)	247,344		23,582,488
Net income				2,308,903								2,308,903
Change in unrealized gain (loss)   on available for sale securities										73,540		73,540
TOTAL COMPREHENSIVE INCOME												2,382,443
Purchase of treasury stock						(1,142,399	)					(1,142,399	)
Dividends paid ($.50 per share)				(587,945	)							(587,945	)
Release of ESOP awards		45,282						71,891				117,173
MRP expense, net								14,035				14,035
Exercise of stock options		(39,261	)			184,671						145,410
BALANCE AT JUNE 30, 2002	$ 18,032	$ 17,456,872		$ 17,093,398		$ (10,122,620	)	$ (255,361	)	$ 320,884		$ 24,511,205

See accompanying notes to consolidated financial statements.

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Consolidated Statements of Cash Flows
Years Ended June 30, 2002, 2001 and 2000

Southern Missouri Bancorp, Inc. and Subsidiary

Cash flows from operating activities:	2002		2001		2000
Net income	$ 2,308,903		$ 1,548,602		$ 1,320,169
Items not requiring (providing) cash:
Depreciation	551,668		413,087		263,726
MRP expense and ESOP expense	131,208		120,429		127,254
Gain on sale of investment     securities, available for sale	-		(11,121	)	(14,500	)
(Gain) loss on sale of mortgage-backed     securities, available for sale	(1,366	)	-		35,705
Amortization of intangible assets	255,258		214,519		-
Provision for loss on impairment of     premises and equipment	-		125,338		-
Provision for loan losses	350,000		510,000		215,000
Gain on sale of branches	-		(633,538	)	-
Net amortization of premiums and discounts	345,408		47,713		87,489
Changes in:
Accrued interest receivable	42,156		(115,188	)	(118,481	)
Prepaid expenses and other assets	180		85,903		(82,027	)
Accounts payable and other liabilities	(362,416	)	227,847		131,533
Accrued interest payable	(567,966	)	2,729		227,527
NET CASH PROVIDED BY OPERATING ACTIVITIES	3,053,033		2,536,320		2,193,395
Cash flows from investing activities:
Net increase in loans	(30,392,626	)	(27,157,886	)	(20,522,582	)
Net cash received in acquisition of branches	-		14,021,579		-
Net cash paid in sale of branches	-		(4,153,644	)	-
Proceeds from sales of investment   securities, available for sale	-		7,102,357		1,034,500
Proceeds from maturing investment   securities, available for sale	11,545,000		10,195,000		415,000
Purchase of investment securities,   available for sale	(12,836,748	)	(3,558,681	)	(2,759,750	)
Proceeds from sales of mortgage-backed   securities, available for sale	3,389,315		-		3,365,084
Proceeds from maturing mortgage-backed   securities, available for sale	13,151,318		2,343,854		2,202,514
Purchase of mortgage-backed   securities, available for sale	(13,113,698	)	(14,937,089	)	(1,976,250	)
Purchase of FHLB stock	(200,000	)	(300,000	)	(759,000	)
Purchase of premises and equipment	(1,326,540	)	(1,648,548	)	(934,364	)
Proceeds from sale of foreclosed real estate	466,442		365,347		178,122
NET CASH USED IN INVESTING ACTIVITIES	$ (29,317,537	)	$ (17,727,711	)	$ (19,756,726	)

See accompanying notes to consolidated financial statements.

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Consolidated Statements of Cash Flows (continued)
Years Ended June 30, 2002, 2001 and 2000

Southern Missouri Bancorp, Inc. and Subsidiary

Cash flows from financing activities:	2002		2001		2000
Net increase in demand   deposits and savings accounts	$ 11,997,393		$ 38,489,609		$ 1,894,048
Net increase (decrease) in   certificates of deposit	3,668,044		(20,730,046	)	1,871,705
Net increase in securities sold under   agreements to repurchase	196,095		4,115,142		-
Proceeds from FHLB Advances	11,000,000		77,000,000		143,550,000
Repayments of FHLB Advances	(1,000,000	)	(77,000,000	)	(127,100,000	)
Net (decrease) increase in advances from   borrowers for taxes and insurance	(109,502	)	(16,460	)	16,887
Dividends on common stock	(587,945	)	(615,119	)	(640,700	)
Exercise of stock options	145,410		198,660		135,620
Payments to acquire treasury stock	(1,142,399	)	(10,646	)	(1,762,530	)
NET CASH PROVIDED BY FINANCING ACTIVITIES	24,167,096		21,431,140		17,965,030
(Decrease) increase in cash and cash equivalents	(2,097,408	)	6,239,749		401,699
Cash and cash equivalents at beginning of year	10,710,122		4,470,373		4,068,674
CASH AND CASH EQUIVALENTS AT END OF YEAR	$ 8,612,714		$ 10,710,122		$ 4,470,373
Supplemental disclosures of cash flow information:
Noncash investing and financing activities
Conversion of loans to foreclosed real estate	$ 94,408		$ 1,134,909		$ 424,507
Conversion of foreclosed real estate to loans	177,600		153,000		175,000
Cash paid during the period for
Interest (net of interest credited)	3,723,833		3,718,786		2,677,920
Income taxes	1,258,040		797,254		706,051
Noncash investing and financing transactions relating to the two branch acquisitions that are not reflected in the Consolidated Statement of Cash Flows for the year ended June 30, 2001, are listed below:
Fair value of assets acquired excluding cash and   cash equivalents acquired			$ 27,249,092
Liabilities assumed			(45,109,896	)
Intangible assets			3,839,225
Net cash received in acquisition of branches			14,021,579

See accompanying notes to consolidated financial statements.

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Notes to Consolidated Financial Statements

Southern Missouri Bancorp, Inc. and Subsidiary

NOTE 1: Organization and Summary of Significant Accounting Policies Organization-Southern Missouri Bancorp, Inc., a Missouri corporation (the Company) was organized in 1994 and is the parent company of Southern Missouri Bank & Trust (the Bank) and the Bank's wholly-owned subsidiary S.M.S. Financial Services, Inc. Substantially all of the Company's consolidated revenues are derived from the operations of the Bank, and the Bank represents substantially all of the Company's consolidated assets and liabilities. Basis of Financial Statement Presentation-The financial statements of the Company have been prepared in conformity with U.S. generally accepted accounting principles and general practices within the financial institution industry. In the normal course of business, the Company encounters two significant types of risk: economic and regulatory. Economic risk is comprised of interest rate risk, credit risk, and market risk. The Company is subject to interest rate risk to the degree that its interest-bearing liabilities reprice on a different basis than its interest-earning assets. Credit risk is the risk of default on the Company's loan portfolio that results from the borrowers' inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of collateral underlying loans receivable and the value of the Company's investment in real estate.    Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare the consolidated financial statements in conformity with U.S. generally accepted accounting principles. Actual results could differ from those estimates. The determination of the provision for loan losses and the valuation of real estate are based on estimates that are particularly susceptible to changes in the economic environment and market conditions. These balances may be adjusted in the future based on such changes, or based on requirements of regulatory examiners of the Company's subsidiary. Principles of Consolidation-The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary, the Bank, and the Bank's wholly-owned subsidiary, S.M.S. Financial Services, Inc. The insurance agency of S.M.S. Financial Services, Inc. was sold effective May 31, 1999. The operations of the agency were not material to the consolidated financial condition or operations of the Company. All significant intercompany accounts and transactions have been eliminated. Cash and Cash Equivalents-For purposes of reporting cash flows, cash and cash equivalents include cash, due from depository institutions and interest-bearing deposits in other depository institutions with original maturities of three months or less. Interest-bearing deposits in other depository institutions were $6,275,882 and $8,686,946 at June 30, 2002 and 2001, respectively. Investment and Mortgage-Backed Securities-Debt securities classified as available for sale are carried at fair value. Their related unrealized gains and losses, net of tax, are reported in accumulated other comprehensive income, a component of stockholders' equity. Debt securities that the Company has the positive intent and ability to hold to maturity are classified as held to maturity securities and reported at amortized cost. Debt securities that are bought and held principally for the purpose of selling in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings. All securities have been classified as available for sale.    Premiums and discounts on debt securities are amortized or accreted as adjustments to income over the estimated life of the security using the level yield method. Gain or loss on the sale of securities is based on the specific identification method. The fair value of securities is based on quoted market prices or dealer quotes. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.    The Company does not invest in collateralized mortgage obligations that are considered high risk.    The Bank is a member of the Federal Home Loan Bank system. As a member of this system, it is required to maintain an investment in capital stock of the Federal Home Loan Bank (FHLB) in an amount equal to the greater of 1% of its outstanding home loans, 0.3% of its total assets, or one-twentieth of its outstanding advances from FHLB.

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

Loans Receivable, Net-Loans receivable, net are stated at unpaid principal balances, less the allowance for loan losses, net deferred loan origination fees, and deferred gain on sale of real estate.    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. 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 loan losses is increased by charges to income and decreased by charge-offs (net of recoveries). Management's periodic evaluation of the adequacy of the allowance is based on the Company's past loan loss experience, known and inherent risks 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.    In accordance with SFAS No. 114, Accounting by Creditor for Impairment of a Loan, as amended by SFAS No. 118, the Company considers a loan impaired when, based upon current information and events, it is probable that it will be unable to collect all amounts due, both principal and interest, according to the contractual terms of the loan agreement. SFAS No. 114 does not apply to large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment, which, for the Company, include residential real estate loans and consumer loans. Valuation allowances are established for impaired loans for the difference between the loan amount and fair value of collateral less estimated selling costs. Impaired loans are placed on nonaccrual status at the point they become contractually delinquent 90 days or more and cash receipts are applied, and interest income recognized, pursuant to the discussion above for nonaccrual loans. Impairment losses are recognized through an increase in the allowance for loan losses. Loan Origination Fees-Loan fees and certain direct loan origination costs are deferred, and the net fee or cost is recognized as an adjustment to interest income using the interest method over the contractual life of the loans. Foreclosed Real Estate-Real estate acquired by foreclosure or by deed in lieu of foreclosure is initially recorded at the lower of cost or fair value less estimated selling costs. Costs for development and improvement of the property are capitalized.    Valuations are periodically performed by management, and an allowance for losses is established by a charge to operations if the carrying value of a property exceeds its estimated fair value, less estimated selling costs.    Loans to facilitate the sale of real estate acquired in foreclosure are discounted if made at less than market rates. Discounts are amortized over the fixed interest period of each loan using the interest method. Income Taxes-The Company and its subsidiary file consolidated income tax returns. Deferred income taxes are provided on temporary differences between the financial reporting bases and income tax bases of the Company's assets and liabilities. Premises and Equipment-Premises and equipment are stated at cost less accumulated depreciation and include expenditures for major betterments and renewals. Maintenance, repairs, and minor renewals are expensed as incurred. When property is retired or sold, the retired asset and related accumulated depreciation are removed from the accounts and the resulting gain or loss taken into income. The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, the impairment loss recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets.    Depreciation is computed by use of straight-line and accelerated methods over the estimated useful lives of the assets. Estimated lives are generally twenty to forty years for premises, and five to seven years for equipment. Earnings Per Share-Basic income per share is computed using the weighted-average number of common shares outstanding. ESOP shares which have been committed to be released are considered outstanding. Diluted income per share includes the effect of all dilutive potential common shares (primarily stock options) outstanding during each year. Intangible Assets-Intangible assets represents the premium paid in conjunction with the Bank's branch acquisitions. The premium is being amortized over a fifteen year period.

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

Segments-Southern Missouri Bancorp, Inc., through the branch network of its subsidiary, Southern Missouri Bank & Trust, provides a broad range of financial services to individuals and companies in Southeast Missouri. These services include demand, time and savings deposits, and lending activities. While the Company's chief decision makers monitor the revenue streams of the various Company products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Company's banking operations are considered by management to be aggregated in one reportable segment. The following paragraphs summarize the impact of new accounting pronouncements:    In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, Business Combinations, effective for all business combinations initiated after June 30, 2001, as well as all business combinations accounted for by the purchase method that are completed after June 30, 2001. The new statement requires that the purchase method of accounting be used for all business combinations and prohibits the use of the pooling-of-interests method. The adoption of Statement No. 141 is not expected to have a material effect on the Company's financial position or results of operations.    In July 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible Assets, effective for fiscal years beginning after December 15, 2001. The statement changes the accounting for goodwill from an amortization method to an impairment-only approach. Thus, amortization of goodwill, including goodwill recorded in past business combinations, will cease upon adoption of this statement. However, the new statement did not amend SFAS No. 72, Accounting for Certain Acquisitions of Banking or Thrift Institutions, which requires recognition and amortization of unidentified intangible assets relating to the acquisition of financial institutions or branches thereof. The FASB has decided to undertake a limited scope project to reconsider the provisions of SFAS No. 72 in 2002. Therefore, the adoption of Statement No. 142 is not expected to have a material effect on the Company's financial position or results of operations. In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations, which requires that the fair value of a liability be recognized when incurred for the retirement of a long-lived asset and the value of the asset be increased by that amount. The statement also requires that the liability be maintained at its present value in subsequent periods and outlines certain disclosures for such obligations. The adoption of this statement, which is effective January 1, 2003, is not expected to have a material effect on the Company's financial statements.    In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 supercedes SFAS No. 121 and applies to all long-lived assets (including discontinued operations) and consequently amends APB Opinion No. 30, Reporting Results of Operations-Reporting the Effects of Disposal of a Segment of a Business. SFAS No. 144 requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less costs to sell. SFAS No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001 and, generally, its provisions are to be applied prospectively. The adoption of this statement is not expected to have a material effect on the Company's financial statements. NOTE 2: Acquisitions and Divestitures    In August 2000, the Bank purchased two full-service branches in Kennett and Qulin, Missouri, from Commerce Bancshares, Inc. for $4.9 million in cash. The transaction which was accounted for as a purchase in accordance with SFAS No. 72, Accounting for Certain Acquisitions of Bank and Thrift Acquisitions, included the acquisition of approximately $25.3 million in loans, $1.6 million in premises and equipment and the assumption of $44.7 million in deposits. The premium of $3.8 million is being amortized over 15 years. In September 2000, the Bank completed its divesture of its branches in Malden and Ellington, Missouri, resulting in a reduction of the deposit base of approximately $13.2 million and a pre-tax gain of $633,538 recorded in other noninterest income.

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

NOTE 3: Investment and Mortgage-Backed Securities

   Available for Sale - The amortized cost, gross unrealized gains, gross unrealized losses and estimated market value of securities available for sale consisted of the following:

	June 30, 2002
	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Market Value
Investment securities:
U.S. government and Federal     agency obligations	$ 6,987,208	$ 92,612	$	$ 7,079,820
Obligations of states and     political subdivisions	2,950,363	119,717		3,070,080
TOTAL INVESTMENT SECURITIES	9,937,571	212,329	-	10,149,900
Mortgage-backed securities:
FHLMC certificates	1,330,431	30,297		1,360,728
GNMA certificates	900,192	6,138		906,330
FNMA certificates	4,950,138	53,478		5,003,616
CMO's issued by government agencies	14,176,937	192,287		14,369,224
CMO's issued by private issuer	954,248	14,811		969,059
TOTAL MORTGAGE-BACKED SECURITIES	22,311,946	297,011	-	22,608,957
TOTAL	$ 32,249,517	$ 509,340	$    -	$ 32,758,857

	June 30, 2001
	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Market Value
Investment securities:
U.S. government and Federal     agency obligations	$ 4,955,106	$ 10,514	$     -	$ 4,965,620
Obligations of states and     political subdivisions	3,796,472	134,972	-	3,931,444
TOTAL INVESTMENT SECURITIES	8,751,578	145,486	-	8,897,064
Mortgage-backed securities:
FHLMC certificates	1,823,691	7,381	-	1,831,072
GNMA certificates	1,436,790	15,702	2,554	1,449,938
FNMA certificates	479,853	-	3,813	476,040
CMO's issued by government agencies	20,539,801	248,054	41,773	20,746,082
CMO's issued by private issuer	1,697,034	24,125	-	1,721,159
TOTAL MORTGAGE-BACKED SECURITIES	25,977,169	295,262	48,140	26,224,291
TOTAL	$ 34,728,747	$ 440,748	$ 48,140	$ 35,121,355

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

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

	June 30, 2002
Available for Sale	Amortized Cost	Estimated Market Value
Due in one year or less	$ 869,870	$ 882,867
Due after one year thru 5 years	2,666,899	2,757,275
Due after 5 years thru 10 years	6,400,802	6,509,758
Total investment securities	9,937,571	10,149,900
Mortgage-backed securities	22,311,946	22,608,957
TOTAL	$ 32,249,517	$ 32,758,857

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

	June 30
	2002	2001	2000
Proceeds from sales:
Investment securities	$        -	$ 7,102,357	$ 1,034,500
Mortgage-backed securities	3,389,315	-	3,365,084
Gross realized gains:
Investment securities	-	15,680	14,500
Mortgage-backed securities	35,207	-	-
Gross realized losses:
Investment securities	-	(4,559)	-
Mortgage-backed securities	(33,841)	-	(35,705)

The carrying value of investment and mortgage-backed securities pledged as collateral to secure public deposits amounted to $14,873,673 and $12,080,527 at June 30, 2002 and 2001, respectively. Adjustable rate mortgage loans included in mortgage-backed securities at June 30, 2002 and 2001 amounted to $1,266,620 and $3,292,580, respectively.

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

NOTE 4: Loans Receivable, net

Loans receivable, net are summarized as follows:

	June 30
	2002		2001
Real estate loans:
Conventional	$ 120,051,233		$ 109,979,202
Construction	3,083,069		3,374,680
Commercial	43,035,949		36,612,380
Loans secured by deposit accounts	696,545		871,319
Consumer loans	18,081,802		10,949,930
Commercial	29,273,348		22,287,531
	214,221,946		184,075,042
Loans in process	(1,413,818	)	(1,728,786	)
Deferred loan fees, net	(27,274	)	(27,978	)
Allowance for loan losses	(1,569,266	)	(1,461,684	)
TOTAL	$ 211,211,588		$ 180,856,594

   Adjustable-rate loans included in the loan portfolio amounted to $86,117,489 and $90,801,530 at June 30, 2002 and 2001, respectively.    One-to four-family residential real estate loans amounted to $118,300,466 and $107,809,992 at June 30, 2002 and 2001, respectively.    Real estate construction loans are secured principally by single and multi-family dwelling units.    Commercial real estate loans are secured principally by commercial buildings, motels, medical centers, churches, fast food restaurants and farmland.

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

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

	June 30
	2002		2001		2000
Balance, beginning of period	$ 1,461,684		$ 1,276,953		$ 1,191,147
Loans charged-off	(280,464	)	(628,289	)	(240,036	)
Recoveries of loans previously charged-off	38,046		53,020		110,842
Net charge-offs	(242,418	)	(575,269	)	(129,194	)
Provision charged to expense	350,000		510,000		215,000
Acquired allowance for losses	-		250,000		-
Balance, end of period	$ 1,569,266		$ 1,461,684		$ 1,276,953

   The Company ceased recognition of interest income on loans with a book value of $133,585, $0 and $537,000 at June 30, 2002, 2001 and 2000, respectively. The average balance of nonaccrual loans for the years ended June 30, 2002, 2001 and 2000 was $80,000, $132,000 and $217,000 respectively. Allowance for losses on nonaccrual loans amounted to $13,350, $0 and $146,000 at June 30, 2002, 2001 and 2000. Interest income of approximately $1,000, $0 and $23,000 was recognized on these loans for the years ended June 30, 2002, 2001 and 2000, respectively. Gross interest income would have been approximately $13,000, $0 and $51,000 for the years ended June 30, 2002, 2001 and 2000, respectively, if the interest payments had been received in accordance with the original terms. The Bank is not committed to lend additional funds to customers whose loans have been placed on nonaccrual status.    Of the above nonaccrual loans at June 30, 2002, 2001 and 2000 none were considered to be impaired. There were no impaired loans during the years ended June 30, 2002, 2001 and 2000.

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, 2000	$ 803,878
Additions	973,570
Repayments	(189,603	)
Balance, June 30, 2001	1,587,845
Additions	4,386,699
Repayments	(2,433,634	)
Balance, June 30, 2002	$ 3,540,910

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

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

NOTE 5: Accrued Interest Receivable

   Accrued interest receivable is summarized as follows:

	June 30
	2002	2001
Investment securities	$  224,876	$  205,051
Mortgage-backed securities	116,812	139,443
Loans receivable	1,217,986	1,257,336
	$1,559,674	$1,601,830

NOTE 6: Foreclosed Real Estate

   Foreclosed real estate consists of the following:

	June 30
	2002	2001
Foreclosed real estate	$383,346	$1,162,156
Allowance for losses	-	-
	$383,346	$1,162,156

NOTE 7: Premises and Equipment

   Following is a summary of premises and equipment:

	June 30
	2002		2001
Land	$ 1,128,160		$ 1,095,080
Buildings and improvements	4,317,345		3,536,414
Furniture, fixtures and equipment	2,860,854		2,296,987
Automobiles	28,733		29,797
Construction in progress	149,613		199,833
	8,484,705		7,158,111
Less accumulated depreciation	(2,641,025	)	(2,089,303	)
	$ 5,843,680		$ 5,068,808

   Depreciation expense for the years ended June 30, 2002, 2001 and 2000 was $551,668, $413,087 and $263,726, respectively.    Construction in progress at June 30, 2002 consisted of remodeling at the main banking facility in Poplar Bluff, Missouri. Estimated completion date is October 2002, at an additional cost of $250,000.    During 2001, an impairment loss of $125,338 was recognized on the abandonment of certain computer equipment and as a result of a decrease in the market value of the Company's former office in Kennett, Missouri.

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

NOTE 8: Deposits

   Deposits are summarized as follows:

	June 30
	2002		2001
Noninterest-bearing accounts	$10,207,129		$9,731,376
NOW accounts	19,476,866		15,980,318
Money market deposit accounts	18,974,105		20,695,313
Savings accounts	56,038,200		46,291,900
TOTAL TRANSACTION ACCOUNTS	$104,696,300		$92,698,907
Certificates:
1.00 - 1.99%	1,086,847		-
2.00 - 2.99%	37,449,560		-
3.00 - 3.99%	14,355,571		1,787,509
4.00 - 4.99%	17,579,422		19,546,986
5.00 - 5.99%	8,881,887		38,770,988
6.00 - 6.99%	4,832,442		12,326,045
7.00 - 7.99%	11,568		8,092,874
8.00 - 8.99%	53,259		58,110
Total certificates, 3.66%   and 5.53%, respectively	84,250,556		80,582,512
TOTAL DEPOSITS	$188,946,856		$173,281,419
WEIGHTED-AVERAGE RATES - DEPOSITS	2.79	%	4.08	%

   The aggregate amount of certificates of deposit with a minimum denomination of $100,000 was $20,020,253 and $12,864,088 at June 30, 2002 and 2001, respectively.

   Certificate maturities at June 30, 2002 are summarized as follows:

July 1, 2002 to June 30, 2003	$56,860,155
July 1, 2003 to June 30, 2004	7,764,595
July 1, 2004 to June 30, 2005	9,408,002
July 1, 2005 to June 30, 2006	1,082,681
July 1, 2006 to June 30, 2007	9,135,123
	$84,250,556

   Interest expense on deposits is summarized as follows:

	Year Ended June 30
	2002	2001	2000
NOW accounts	$   191,297	$   388,792	$   239,815
Money market deposit accounts	467,015	777,089	606,109
Savings accounts	1,509,490	793,810	174,494
Certificates of deposit	3,462,601	5,308,429	4,402,285
	$ 5,630,403	$ 7,268,120	$ 5,422,703

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

NOTE 9: Securities Sold Under Agreements to Repurchase    Securities sold under agreements to repurchase, which are classified as borrowings, generally mature within one to four days. The following table presents balance and interest rate information on the securities sold under agreements to repurchase. Prior to July 1, 2000, the Company had not entered into these types of contracts.

	June 30
	2002		2001
Year-end balance	$ 4,311,237		$ 4,115,142
Average balance during the year	4,694,000		3,486,000
Maximum month-end balance during the year	5,453,003		5,169,096
Average interest during the year	2.13	%	2.84	%
Year-end interest rate	1.75	%	3.25	%

The market value of the securities underlying the agreements at June 30, 2002 and 2001, was $5,684,663 and $4,377,104, respectively. The securities sold under agreements to repurchase are under the Company's control.

NOTE 10: Advances from Federal Home Loan Bank of Des Moines

   Advances from Federal Home Loan Bank of Des Moines are summarized as follows:

			June 30
Maturity	Call Date or Quarterly Thereafer	Interest Rate
			2002		2001
06-19-06	-	4.33%	$ 1,000,000		$       -
09-08-06	-	5.00%	5,000,000		-
06-11-07	-	4.89%	1,000,000		-
06-19-07	-	4.63%	1,000,000		-
10-17-07	-	4.84%	2,000,000		-
02-06-08	08-06-02	5.17%	3,000,000		3,000,000
10-26-09	09-01-02	5.50%	10,000,000		10,000,000
01-20-10	07-20-02	5.77%	5,000,000		5,000,000
10-27-10	10-27-03	5.86%	9,000,000		9,000,000
12-09-10	12-09-05	5.93%	10,000,000		10,000,000
			$ 47,000,000		$ 37,000,000
Weighted-average rate			5.62	%	5.73	%

   In addition to the above advances, the Bank had an available line of credit amounting to $48,716,000, $45,170,000 and $33,672,000 with the FHLB at June 30, 2002, 2001 and 2000, respectively.    Advances from FHLB of Des Moines are secured by FHLB stock and one-to four-family mortgage loans of $56,400,000 and $44,400,000 at June 30, 2002 and 2001, respectively. Scheduled principal maturities of advances from FHLB of Des Moines are over the next four to nine years.

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

NOTE 11: Employee Benefits    The Bank has adopted a 401(k) profit sharing plan that covers substantially all eligible employees. Contributions to the plan are at the discretion of the Board of Directors of the Bank. During 2002, 2001 and 2000, there were no contributions made to the plan.    The Bank established a tax-qualified employee stock ownership plan (ESOP) in April 1994. The plan covers substantially all employees who have attained the age of 21 and completed one year of service.    The Bank makes contributions to the ESOP equal to the ESOP's debt service less dividends on unallocated ESOP shares used to repay the ESOP loan. Dividends on allocated ESOP shares are paid to participants of the ESOP. The ESOP shares are pledged as collateral on the ESOP loan.    Shares are released from collateral and allocated to participants based on pro-rata compensation as the loan is repaid over seven years. Effective July 1, 1998, the loan terms were modified and principal payments were extended an additional four years. Benefits are vested over five years. Forfeitures are allocated on the same basis as other contributions. Benefits are payable upon a participant's retirement, death, disability or separation of service. The purchase of the shares of the ESOP has been recorded in the consolidated financial statements through a credit to common stock and additional paid-in capital with a corresponding charge to a contra equity account for the unreleased shares. As shares are committed to be released from collateral, the Bank reports compensation expense equal to the average fair value of the ESOP shares committed to be released. The ESOP expense for 2002, 2001 and 2000 was $117,173, $107,004, and $107,044, respectively.

The number of ESOP shares at June 30, 2002 and 2001 were as follows:

	2002	2001
Allocated shares	59,489	55,730
Unreleased shares	18,982	26,096
TOTAL ESOP SHARES	78,471	81,826

The fair value of unreleased ESOP shares at June 30, 2002 was $365,404.

   The Bank adopted a management recognition plan (MRP) for the benefit of non-employee directors and two MRPs for officers and key employees (who may also be directors) in April 1994. Total shares in the MRP left to be issued are 5,118 at June 30, 2002. During 2002, 2001 and 2000, the Bank granted 0, 0 and 2,700 shares, respectively, to employees. The shares granted are in the form of restricted stock payable at the rate of 20% of such shares per year. Compensation expense, in the amount of the fair market value of the common stock at the date of grant, will be recognized pro-rata over the five years during which the shares are payable.    The Board of Directors can terminate the MRPs at any time, and if it does so, any shares not allocated will revert to the Company. The MRP expense for 2002, 2001 and 2000 was $14,035, $13,425 and $20,210, respectively.    The Company sponsors a stock option plan adopted in April 1994. The purpose of the plan is to provide additional incentive to certain directors, officers and key employees of the Bank. In October 1999, the stockholders voted to increase the number of shares reserved for options by 67,932 shares. The stock options are granted at the fair market value of the common stock on the date of the grant. Through June 30, 1999, all options granted were 100% vested at the grant date. For shares granted since June 30, 1999, the vesting period range is from the grant date up to a five year period. All options expire ten years from the date of the grant. At June 30, 2002, there are 41,932 shares remaining available for option grants. The weighted-average remaining contractual life of options outstanding at June 30, 2002 is 5.6 years.    Changes in options outstanding were as follows:

	Number of Shares		Weighted Average Exercise Price
Balance at June 30, 1999	102,694		$ 12.29
Granted	31,491		13.48
Exercised	(13,562	)	10.00
Balance at June 30, 2000	120,623		12.86
Granted	20,000		13.38
Exercised	(19,566	)	10.00
Forfeited	(6,000	)	13.00
Balance at June 30, 2001	115,057		13.40
Granted	0
Exercised	(13,000	)	11.20
Forfeited	(5,000	)	14.00
Balance at June 30, 2002	97,057		13.67

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

   The Company has estimated the fair value of awards granted under its stock option plan during 2002, 2001 and 2000 utilizing the Black-Scholes pricing model.    For the options granted in 2002, 2001 and 2000, the Company has applied Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. Accordingly, no compensation expense has been recognized for its stock-based compensation plans. Had compensation cost for the Company's stock option plan been determined based upon the fair value at the grant date for awards under these plans consistent with the methodology prescribed under SFAS No. 123, Accounting for Stock-Based Compensation, the Company's net income and diluted earnings per share would have been reduced by approximately $7,000, $19,000 and $62,000, or $.01, $.02 and $.05 per share in 2002, 2001 and 2000, respectively.    Following is a summary of the fair values of options granted using the Black-Scholes pricing model:

	2002		2001		2000
Fair value at grant date	$ 10,000		$ 28,000		$ 93,000
Assumptions:
Expected dividend yield	5.00	%	5.00	%	5.00	%
Expected volatility	21.50	%	21.00	%	22.00	%
Risk-free interest rate	6.20	%	5.60	%	6.20	%
Weighted-average expected life	5 years		5 years		5 years

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

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

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

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

The following items are components of net pension costs for the years ended June 30, 2002, 2001 and 2000:

	2002		2001		2000
Service cost - benefits earned   during the year	$ 6,027		$ 5,537		$ 4,062
Interest cost on benefit obligation	11,916		12,258		11,998
Amortization of prior service cost   and net obligation	0		0		0
Amortization of unrecognized gains	(1,015	)	(589	)	(1,148	)
Net pension cost	$ 16,928		$ 17,206		$ 14,912

The following table sets forth the directors' retirement plan's funded status and amounts recognized in the consolidated financial statements at June 30, 2002 and 2001:

	2002	2001
Actuarial present value of benefit obligations:
Vested accumulated benefits	$ 140,575	$ 150,414
Non-vested accumulated benefits	19,668	13,781
Total accumulated benefits	160,243	164,195
Effect of projected future fee increases	-	-
Projected benefit obligation for service rendered to date	160,243	164,195
Unrecognized net gain	24,342	23,862
Accrued pension cost included in other liabilities	$ 184,585	$ 188,057

   A reconciliation of the projected benefit obligation and fair value of plan assets is summarized as follows at June 30, 2002 and 2001:

	2002		2001
	Projected Benefit Obligation	Plan Assets at Fair Value	Projected Benefit Obligation	Plan Assets at Fair Value
Balance, beginning of year	$ 164,195	$      -	$ 169,580	$     -
Service cost	6,027	-	5,537	-
Interest cost	11,916	-	12,258	-
Actual return	-	-	-	-
Actuarial gain	(1,495)	-	(2,780)	-
Contributions	-	20,400	-	20,400
Benefits paid	(20,400)	(20,400)	(20,400)	(20,400)
Balance, end of year	$ 160,243	$     -	$ 164,195	$     -

	2002	2001	2000
Weighted-average assumptions as of June 30:
Discount rate	7%	7%	7%
Rate of directors' fees increase	0%	0%	0%

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

NOTE 12: Income Taxes    SFAS No. 109 requires the Bank to establish a deferred tax liability for the tax bad debt reserves over the base year amounts. The Bank's base year tax bad debt reserves are $1,799,626. The estimated deferred tax liability on such amount is approximately $611,000, which has not been recorded in the accompanying Consolidated Financial Statements. If these tax bad debt reserves are used for other than loan losses, the amount will be subject to Federal income taxes at the then prevailing corporate rate.    The components of net deferred tax liabilities are summarized as follows:

	2002		2001
Deferred tax assets:
Provision for losses on loans and foreclosed real estate	$ 458,939		$ 411,972
Accrued compensation and benefits	100,234		113,455
Gross deferred tax assets	559,173		525,427
Valuation allowance	-		-
Total deferred tax assets	$ 559,173		$ 525,427
Deferred tax liabilities:
FHLB stock dividends	$ 166,566		$ 166,566
Purchase accounting adjustments	23,512		10,514
Premises and equipment, tax vs. book     accumulated depreciation	211,842		107,020
Installment sale	143,439		166,513
Unrealized gain on available for sale securities	188,456		145,265
Total deferred tax liabilities	733,815		595,878
NET DEFERRED TAX LIABILITIES	($174,642	)	$ (70,451	)

   Income taxes are summarized as follows:

	Year Ended June 30
	2002	2001		2000
Current:
Federal	$ 1,034,700	$ 726,000		$ 661,700
State	92,000	124,000		113,600
	1,126,700	850,000		775,300
Deferred:
Federal	61,000	(8,000	)	(76,800	)
State	9,000	(2,000	)	(8,500	)
	70,000	(10,000	)	(85,300	)
	$ 1,196,700	$ 840,000		$ 690,000

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

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

	Year Ended June 30
	2002		2001		2000
Tax at statutory Federal rate	$ 1,191,905		$ 812,124		$ 683,457
Increase (reduction) in taxes   resulting from:
Nontaxable municipal income	(79,714	)	(76,635	)	(66,493	)
State tax, net of Federal benefit	72,700		83,200		69,300
Nondeductible ESOP expenses	17,071		9,474		7,827
Other, net	(5,262	)	11,837		(4,091	)
ACTUAL PROVISION	$ 1,196,700		$ 840,000		$ 690,000

NOTE 13: Comprehensive Income    SFAS No. 130 Reporting Comprehensive Income requires the reporting of comprehensive income and its components. Comprehensive income is defined as the change in equity from transactions and other events and circumstances from non-owner sources, and excludes investments

by and distributions to owners. Comprehensive income includes net income and other items of comprehensive income meeting the above criteria. Components of other comprehensive income are as follows:

	Year Ended June 30
	2002		2001		2000
Unrealized gains (losses) on   available for sale securities:
Unrealized holding gains (losses)       arising during period	$ 118,098		$ 1,403,360		$ (612,555	)
Less: reclassification       adjustments for (gains) losses       realized in net income	(1,366	)	(11,121	)	21,205
Total unrealized gains (losses)       on securities	116,732		1,392,239		(591,350	)
Income tax expense (benefit)	43,192		514,939		(212,273	)
Other comprehensive income (loss)	$ 73,540		$ 877,300		$ (379,077	)

   At June 30, 2002, 2001 and 2000 accumulated other comprehensive income in the Statement of Financial Condition consisted entirely of unrealized gains (losses) on available for sale investment and mortgage-backed securities.

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

NOTE 14: Stockholders' Equity and Regulatory Capital    The Bank is subject to various regulatory capital requirements administered by the Federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory -- and possibly additional discretionary -- actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.    Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios

(set forth in the table below) of total capital and Tier I risk-based 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, 2002, that the Bank meets all capital adequacy requirements to which it is subject.    As of June 30, 2002, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Bank's category.    The following table summarizes the Bank's actual and required regulatory capital:

(dollars in thousands)	Actual		For Capital Adequacy Purposes		To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount	Ratio	Amount	Ratio	Amount	Ratio
As of June 30, 2002
Total Capital (to Risk-Weighted Assets)	$ 21,080	12.2%	$ 13,788	≥8.0%	$ 17,235	10.0%
Tier I Capital (to Risk-Weighted Assets)	19,511	11.3%	6,894	≥4.0%	10,341	6.0%
Tier I Capital (to Average Assets)	19,511	7.5%	10,385	≥4.0%	12,981	5.0%
As of June 30, 2001
Total Capital (to Risk-Weighted Assets)	$ 20,290	14.0%	$ 11,554	≥8.0%	$ 14,442	10.0%
Tier I Capital (to Risk-Weighted Assets)	18,828	13.0%	5,777	≥4.0%	8,665	6.0%
Tier I Capital (to Average Assets)	18,828	8.2%	9,238	≥4.0%	11,547	5.0%

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

NOTE 15: Commitments and Contingencies    In the ordinary course of business, the Bank has various outstanding commitments and contingent liabilities that are not reflected in the accompanying Consolidated Financial Statements. The Bank is involved

in litigation of a routine nature which is being defended and handled in the ordinary course of business. These matters are not considered significant to the Company's financial condition.

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

NOTE 16: Off-Balance-Sheet and Credit Risk    The Company's Consolidated Financial Statements do not reflect various financial instruments to extend credit to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These

instruments involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the statements of financial condition. A summary of the Company's commitments to extend credit and standby letters of credit is as follows:

	Contract or Notional Amount June 30
	2002	2001
Commitments to extend credit	$ 20,808,632	$ 8,799,461
Standby letters of credit	$ 362,779	$ 195,413

   At June 30, 2002, total commitments to originate fixed-rate loans with terms in excess of one year were $1.2 million at interest rates ranging from 6.75% to 8.0%. Commitments to extend credit and standby letters of credit include exposure to some credit loss in the event of nonperformance of the customer. The Company's policies for credit commitments and financial guarantees are the same as those for extension of credit that are recorded in the statements of financial condition. The commitments extend over varying periods of time with the majority being disbursed within a thirty-day period.    The Company grants collateralized commercial, real estate, and consumer loans to customers in Southeast Missouri. Although the Company has a diversified portfolio, loans aggregating $120,051,233 at June 30, 2002, are secured by single and multi-family residential real estate in the Company's primary lending area.

NOTE 17: Earnings Per Share

   The following table sets forth the computations of basic and diluted earnings per common share:

	Year Ended June 30
	2002	2001	2000
Numerator - net income	$ 2,308,903	$ 1,548,602	$ 1,320,169
Denominators
Denominator for basic earnings     per share -
Weighted-average shares       outstanding	1,192,612	1,229,652	1,277,562
Common equivalent shares due       to stock options under       treasury stock method	22,397	10,507	13,496
Denominator for diluted     earnings per share	1,215,009	1,240,159	1,291,058
Basic earnings per common share	$     1.94	$     1.26	$     1.03
Diluted earnings per common share	$     1.90	$     1.25	$     1.02

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

NOTE 18: Fair Value of Financial Instruments

   The carrying amounts and estimated fair values of the Company's financial instruments at June 30, 2002 and 2001, are summarized as follows:

	2002		2001
	Carrying Amount	Fair Value	Carrying Amount	Fair Value
Non-trading instruments and   nonderivatives:
Cash and cash equivalents	$ 8,612,714	$ 8,612,714	$ 10,710,122	$ 10,710,122
Investment and mortgage-       backed securities       available for sale	32,758,857	32,758,857	35,121,355	35,121,335
Stock in FHLB of Des Moines	2,350,000	2,350,000	2,150,000	2,150,000
Loans receivable, net	211,211,588	215,858,786	180,856,594	182,200,836
Accrued interest receivable	1,559,674	1,559,674	1,601,830	1,601,830
Deposits	188,946,856	189,570,828	173,281,419	174,189,325
Securities sold under       agreements to repurchase	4,311,237	4,311,237	4,115,142	4,115,142
Advances from FHLB of       Des Moines	47,000,000	50,287,000	37,000,000	37,840,239
Accrued interest payable	571,168	571,168	1,139,134	1,139,134

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

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

NOTE 19: Condensed Parent Company Only Financial Statements    The following condensed statements of financial condition and condensed 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.

	At June 30
Statements of Financial Condition	2002	2001
Assets
Cash	$ 1,052,923	$ 551,175
ESOP note receivable	216,313	289,187
Other assets	80,495	79,393
Equity in net assets of the Bank	23,200,003	22,699,953
TOTAL ASSETS	$ 24,549,734	$ 23,619,708
Liabilities and Stockholders' Equity
Accrued expenses and other liabilities	$ 38,529	$ 37,220
TOTAL LIABILITIES	38,529	37,220
Stockholders' equity	24,511,205	23,582,488
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 24,549,734	$ 23,619,708

	Year Ended June 30
Statements of Income	2002	2001	2000
Interest income	$ 27,826	$ 40,334	$ 90,226
Dividend from Bank	2,125,000	800,000	800,000
Other income	-	4,606	22,376
	2,152,826	844,940	912,602
Operating expenses	196,524	198,340	189,963
Income before income taxes and     equity in undistributed income of     the Bank	1,956,302	646,600	722,639
Income taxes	(57,300)	(52,155)	(34,037)
Income before equity in undistributed     income of the Bank	2,013,602	698,755	756,676
Equity in undistributed income of   the Bank	295,301	849,847	563,493
NET INCOME	$ 2,308,903	$ 1,548,602	$ 1,320,169

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

	Year Ended June 30
Statements of Cash Flows	2002	2001	2000
Cash flows from operating activities:
Net income	$ 2,308,903	$ 1,548,602	$ 1,320,169
Adjustments to reconcile net income     to net cash provided by operating     activities:
Equity in undistributed income     of the Bank	(295,301)	(849,847)	(563,493)
Other adjustments, net	(794)	18,068	60,171
NET CASH PROVIDED BY OPERATING ACTIVITIES	2,012,808	716,823	816,847
Cash flows from investing activities:
Principal collected on loan to ESOP	73,874	72,873	75,181
Purchase of investment security,     available for sale	-	(100,000)	-
Proceeds from sales and maturities     of investment securities, available     for sale	-	104,581	1,034,500
Proceeds from sales of other assets	-	16,500	-
NET CASH PROVIDED BY INVESTING ACTIVITIES	73,874	93,954	1,109,681
Cash flows from financing activities:
Dividends on common stock	(587,945)	(615,119)	(640,700)
Exercise of stock options	145,410	198,660	135,620
Payments to acquire treasury stock	(1,142,399)	(10,646)	(1,762,530)
NET CASH USED IN FINANCING ACTIVITIES	(1,584,934)	(427,105)	(2,267,610)
Net increase (decrease) in cash and   cash equivalents	501,748	383,672	(341,082)
Cash and cash equivalents at beginning   of period	551,175	167,503	508,585
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$ 1,052,923	$ 551,175	$ 167,503

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Notes to Consolidated Financial Statements (continued)

Southern Missouri Bancorp, Inc. and Subsidiary

NOTE 20: Quarterly Financial Data (Unaudited)

Quarterly operating data is summarized as follows (in thousands):

	June 30, 2002
	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Interest income	$ 4,317	$ 4,228	$ 4,229	$ 4,219
Interest expense	2,317	2,062	1,892	1,868
Net interest income	2,000	2,166	2,337	2,351
Provision for loan losses	80	90	110	70
Noninterest income	203	214	226	231
Noninterest expense	1,377	1,469	1,504	1,522
Income before income taxes	746	821	949	990
Income taxes	250	285	326	336
NET INCOME	$ 496	$ 536	$ 623	$ 654
	June 30, 2001
	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Interest income	$ 3,714	$ 4,082	$ 4,111	$ 4,254
Interest expense	2,221	2,393	2,413	2,463
Net interest income	1,493	1,689	1,698	1,791
Provision for loan losses	170	60	140	140
Noninterest income	804	204	197	242
Noninterest expense	1,409	1,274	1,225	1,311
Income before income taxes	718	559	530	582
Income taxes	267	178	188	207
Net income	$ 451	$ 381	$ 342	$ 375

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Corporate Information

Corporate Headquarters
531 Vine Street
Poplar Bluff, Missouri 63901

Independent Auditors
Kraft, Miles & Tatum, LLC
Poplar Bluff, Missouri 63901 Special Counsel
Silver, Freedman & Taff, L.L.P.
Washington, D.C. 20007

Transfer Agent
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016 Common Stock
Nasdaq Stock Market
Nasdaq Symbol: SMBC

Annual Meeting

The Annual Meeting of Stockholders will be held Monday, October 21, 2002, at 9:00 a.m., Central Time, at the Greater Poplar Bluff Area Chamber of Commerce Building, 1111 West Pine, Poplar Bluff, Missouri 63901.

Annual Report on Form 10-KSB and Other Reports

A copy of the Company's annual report on Form 10-KSB, including financial statement schedules and our quarterly reports as filed with the Securities and Exchange Commission, will be furnished without charge to stockholders as of the record date upon written request to the Secretary, Southern Missouri Bancorp, Inc., 531 Vine Street, Poplar Bluff, Missouri 63901. These documents also may be accessed through the SEC's website at www.sec.gov

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Directors and Officers

Seated left to right, James Tatum, Samuel
Smith, Thadis Seifert, Leonard Ehlers.
Standing left to right, Douglas Bagby,
Greg Steffens, Ronnie Black.
Not shown, Sammy Schalk.

SOUTHERN MISSOURI BANCORP, INC.
Directors Thadis R. Seifert Chairman of the Board Retired former executive vice president   of Bank Leonard M. Ehlers Vice-Chairman Retired court reporter of the 36th   Judicial Circuit Samuel H. Smith Engineer and majority owner of   S.H. Smith and Company, Inc. James W. Tatum Retired certified public accountant	Ronnie D. Black Executive Director General Association   of General Baptists L. Douglas Bagby General Manager Municipal Utilities of   City of Poplar Bluff Sammy A. Schalk President of Gamblin Lumber Company Greg A. Steffens President Chief Financial Officer	Executive Officers Greg A. Steffens President Chief Financial Officer James W. Tatum Vice President
SOUTHERN MISSOURI BANK AND TRUST
Directors Samuel H. Smith Chairman of the Board Engineer and majority owner of   S.H. Smith and Company, Inc. James W. Tatum Vice-Chairman Retired certified public accountant Thadis R. Seifert Retired former executive vice president   of Bank	Ronnie D. Black Executive Director General Association   of General Baptists L. Douglas Bagby General Manager Municipal Utilities of   City of Poplar Bluff Sammy A. Schalk President of Gamblin Lumber Company Greg A. Steffens President Chief Executive Officer	Executive Officers Greg A. Steffens President Chief Executive Officer James D. Duncan Executive Vice President Chairman Loan Dept. Kimberly A. Capps Chief Financial Officer Adrian Rushing Chief Operating Officer William D. Hribovsek Senior Commercial Loan Officer

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Southern Missouri Bancorp, Inc. (SMBC)

is a single-bank holding company that now more than measures up to its peers on ROE and other financial performance benchmarks. This has come about through the establishment of a strong management team, continuing emphasis on growing core businesses, and the addition of new systems, services and offices that make Southern Missouri Bank one of the leading financial institutions headquartered in Southeast Missouri.

SOUTHERN MISSOURI BANCORP, INC.
531 Vine Street
Poplar Bluff, Missouri 63902
(573) 785-1421

EX-21

EXHIBIT 21

Subsidiaries of the Registrant

Parent
Southern Missouri Bancorp, Inc.
Subsidiaries(a)	Percentage of Ownership	Jurisdiction or State of Incorporation
Southern Missouri Bank and Trust Co.	100%	Missouri
SMS Financial Services, Inc.(b)	100%	Missouri

___________________

(a)	The operation of the Company's wholly owned subsidiaries are included in the Company's Financial Statements contained in Item 7 hereof.
(b)	Wholly-owned subsidiary of Southern Missouri Bank and Trust Co.

EX-23

EXHIBIT 23

CONSENT OF AUDITORS






KRAFT, MILES & TATUM, LLC CERTIFIED PUBLIC ACCOUNTANTS ----------------------------------------- 1650 WEST HARPER, POPLAR BLUFF, MISSOURI 63901-4196 (573) 785-6438 FAX (573) 785-0114


Consent of Independent Accountants

We have issued our report dated July 10, 2002, accompanying the Consolidated Financial Statements incorporated by reference in the Annual Report of Southern Missouri Bancorp, Inc. on Form 10-KSB for the year ending June 30, 2002. We hereby consent to the incorporation of reference of said reports in the Registration Statement of Southern Missouri Bancorp, Inc. on the Form S-8 (File No. 333-2320, effective March 13, 1996.)

/s/ Kraft, Miles & Tatum, LLC

Kraft, Miles & Tatum, LLC
Poplar Bluff, Missouri
September 27, 2002