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, 2005          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) 778-1800

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.   X  

         The registrant's revenues for the fiscal year ended June 30, 2005 were $19,598,000.

         As of September 22, 2005, there were issued and outstanding 2,232,816 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 $27.5 million 1,914,105 shares at $14.35. (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, 2005.

Part III of Form 10-KSB - Portions of the Proxy Statement for the 2005 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 & Trust Co. On June 25, 2004, Southern Missouri Bank & Trust Co. ("Bank") converted from a Missouri chartered stock savings bank to a Missouri state chartered trust company with banking powers ("Charter Conversion").

         The primary regulator of the Bank is 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"). With the Bank's conversion to a trust company with banking powers, the Company became a bank holding company regulated by the Federal Reserve Board ("FRB").

         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"), and to a lesser extent, brokered deposits, to invest in one- to four-family residential mortgage loans, mortgage loans secured by commercial real estate, 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, 2005, the Company had total assets of $330.4 million, total deposits of $224.7 million and stockholders' equity of $25.0 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, increases in the cash surrender value of bank owned life insurance and other fee income.

Forward Looking Statements

         This document, including information incorporated by reference, contains forward-looking statements about the Company and its subsidiaries which we believe are within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements with respect to anticipated future operating and financial performance, growth opportunities, interest rates, cost savings and funding advantages expected or anticipated to be realized by management. Words such as "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar expressions are intended to identify these forward-looking statements. Forward-looking statements by the Company and its management are based on beliefs, plans, objectives, goals, expectations, anticipations, estimates and the intentions of management and are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise. The important factors we discuss below, as well as other factors discussed under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and identified in our filings with the SEC and those presented elsewhere by our management from time

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to time, could cause actual results to differ materially from those indicated by the forward-looking statements made in this document:

• further developments in the Company's ongoing review of and efforts to resolve the problem credit relationship described in this report, which could result in, among other things, further downgrades of aforementioned loans, additional provisions to the loan loss reserve and the incurrence of other material non-cash and cash charges;
• the strength of the United States economy in general and the strength of the local economies in which we conduct operations;
• the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board;
• inflation, interest rate, market and monetary fluctuations;
• the timely development of and acceptance of our new products and services and the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors' products and services;
• the willingness of users to substitute our products and services for products and services of our competitors;
• the impact of changes in financial services' laws and regulations (including laws concerning taxes, banking, securities and insurance);
• the impact of technological changes;
• acquisitions;
• changes in consumer spending and saving habits; and
• our success at managing the risks involved in the foregoing.

         The Company disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise.

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, Wayne and Pemiscot Counties in Missouri and Mississippi and Clay Counties in Arkansas. The Bank's market area has a population of approximately 190,000. 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, Emerson Electric, Tyson Foods, and Arvin. The Bank's market area is primarily rural in nature and relies heavily on the manufacturing industries and agriculture, with products including livestock, rice, timber, soybeans, wheat, melons, corn and cotton.

Competition

         The Bank faces strong competition in attracting deposits (its primary source of lendable funds) and originating loans. The Bank is one of 20 financial institution groups located in its primary market area. Competitors for deposits include commercial banks, credit unions, money market funds, and other investment alternatives, such as mutual funds, full service and discount broker-dealers, equity markets, brokerage accounts and government securities. 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

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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.

Internet Website

         Bancorp maintains a website at www.smbtonline.com. The information contained on that website is not included as part of, or incorporated by reference into, this Annual Report on Form 10-KSB. Bancorp currently makes available on or through its website Bancorp's Annual Report on Form 10-KSB, Quarterly Reports on Form 10-QSB and Current Reports on Form 8-KSB or amendments to these reports. These materials are also available free of charge on the Securities and Exchange Commission's website at www.sec.gov.

Selected Consolidated Financial Information

         This information is incorporated by reference from pages 9 and 10 of the 2005 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 lending activities consists of origination of loans secured by mortgages on one- to four-family residences and commercial real estate, construction loans on residential and commercial properties, commercial business loans and consumer loans. The Bank has also occasionally purchased loan participation interests originated by other lenders and secured by properties generally located in the State of Missouri.

         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 Loan Officers Committee, comprised of President Greg Steffens, Loan Chairman Duncan and Senior Commercial Lender William D. Hribovsek, along with various appointed loan officers. Loans to one borrower (or group of related borrowers), 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, 2005, the maximum amount which the Bank could lend to any one borrower and the borrower's related entities was approximately $7.4 million. At June 30, 2005, the Bank's two largest extensions of credit to one entity were $7.2 million and $6.9 million, respectively. Both of these credits were commercial loans and were performing according to their terms.

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         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,
			2005		2004		2003
			Amount	Percent	Amount	Percent	Amount	Percent
					(Dollars in thousands)
Type of Loan:
Mortgage Loans:
	One-to four-family		$125,775	47.01%	$122,392	49.28%	$116,806	52.42%
	Commercial real estate		58,144	21.73	56,112	22.59	48,649	21.83
	Construction		8,557	3.20	7,533	3.03	3,374	1.51
	Total mortgage loans		$192,476	71.94	$186,037	74.90	$168,829	75.76
Other Loans:
	Automobile loans		11,444	4.28	12,808	5.16	14,579	6.54
	Commercial business		59,284	22.16	45,923	18.49	37,060	16.63
	Home equity		7,504	2.80	5,901	2.38	3,019	1.35
	Other		2,466	0.92	2,768	1.11	2,943	1.33
		Total other loans	80,698	30.16	67,400	27.14	57,601	25.85
		Total loans	$273,174	102.10	$253,437	102.04	$226,430	101.61
Less:
	Undisbursed loans in process		$    3,627	(1.36)	$    3,093	(1.24)	$    1,717	(0.77)
	Deferred fees and discounts		(37)	0.01	11	--	37	(0.02)
	Allowance for loan losses		2,016	(0.75)	1,978	(0.80)	1,836	(0.82)
		Net loans receivable	$267,568	100.00%	$248,355	100.00%	$222,840	100.00%
Type of Security:
Residential real estate
	One-to four-family		$130,610	48.82%	$125,051	50.35%	$119,980	53.84%
	Multi-family		1,752	0.65	1,531	0.62	1,793	0.80
Commercial real estate			50,486	18.87	51,692	20.81	41,337	18.55
Land			9,628	3.60	7,763	3.12	5,719	2.57
Commercial			59,284	22.16	45,923	18.49	37,060	16.63
Consumer and other			21,414	8.00	21,477	8.65	20,541	9.22
		Total loans	$273,174	102.10	$253,437	102.04	$226,430	101.61
Less:
	Undisbursed loans in process		3,627	(1.36)	3,093	(1.24)	1,717	(0.77)
	Deferred fees and discounts		(37)	0.01	11	--	37	(0.02)
	Allowance for loan losses		2,016	(0.75)	1,978	(0.80)	1,836	(0.82)
		Net loans receivable	$267,568	100.00%	$248,355	100.00%	$222,840	100.00%

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         The following table shows the fixed and adjustable rate composition of the Bank's loan portfolio at the dates indicated.

			At June 30,
			2005		2004		2003
			Amount	Percent	Amount	Percent	Amount	Percent
					(Dollars in thousands)
Type of Loan:
Fixed-Rate Loans:
	One-to four-family		$  84,440	31.56%	$  81,430	32.79%	$  73,808	33.12%
	Commercial real estate		18,430	6.89	17,963	7.23	13,438	6.03
	Construction		5,882	2.20	4,733	1.91	3,174	1.42
	Consumer		13,867	5.18	15,798	6.24	17,356	7.79
	Commercial business		24,247	9.06	15,191	6.12	13,207	5.93
		Total fixed-rate loans	146,866	54.89	135,115	54.29	120,983	54.29
Adjustable-Rate Loans:
	One-to four-family		41,335	15.45	40,962	16.49	42,998	19.30
	Commercial real estate		39,714	14.84	38,149	15.36	35,211	15.80
	Construction		2,675	1.00	2,800	1.13	200	0.09
	Consumer		7,547	2.82	5,679	2.41	3,185	1.43
	Commercial business		35,037	13.10	30,732	12.37	23,853	10.70
		Total adjustable-rate loans	126,308	47.21	118,322	47.76	105,447	47.32
		Total Loans	273,174	102.10	253,437	102.05	226,430	101.61
Less:
	Undisbursed loans in process		3,627	(1.36)	3,093	(1.25)	1,717	(0.77)
	Net deferred loan fees		(37)	0.01	11	(0.00)	37	(0.02)
	Allowance for loan loss		2,016	(0.75)	1,978	(0.80)	1,836	(0.82)
			$267,568	100.00%	$248,355	100.00%	$222,840	100.00%

         One- to Four-Family Residential Mortgage Lending. The Bank actively originates 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, 2005, net mortgage loans secured by one- to four-family residences totaled $125.8 million, or 47.01% of net loans receivable.

         The Bank currently offers both fixed-rate and adjustable-rate mortgage ("ARM") loans. During the year ended June 30, 2005, the Bank originated $10.6 million of ARM loans and $20.7 million of fixed-rate one- to four-family residence 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 an additional 25 basis points. 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.

         Fixed-rate loans secured by one- to four-family residences have contractual maturities up to 30 years, and are generally fully amortizing with payments due monthly. These loans normally remain outstanding for a substantially shorter period of time because of refinancing and other prepayments. A significant change in the interest rate environment can alter the average life of a residential loan portfolio. The one- to four-family fixed-rate loans do not contain prepayment penalties. Most are written using secondary market guidelines. At June 30, 2005, one- to four-family loans with a fixed rate totaled $84.4 million.

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         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 3.75% over the CMT index. Current residential ARM loan originations are subject to annual and lifetime interest rate caps and floors. As a consequence of using interest rate caps, discounted initial rates and a "CMT" 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, 2005, loans tied to the CMT index totaled $32.2 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, 2005, loans tied to these indices totaled $8.0 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 2005, 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 land (improved and unimproved), strip shopping centers, retail establishments and other businesses generally located in the Bank's primary market area. At June 30, 2005, the Bank had $58.1 million in commercial real estate loans, which represent 21.7% 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, quarterly or annually based on the Wall Street prime rate. Generally, improved commercial real estate loan amounts do not exceed 80% of the lower of the appraised value or the 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. Generally, personal guaranties are obtained from the borrower in addition to obtaining the secured property as collateral for such loans. 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. 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, 2005, the Bank had $8.6 million, or 3.20% 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, 2005, the Bank had $8.6 million in construction loans, $5.6 million of which were secured by residential real estate, $2.0 million of which were secured

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by commercial real estate and $1.0 million of which were secured by multi-family 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 home equity, 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, 2005, the Bank's consumer loan portfolio totaled $21.4 million, or 8.0% of net loans receivable.

         Home equity loans represent 35.05% of the Bank's consumer loan portfolio at June 30, 2005, and totaled $7.5 million, or 2.80% of net loans receivable.

         Home equity lines of credit are secured with a deed of trust and are issued up to 100% of the appraised or assessed value of the property securing the line of credit, less the outstanding balance on the first mortgage. Interest rates on the home equity lines of credit are adjustable and are tied to the current prime interest rate. This rate is obtained from the Wall Street Journal and adjusts on a daily basis. Interest rates are based upon the loan-to-value ratio of the property with better rates given to borrowers with more equity. Home equity lines of credit, which are secured by residential properties, are secured by stronger collateral than automobile loans and because of the adjustable rate structure, contain less interest rate risk to the Bank. Lending up to 100% of the value of the property presents greater credit risk to the Bank. Consequently, the Bank limits this product to customers with a favorable credit history.

         Automobile loans represent 53.44% of the Bank's consumer loan portfolio at June 30, 2005, and totaled $11.4 million, or 4.28% of net loans receivable. Typically, automobile loans are made for terms of up to 60 months for new and 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.

         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, 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

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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, 2005, the Bank also had $59.3 million in commercial business loans outstanding, or 22.16% 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 $24.2 million in fixed rate and $35.0 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.

         Contractual Obligations and Commitments. The following table discloses our fixed and determinable contractual obligations and commercial commitments by payment date as of June 30, 2005. Commitments to extend credit totaled $28.3 million at June 30, 2005.

		Less Than 1 Year	1-3 Years	4-5 Years	More Than 5 Years	Total
		(In Thousands)
Federal Home Loan Bank
	advances	$10,500	$17,000	$15,000	$19,000	$61,500
Certificates of deposit		60,707	35,354	3,862	4	99,927
	Total	$71,207	$52,354	$18,862	$19,004	$161,427
		Less Than 1 Year	1-3 Years	4-5 Years	More Than 5 Years	Total
		(In Thousands)
Construction loans in process		$  3,627	$  ---	$  ---	$        --	$  3,672
Other commitments		18,889	365	640	4,871	24,765
		$22,516	$365	$640	$4,871	$28,392

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Loan Maturity and Repricing

         The following table sets forth certain information at June 30, 2005 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.

	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	$ 13,816	$23,681	$15,269	$73,009	$125,775
Commercial real estate	38,512	14,185	1,130	4,317	58,144
Construction	8,557	---	---	---	8,557
Consumer	8,779	11,965	646	24	21,414
Commercial business	40,314	18,766	204	---	59,284
Total loans	$109,978	$68,597	$17,249	$77,350	$273,174

         As of June 30, 2005, loans with a maturity date after June 30, 2006 with fixed interest rates totaled $127.8 million, and loans with a maturity date after June 30, 2006 with adjustable rates totaled $97.2 million.

Loan Originations, Sales and Purchases

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

         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 2005, the Bank originated $167.0 million of loans, compared to $169.4 million and $124.8 million in fiscal 2004 and 2003, respectively. Of these loans, mortgage loan originations were $60.8 million, $80.2 million and $63.2 million in fiscal 2005, 2004 and 2003, respectively.

         From time to time, the Bank has purchased loan participations consistent with its loan underwriting standards. In fiscal 2005, the Bank purchased $9.8 million of new loans. At June 30, 2005, loan participations totaled $16.6 million, or 6.20% of net loans receivable. All of these participations were secured by properties located in Missouri. At June 30, 2005, 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, liquidity, portfolio and leverage rate.

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

	Year Ended June 30,
	2005	2004	2003
	(Dollars in thousands)
Total loans at beginning of period	$253,437	$226,430	$214,222
Loans originated:
One-to four-family residential	33,306	43,640	31,346
Multi-family residential and         commercial real estate	19,309	27,533	16,253
Construction loans	1,835	2,539	276
Commercial and industrial	39,703	33,147	14,248
Consumer and others	9,764	9,908	9,706
Total loans originated	103,917	116,767	71,829
Loans purchased:
Total loans purchased	9,819	7,690	2,748
Loans sold:
Total loans sold	(9,217)	(5,398)	---
Principal repayments	84,772	(91,916)	(62,222)
Foreclosures	(10)	(136)	(147)
Net loan activity	19,737	27,007	12,208
Total mortgage loans at end of period	$273,174	$253,437	$226,430

Loan Commitments

         The Bank issues commitments for one- to four-family residential mortgage loans, 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 and stand by letters-of-credit. The Bank had outstanding net loan commitments of approximately $28.3 million at June 30, 2005. See Note13 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, 2005.

	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	7	$267	4	$130	11	$397
Commercial real estate	---	---	---	---	---	---
Commercial non-real estate	2	65	4	394	6	459
Other consumer	6	28	8	47	14	75
Totals	15	$360	16	$571	31	$931

         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 removed from 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, 2005, the Bank had eleven 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 $146,000, $700 and $8,000 on non-accrual loans during the years ended June 30, 2005, 2004 and 2003, respectively, if such loans had been performing in accordance with their terms during such periods. Interest income of approximately $8,000, $200 and $400 was recognized on these loans for the years ending June 30, 2005, 2004 and 2003, 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,
	2005	2004	2003	2002	2001
	(Dollars in thousands)
Nonaccruing loans:
One-to four-family	$  52	$    ---	$    ---	$    96	$     ---
Commercial real estate	---	---	---	28	---
Consumer	41	4	7	10	---
Commercial business	334	---	---	---	---
Total	$427	$      4	$      7	$   134	$     ---
Loans 90 days past due     accruing interest:
One-to four-family	$  78	$  114	$    74	$   177	$     51
Commercial real estate	---	---	---	---	336
Consumer	6	17	---	18	53
Commercial business	60	---	8	7	50
Total	$144	$  131	$    82	$   202	$   490
Total nonperforming loans	$571	$  135	$    89	$   336	$   490
Foreclosed assets held for sale:
Real estate owned	$  87	$  163	$  217	$   383	$1,162
Other nonperforming assets	7	17	41	5	27
Total nonperforming assets	$665	$  315	$  347	$   724	$1,679
Total nonperforming loans     to net loans	0.21%	0.05%	0.04%	0.16%	0.27%
Total nonperforming loans    to net assets	0.17%	0.04%	0.03%	0.13%	0.20%
Total nonperforming assets    to total assets	0.20%	0.10%	0.12%	0.27%	0.69%

         Other Loans of Concern. In addition to the non-performing assets discussed above, there was also an aggregate of $1.6 million in loans (all were commercial real estate and commercial business 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, 2005, the Company's balance of real estate owned totaled $87,000 and included one commercial lot.

         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 characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not

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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, 2005, classified assets totaled $1.3 million, or 0.54% of total assets as compared $2.2 million, or 0.9% of total assets at June 30, 2004.

         The Bank has classified $1.3 million of its assets as substandard and $21,000 as doubtful. The largest classified commercial lending relationship at June 30, 2005 totaled $332,000 and was performing in accordance with its terms. In addition, the Bank had classified three other commercial lending relationships, which in the aggregate totaled $887,000. 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 collectibility 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, 2005, of $2.0 million, which represented 306% of nonperforming assets as compared to an allowance of $2.0 million, which represented 664% of nonperforming assets at June 30, 2004. See "Item 3. Legal Proceedings" for a discussion of the impact on the Bank of allegedly fraudulent actions by a significant borrower, as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations - Comparison of the Years Ended June 30, 2005 and 2004" and Note 3 of Notes to Consolidated Financial Statements contained in the Annual Report.

         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,
	2005	2004	2003	2002	2001
	(Dollars in thousands)
Allowance at beginning of period	$1,978	$1,836	$1,569	$1,462	$1,277
Recoveries
One-to four-family	5	---	---	---	15
Commercial real estate	---	---	---	8	1
Commercial business	---	2	20	---	---
Consumer	39	24	42	29	37
Total recoveries	44	26	62	37	53
Charge offs:
One-to four-family	7	39	18	24	76
Commercial real estate	---	9	---	13	51
Commercial business	4,687	16	20	95	191
Consumer	127	95	87	148	310
Total charge offs	4,821	159	125	280	628
Net charge offs	(4,777)	(133)	(63)	(243)	(575)
Acquired allowance for losses	---	---	---	---	250
Provision for loan losses	4,815	275	330	350	510
Balance at end of period	$2,016	$1,978	$1,836	$1,569	$1,462
Ratio of allowance to total loans    outstanding at the end of the    period	0.75%	0.80%	0.81%	0.73%	0.79%
Ratio of net charge offs to    average loans outstanding    during the period	1.84%	0.06%	0.03%	0.12%	0.35%

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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,
	2005		2004		2003		2002		2001
	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	$   225	46.04%	$   219	48.29%	$   214	51.59%	$   237	56.04%	$   293	59.75%
Construction	67	3.13	60	2.97	25	1.49	24	1.44	16	1.83
Commercial real estate	595	21.28	634	22.14	546	21.49	602	20.09	657	19.89
Consumer	306	7.84	321	8.48	326	9.07	254	8.77	165	6.42
Commercial business	770	21.71	743	18.12	536	16.36	450	13.66	268	12.11
Unallocated	53	---	1	---	189	---	2	---	63	---
Total allowance for       loan losses	$2,016	100.00%	$1,978	100.00%	$1,836	100.00%	$1,569	100.00%	$1,462	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, CFO 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 has not classified any investment securities classified as held to maturity over the last five years. 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, 2005, AFS securities totaled $34.7 million (excluding FHLB stock). For information regarding the amortized cost and market values of the Company's investments, see Note 2 of Notes to Consolidated Financial Statements contained in the Annual Report.

         Presently, the Company has no high risk derivative instruments and no outstanding hedging activities. Management does not currently intend to purchase derivative instruments or enter into hedging activities.

         Investment and Other Securities. At June 30, 2005, the Company's investment securities portfolio totaled $20.2 million, or 6.2% of total assets as compared to $22.4 million, or 7.2% of total assets at June 30, 2004. During 2005, the Bank had $4.1 million in maturities, $4.2 in sales and $8.0 million in security purchases. Of the securities that matured, $4.0 million were called for early redemption. At June 30, 2005, the investment securities portfolio included $14.4 million in U.S. government and government agency bonds and $1.6 million in municipal bonds, $14.1 million of which are subject to early redemption at the option of the issuer. The remaining portfolio consists of $984,000 in FNMA preferred stock, $3.1 million in FHLB stock, and $500,000 in other securities. Based on the projected maturities, the weighted average life of the investment securities portfolio at June 30, 2005, excluding the FNMA preferred stock, was 37.4 months.

         Mortgage-Backed Securities. At June 30, 2005, MBS totaled $17.2 million, or 5.2%, of total assets as compared to $21.0 million, or 6.7%, of total assets at June 30, 2004. During fiscal 2005, the Bank had maturities and prepayments of $4.8 million and had purchases of $1.0 million in MBS. At June 30, 2005, the MBS portfolio included $1.3 million in adjustable-rate MBS, $8.7 million in fixed-rate MBS and $7.2 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, 2005 was 33.6 months. Prepayment rates may cause the anticipated average life of MBS portfolio to extend or shorten based upon actual prepayment rates.

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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,
	2005		2004		2003
	Fair Value	Percent of Portfolio	Fair Value	Percent of Portfolio	Fair Value	Percent of Portfolio
	(Dollars in thousands)
U.S. government and government    agencies	$14,373	69.85%	$11,314	50.55%	$3,662	42.29%
State and political subdivisions	1,600	7.78	777	3.47	1,304	15.06
FNMA preferred stock	984	4.78	1,002	4.48	1,018	11.76
Equity securities	---	---	3,415	15.25	---	---
FHLB stock	3,121	15.16	3,171	14.17	2,675	30.89
Other securities	500	2.43	2,704	12.07	---	---
Total	$20,578	100.00%	$22,383	100.00%	$8,659	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, 2005.

	Available Securities for Sale June 30, 2005
	Amortized Cost	Fair Value	Weighted Average Yield
	(Dollars in thousands)
U.S. government, government agencies and    other securities:
Due within 1 year	$       ---	$       ---	---%
Due after 1 year but within 5 years	13,518	13,400	3.85
Due after 5 years but within 10 years	1,465	1,473	4.83
Total	14,983	14,873	3.45
State and political subdivisions:
Due within 1 year	730	730	4.10
Due after 1 year but within 5 years	852	870	3.62
Due after 5 years but within 10 years	---	---	---
Total	1,582	1,600	3.84
No stated maturity:
FNMA preferred stock	1,000	984	5.09
FHLB stock	3,121	3,121	3.17
	4,121	4,105	3.64
Total Available for Sale	$20,686	$20,578	3.70%

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         The following table sets forth certain information at June 30, 2005 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, 2005
	(Dollars in thousands)
Amounts due:
Within 1 year	$     1,311
After 1 year through 3 years	493
After 3 years through 5 years	---
After 5 years	15,606
Total	$17,410

         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, 2005, which have fixed interest rates and have floating or adjustable rates.

	At June 30, 2005
	(Dollars in thousands)
Interest rate terms on amounts due after 1 year:
Fixed	$16,099
Adjustable	1,311
Total	$17,410

         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,
	2005		2004		2003
	Amortized Cost	Fair Value	Amortized Cost	Fair Value	Amortized Cost	Fair Value
	(Dollars in thousands)
FHLMC certificates	$  2,705	$  2,673	$  3,634	$3,552	$ 5,979	$ 5,999
GNMA certificates	259	259	350	348	592	602
FNMA certificates	7,127	7,066	9,225	9,094	6,545	6,630
Collateralized mortgage obligations issued    by government agencies	7,319	7,245	8,158	8,000	11,552	11,490
Collateralized mortgage obligations issued    by private issuer	---	---	---	---	294	297
Total	$17,410	$17,243	$21,367	$20,994	$24,962	$25,018

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Deposit Activities and Other Sources of Funds

         General. The Company's primary sources of funds are deposits, borrowings, payments 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.

         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 or Northeast Arkansas. 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.

         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 Amount	Balance	Percentage of Total Deposits
				(In thousands)
0.00%	None	Non-interest Bearing	$   100	$  15,658	6.97%
0.65	None	NOW Accounts	100	28,971	12.90
1.12	None	Savings Accounts	100	65,550	29.18
0.74	None	Money Market Deposit Accounts	1,000	14,560	6.48
		Certificates of Deposit
2.91%	91-day	Fixed-term/Fixed-rate	1,000	1,021	0.45
2.22	91-day	IRA Fixed-term/Fixed-rate	1,000	28	0.01
2.90	5 month	Fixed-term/Fixed-rate	1,000	1,712	0.76
2.71	6 month	Fixed-term/Fixed-rate	1,000	8,284	3.69
2.27	6 month	IRA Fixed-term/Fixed-rate	1,000	619	0.28
2.15	7 month	Fixed-term/Fixed-rate	1,000	186	0.08
2.30	9 month	Fixed-term/Fixed-rate	1,000	2,652	1.18
2.16	9 month	IRA Fixed-term/Fixed-rate	1,000	1,136	0.51
2.52	11 month	Fixed-term/Fixed-rate	1,000	7,473	3.33
2.44	11 month	IRA Fixed-term/Fixed-rate	1,000	1,329	0.59
2.32	12 month	Fixed-term/Fixed-rate	1,000	10,647	4.74
2.30	12 month	IRA Fixed-term/Fixed-rate	1,000	1,643	0.73
2.98	13 month	Fixed-term/Fixed-rate	1,000	8,838	3.93
2.98	13 month	IRA Fixed-term/Fixed-rate	1,000	645	0.29
3.27	15 month	Fixed-term/Fixed-rate	1,000	13,023	5.80
3.39	15 month	IRA Fixed-term/Fixed-rate	1,000	1,957	0.87
2.42	18 month	Fixed-term/Fixed-rate	1,000	1,572	0.70
3.09	18 month	IRA Fixed-term/Fixed-rate	1,000	518	0.23
2.54	24 month	Fixed-term/Fixed-rate	1,000	3,208	1.43
3.39	24 month	IRA Fixed-term/Fixed-rate	1,000	455	0.20
2.97	24 month	IRA Fixed-term/Variable rate	1,000	344	0.15
2.90	25 month	Fixed-term/Fixed-rate	1,000	2,641	1.18
2.98	25 month	IRA Fixed-term/Fixed-rate	1,000	274	0.12
2.72	29 month	Fixed-term/Fixed-rate	1,000	17	0.01
2.90	30 month	Fixed-term/Fixed-rate	1,000	333	0.15
3.23	35 month	Fixed-term/Fixed-rate	1,000	108	0.05
3.26	35 month	IRA Fixed-term/Fixed-rate	1,000	118	0.05
3.02	36 month	Fixed-term/Fixed-rate	1,000	8,001	3.56
2.84	36 month	IRA Fixed-term/Fixed-rate	1,000	2,613	1.16
3.94	48 month	Fixed-term/Fixed-rate	1,000	1,252	0.56
3.91	48 month	IRA Fixed-term/Fixed-rate	1,000	243	0.11
4.94	55 month	Fixed-term/Fixed-rate	1,000	5,733	2.55
4.90	55 month	IRA Fixed-term/Fixed-rate	1,000	1,021	0.45
4.26	60 month	Fixed-term/Fixed-rate	1,000	7,148	3.18
4.03	60 month	IRA Fixed-term/Fixed-rate	1,000	3,057	1.36
4.00	84 month	Fixed-term/Fixed-rate	1,000	74	0.03
3.77	96 month	Fixed-term/Fixed-rate	1,000	4	0
				$224,666	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, 2005. 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	$  7,188
Over three through six months	4,762
Over six through twelve months	9,688
Over 12 months	12,085
Total	$33,723

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,
	2005	2004	2003
	(Dollars in thousands)
0.00 - 0.99%	$       ---	$       13	$       ---
1.00 - 1.99%	9,291	40,381	32,138
2.00 - 2.99%	40,481	9,209	21,162
3.00 - 3.99%	36,306	14,629	10,209
4.00 - 4.99%	10,600	14,262	15,343
5.00 - 5.99%	3,036	3,834	5,854
6.00 - 6.99%	213	265	1,595
Total	$99,927	$82,593	$86,301

         The following table sets forth the amount and maturities of all time deposits at June 30, 2005.

	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%	$  9,291	$       ---	$     ---	$     ---	$     ---	$  9,291	9.30%
2.00 - 2.99%	31,358	8,108	991	24	----	40,481	40.51
3.00 - 3.99%	18,459	12,430	3,387	1,839	191	36,306	36.33
4.00 - 4.99%	970	6,790	1,028	204	1,608	10,600	10.61
5.00 - 5.99%	416	2,620	---	---	---	3,036	3.04
6.00 - 6.99%	213	---	---	---	---	213	0.21
Total	$60,707	$29,948	$5,406	$2,067	$1,799	$99,927	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,
	2005			2004			2003
	Amount	Percent of Total	Increase (Decrease)	Amount	Percent of Total	Increase (Decrease)	Amount	Percent of Total	Increase (Decrease)
	(Dollars in thousands)
Noninterest bearing	$  15,658	6.97%	$  1,515	$  14,143	6.67%	$  1,432	$12,711	6.53%	$2,504
NOW checking	28,971	12.90	(1,607)	30,578	14.43	6,581	23,997	12.34	4,520
Savings accounts	65,550	29.18	636	64,914	30.63	8,134	56,780	29.19	742
Money market deposit	14,560	6.48	(5,171)	19,731	9.31	4,988	14,743	7.58	(4,231)
Fixed-rate certificates    which mature(1):
Within one year	60,505	26.93	6,748	53,757	25.36	(1,116)	54,873	28.21	(1,713)
Within three years	35,214	15.67	12,503	22,711	10.71	5,594	17,117	8.80	248
After three years	3,865	1.72	(1,883)	5,748	2.71	(8,115)	13,863	7.13	3,645
Variable-rate certificates    which mature within    one year	202	0.09	40	162	0.08	(112)	274	0.14	---
Variable-rate certificates    which mature within    two years	141	0.06	(74)	215	0.10	41	174	0.09	(130)
Total	$224,666	100.00%	$12,707	$211,959	100.00%	$17,427	$194,532	100.00%	$  5,585

___________________________

⁽¹⁾ At June 30, 2005, 2004 and 2003, certificates in excess of $100,000 totaled $33.7 million, $24.0 million and $26.1 million, respectively.

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

	At June 30,
	2005	2004	2003
	(Dollars in thousands)
Beginning Balance	$211,959	$194,532	$188,947
Net increase before interest credited	9,105	14,770	2,263
Interest credited	3,602	2,657	3,322
Net increase in savings deposits	12,707	17,427	5,585
Ending balance	$224,666	$211,959	$194,532

         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 4.45% 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, 2005, the Bank had $61.5 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, $15.0 million in borrowings, all of which had fixed rates and original maturities of three to six years and $9.5 million in short-term borrowings. In order for the Bank to borrow from the FHLB, it has pledged $73.8 million of its residential loans to the FHLB and has purchased $3.1 million in FHLB stock. At June 30, 2005, the Bank had additional borrowing capacity on its pledged residential loans from the FHLB of $32.3 million as compared to $32.9 million at June 30, 2004.

         Southern Missouri Statutory Trust I, a Delaware business trust subsidiary of the Company, issued $7.0 million in Floating Rate Capital Securities (the "Trust Preferred Securities") with a liquidation value of $1,000 per share. The securities are due in 30 years, redeemable after five years and bear interest at a floating rate based on LIBOR. The securities represent undivided beneficial interests in the trust, which was established by Southern Missouri Bancorp for the purpose of issuing the securities. The Trust Preferred Securities were sold in a private transaction exempt from registration under the Securities Act of 1933, as amended (the "Act") and have not been registered under the Act. The securities may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

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         Southern Missouri Statutory Trust I used the proceeds of the sale of the Trust Preferred Securities to purchase Junior Subordinated Debentures of Southern Missouri Bancorp. Southern Missouri Bancorp is using the net proceeds for working capital and investment in its subsidiaries. Trust Preferred Securities qualify as Tier I Capital for regulatory purposes.

         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,
			2005	2004	2003
			(Dollars in thousands)
Year end balances
	Short-term FHLB advances		$  9,500	$  7,250	$  5,500
	Securities sold under agreements to repurchase		10,757	6,448	5,234
		Total short-term borrowings	$20,257	$13,698	$10,734
	Weighted average rate at year end		3.16%	1.24%	1.38%
			Year Ended June 30,
			2005	2004	2003
			(Dollars in thousands)
Short term FHLB advances
	Daily average balance		$  8,263	$  6,845	$   347
	Weighted average interest rate		2.22%	1.27%	1.65%
	Maximum outstanding at any month end		$16,750	$12,900	$5,500
Securities sold under agreements to repurchase
	Daily average balance		$  8,847	$  6,341	$5,480
	Weighted average interest rate		2.11%	1.15%	1.33%
	Maximum outstanding at any month end		$13,231	$  8,073	$7,444
Subordinated Debt
	Daily average balance		$  7,217	$  2,904	$     ---
	Weighted average interest rate		5.12%	4.02%	---%
	Maximum outstanding at month end		$  7,217	$  7,217	$    ---

Subsidiary Activities

         The Bank has one subsidiary, SMS Financial Services, Inc., which had no assets or liabilities at June 30, 2005 and is currently inactive. 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 trust company with banking powers, 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 trust company with banking powers, 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. 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, 2005, the Bank was in compliance with these reserve requirements.

         The Bank is 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, 2005, the Bank had $3.1 million in FHLB stock, which was in compliance with this requirement. The Bank is paid a quarterly dividend on this stock which averaged 3.12% in 2005. The quarterly dividend is expected to float at a margin over three month libor.

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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 1.60 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, 2005, 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. See Footnote 12 in the notes to the consolidated financial statements for a description of the Company's regulatory capital compliance.

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         For a discussion of the Bank's capital position relative to its FDIC Capital requirements at June 30, 2005, see Note 12 of the Notes to the Consolidated Financial Statements in the annual report to stockholders included in Exhibit 13 and hereby incorporated by reference.

         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.

         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.

         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.

         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

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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

         The Company is a bank holding company that has elected to be treated as a financial holding company by the FRB. Financial holding companies are subject to comprehensive regulation by the FRB under the Bank Holding Company Act, and the regulations of the FRB. As a financial holding company, the Company is required to file reports with the FRB and such additional information as the FRB may require, and is subject to regular examinations by the FRB. The FRB also has extensive enforcement authority over financial holding companies, including, among other things, the ability to assess civil money penalties, to issue cease and desist or removal orders and to require that a holding company divest subsidiaries (including its bank subsidiaries). In general, enforcement actions may be initiated for violations of law and regulations and unsafe or unsound practices.

         Under FRB policy, a financial holding company must serve as a source of strength for its subsidiary banks. Under this policy the FRB may require, and has required in the past, that a holding company to contribute additional capital to an undercapitalized subsidiary bank.

         Under the Bank Holding Company Act, a financial holding company must obtain FRB approval before: (i) acquiring, directly or indirectly, ownership or control of any voting shares of another bank or bank holding company if, after such acquisition, it would own or control more than 5% of such shares (unless it already owns or controls the majority of such shares); (ii) acquiring all or substantially all of the assets of another bank or bank or financial holding company; or (iii) merging or consolidating with another bank or financial holding company.

         The Bank Holding Company Act also prohibits a financial holding company generally from engaging directly or indirectly in activities other than those involving banking, activities closely related to banking that are permitted for a bank holding company, securities, insurance or merchant banking.

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.

         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

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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 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 banks, such as the Bank, are subject to a Missouri bank franchise and income tax. The Missouri bank franchise tax is based on the Bank's taxable income, however, it is reduced by its portion of the Missouri income tax.

         The Missouri franchise tax is imposed on (i) the bank's taxable income at the rate of 7% of the taxable income (determined without regard for any net operating losses), less credits for all other state or local taxes, including income tax, however, the credits excludes taxes paid for real estate, unemployment taxes, bank tax, and taxes on tangible personal property owned by the Bank and held for lease or rentals to others - income-based calculation; and (ii) the bank's assets at a rate of .033% of total assets less deposits and the investment in greater than 50% owned subsidiaries - asset-based calculation.

         The Bank and its holding company and related subsidiaries are subject to an income tax that is imposed on the consolidated taxable income at the rate of 6.25%. The return is filed on a consolidated basis by all members of the consolidated group including the Bank.

Audits

         There have been no 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 10 of Notes to Consolidated Financial Statements contained in the Annual Report.

Personnel

         As of June 30, 2005, the Company had 87 full-time employees and 7 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, 2005.

Location	Year Opened	Building Net Book Value as of June 30, 2005	Land Owned/ Leased	Building Owned/ Leased
		(Dollars in thousands)
Main Office
531 Vine Street Poplar Bluff, Missouri	1966	$678	Owned	Owned
Branch Offices
Highway 60 Van Buren, Missouri	1982	43	Owned	Owned
1330 Highway 67 Poplar Bluff, Missouri	1976	4	Leased(1)	Owned
Highway PP Poplar Bluff, Missouri	2001	571	Owned	Owned
Business 60 West Dexter, Missouri	1979	71	Owned	Owned
301 First Street Kennett, Missouri	1982	876	Owned	Owned
302 Washington Doniphan, Missouri	2001	621	Owned	Owned
Highway 53 Quiln, Missouri	2000	52	Owned	Owned

______________________

⁽¹⁾ Lease expires on November 30, 2014 but includes options to renew at lessee's discretion.

Item 3. Legal Proceedings

         Except as set forth below, 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.

         The Bank discovered there had been an adverse development with respect to a substandard loan, which resulted from allegedly fraudulent activities on the part of a significant borrower. Control over and access to a significant portion of the collateral underlying the loan is now the subject of litigation between the Bank and another financial institution with a non-performing loan to the same borrower. As a result, the Bank increased its provision for loan losses by $1.9 million as of June 28, 2005, or approximately $1.2 million on an after-tax basis. At the same time, the Bank reduced the value of the borrowers loans by $2.4 million. The remaining net loan balance after this write down and the application of the proceeds from the sale of a portion of the collateral securing the loans is approximately $300,000. The remaining collateral, over which the Bank has control or is able to gain control, will be sold at auction as soon as necessary arrangements can be made. To the extent this litigation is settled or resolved in favor of the Bank, a portion of

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this write down could be recovered . The Company cannot predict whether or to what extent such a recovery may occur.

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, 2005.

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

         Report From Independent Registered Public Accounting Firm*

(a)	Consolidated Balance Sheets as of June 30, 2005 and 2004*
(b)	Consolidated Statements of Income for the Years Ended June 30, 2005, 2004 and 2003*
(c)	Consolidated Statements of Stockholders' Equity For the Years Ended June 30, 2005, 2004 and 2003*
(d)	Consolidated Statements of Cash Flows For the Years Ended June 30, 2005, 2004 and 2003*
(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

         On April 2, 2004, the Company dismissed Kraft, Miles and Tatum, LLC ("KMT") as its independent accountant. The reports of KMT on the financial statements for the past two fiscal years contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. The audit committee of the board of directors made the decision to change independent accountants. In connection with its audits for the two most recent fiscal years and through April 2, 2004, there were no disagreements with KMT on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KMT would have caused KMT to make reference thereto in its report on the company's financial statements. During the two most recent fiscal years and through April 2, 2004, there were no reportable events (as set forth in Regulation S-B Item 304 (a)(1)(iv)(B)) with KMT. KMT furnished the Company with a letter addressed to the SEC stating that it agrees with the above statements. A copy of this letter was included as an exhibit to the Current Report on Form 8-K filed on April 4, 2004 announcing this decision.

         On April 2, 2004, the Company engaged BKD, LLP ("BKD") as its independent accountant for the fiscal year ending June 30, 2005. Prior to April 2, 2004, the Company had engaged BKD for consulting services. The Company did not consult with BKD regarding (1) the application of accounting principles to a specific completed or proposed transaction, (2) the type of audit opinion that might be rendered on the company's financial statements or (3) the subject matter of a disagreement or reportable event with the former auditor (as set forth in Regulation S-B Item 304 (a)(1)(iv)(B)).

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Item 8A. Controls and Procedures

         (a) Evaluation of Disclosure Controls and Procedures

         An evaluation of the Company's disclosure controls and procedures (as defined in Rule13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of June 30, 2005, was carried out under the supervision and with the participation of our Chief Executive Officer, who is also our Chief Financial Officer, and several other members of our senior management. Our Chief Executive Officer concluded that our disclosure controls and procedures as currently in effect are effective in ensuring that the information required to be disclosed in the reports the Company files or submits under the Exchange Act is (i) accumulated and communicated to our management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. There have been no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Act) that occurred during the year ended June 30, 2005, that has materially effected, or is reasonably likely to materially affect, our internal control over financial reporting.

         We intend to continually review and evaluate the design and effectiveness of the Company's disclosure controls and procedures and to improve the Company's controls and procedures over time and to correct any deficiencies that we may discover in the future. The goal is to ensure that senior management has timely access to all material financial and non-financial information concerning the Company's business. While we believe the present design of the disclosure controls and procedures is effective to achieve its goal, future events affecting its business may cause the Company to modify its disclosure controls and procedures.

Item 8B. Other Information

         None.

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 October 17, 2005, 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 October 17, 2005, 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.

Section 16(a) 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. To the Company's knowledge no late reports occurred during the fiscal year ended June 30, 2005. All other Section 16(a) filing requirements applicable to our executive officers, directors and greater than 10% beneficial owners were complied with.

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Code of Ethics

         On January 20, 2004, the Company adopted a written Code of Ethics based upon the standards set forth under Item 406 of Regulation S-B of the Securities Exchange Act. The Code of Ethics applies to all of the Company's directors, officers and employees.

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 October 17, 2005, 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 October 17, 2005, 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	188,515	10.70	19,000
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 October 17, 2005, 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. 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
			(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	****
			(x)	Rebecca McLane Brooks	*****
			(xi)	Charles R. Love	*****
			(xii)	Charles R. Moffitt	*****
		(e)		Tax Sharing Agreement	***
11	Statement Regarding Computation of Per Share Earnings				11
13	2004 Annual Report to Stockholders				13
14	Code of Conduct and Ethics				+++
21	Subsidiaries of the Registrant				21
23	Consent of Auditors				23
31	Rule 13a-14(a)/15d-14(a) Certifications
32	Section 1350 Certifications

_______________________

*	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 Report on Form 10-QSB for the quarter ended December 31, 2004.
++	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 Current Report on Form 8-K filed on September 15, 2005.

Item 14. Principal Accountant Fees and Services

         Information concerning fees and services by our principal accountants is incorporated herein by reference from our definitive Proxy Statement for the 2005 Annual Meeting of Stockholders, a copy of which will be filed not later than 120 days after the close of the fiscal year.

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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 27, 2005	By:	/s/ Greg A. SteffensGreg 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/ James W. Tatum James W. Tatum Chairman of the Board of Directors	September 27, 2005
By:	/s/ Greg A. Steffens Greg A. Steffens President (Principal Executive and Financial and Accounting Officer)	September 27, 2005
By:	/s/ Samuel H. Smith Samuel H. Smith Vice President and Director	September 27, 2005
By:	/s/ Ronnie D. Black Ronnie D. Black Secretary and Director	September 27, 2005
By:	/s/ L. Douglas Bagby L. Douglas Bagby Director	September 27, 2005
By:	/s/ Sammy A. Schalk Sammy A. Schalk Director	September 27, 2005
By:	/s/ Rebecca McLane Brooks Rebecca McLane Brooks Director	September 27, 2005
By:	/s/ Charles R. Love Charles R. Love Director	September 27, 2005
By:	/s/ Charles R. Moffitt Charles R. Moffitt Director	September 27, 2005

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Index to Exhibits

Regulation S-B Exhibit Number	Document
11	Statement Regarding Computation of Per Share Earnings
13	2005 Annual Report to Stockholders
21	Subsidiaries of the Registrant
23	Consent of Auditors
31	Rule 13a-14(a)/15d-14(a) Certifications
32	Section 1350 Certifications

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,
	2005	2004	2003
Basic    Average shares outstanding	2,225,493	2,277,757	2,334,892
Net income	$104,259	$2,882,901	$2,738,218
Basic earnings per share	$ 0.05	$ 1.27	$ 1.17
Diluted    Average shares outstanding	2,225,493	2,277,757	2,334,892
Net effect of dilutive stock options - based on the     treasury stock method using the period end market     price, if greater than average market price	64,255	57,543	63,468
Total	2,289,748	2,335,300	2,398,360
Net income	$104,259	$2,882,901	$2,738,218
Diluted earnings per share	$ 0.05	$ 1.23	$ 1.14

EX-13

EXHIBIT 13

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2005 was, for all of us at Southern Missouri Bancorp, Inc.
personally disappointing. For net income to drop from
a record $2.9 million to $104,000 as a result of one
potentially fraudulent credit relationship is disheartening.
Nonetheless, we are confident in the overall approach
we have taken. To see why, please read on...

>  TABLE of CONTENTS  <

Letter to Shareholders	2
Common Share Data	8
Financial Review	9
Report from Independent    Registered Public Accounting Firm	20
Consolidated Financial Statements	22
Notes to Consolidated Financial Statements	27
Corporate and Investor Information	48
Directors and Officers	49

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>  FINANCIAL SUMMARY  <

	2005	2004	CHANGE(%)
EARNINGS (dollars in thousands)
Net interest income	$   9,252	$   9,155	1.0
Provision for possible loan losses	4,815	275	1,650.9
Other income	2,313	1,875	23.4
Other expense	6,728	6,445	4.4
Income taxes	(82)	1,427	(105.7)
Net income	104	2,883	(96.4)
PER COMMON SHARE
Net income:
Basic	$     .05	$    1.27	(96.1)
Diluted	.05	1.23	(95.9)
Tangible book value	10.07	10.26	(1.0)
Closing market price	14.50	15.76	(8.0)
Cash dividends declared	.36	.36	0
AT YEAR-END (dollars in thousands)
Total assets	$ 330,360	$ 311,893	6.0
Loans, net of allowance	267,568	248,355	7.7
Reserves as a percent of nonperforming loans	353.36%	1460.14%
Deposits	$ 224,666	$ 211,959	6.0
Stockholders' equity	25,003	25,952	(3.7)
FINANCIAL RATIOS
Return on stockholders' equity	.39%	11.09%
Return on assets	.03	.98
Net interest margin	3.06	3.28
Efficiency ratio	58.20	58.40
Allowance for possible loan losses to net loans	.75	.80
Equity to average assets at year-end	7.70	8.40
OTHER DATA(1)
Common shares outstanding	2,232,816	2,262,004
Average common and equivalent       shares outstanding	2,255,674	2,335,300
Stockholders of record	285	288
Full-time equivalent employees	88	90
Assets per employee (in thousands)	$ 3,754	$ 3,465
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, 2005 can be described in many ways. In the most fundamental way it was a true disappointment. Net income for Southern Missouri Bancorp, Inc. (Company) decreased from $2.9 million to $104,000. The decrease was due to a $4.9 million credit relationship involving allegedly fraudulent financial statements and other fraudulent activities. As a result of this one credit relationship, the Company wrote the value of the loan down by $4.6 million and sold part of the creditors' collateral, leaving the balance of the loan at $300,000. Not only did the large write down cause the provision for loan loss to increase by $4.6 million, the Company had a $210,000 loss on deposit, wrote off interest of $41,000, had $51,000 in other expenses and accrued $150,000 in legal fees all related to this credit relationship. Management and the Company's attorneys are working diligently to resolve all the issues with the creditor and the other financial institutions that have interests in the creditor and its collateral. We have been advised that, due to the complexity of the issues involved, it could take two years or longer to finally resolve the relationship. The Company could at some point in time realize a gain in the settlement of all the lawsuits, but this cannot be predicted with certainty. Without this significant event, and the related expenses and write offs, our net income would have approximated $3.2 million, an increase of

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11% over the prior year and diluted earnings per share of $1.40, an increase of 13.8% over the prior year. Stable Business Growth Continues
The second way fiscal 2005 can be described is by continued growth in our core business - loans and deposits. During fiscal 2005, total assets grew by $18.7 million. This growth can be attributed to loan growth of $19.2 million. With increased growth projections for 2006, the Company continues to look at all opportunities for new business, including de novo branching or acquisition strategies to increase our market area, as well as adding senior personnel who can bring or develop new business. Total deposits grew $12.7 million due in part to managements' strategic plan to offer competitively priced certificates of deposit over the course of the year. These CDs were for 11-25 month terms and helped reduce overnight borrowing at attractive prices while improving our sensitivity to rising short-term interest rates. We have continued to enhance relationships with our commercial customers. We have recommended the use of "Sweep" accounts to offer them more value and add another link to the bank. These deposits, also known as "securities sold under agreements to repurchase" increased by $4.2 million. The Company has seen a continuing increase in market share in all its markets, but with other institutions entering our market area, we cannot depend on this trend to go on indefinitely. These developments have confirmed the Company's strategic plan to expand into new markets, either through acquisition or de novo branches to help increase shareholder value.

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>  LETTER to SHAREHOLDERS  <

Technology continues to improve efficiency
Yet another way to describe this year is in terms of operating efficiency. The Company has maintained an operating efficiency ratio of 58.2% as compared to the peer bank group of 67.5%. This superior efficiency ratio is a result of investments made over the last several years to enhance our technological infrastructure. An example of technology increasing operating efficiency is the delivery of customer account statements. No longer does the Company pay for postage, envelopes and paper, and the labor to assemble them, if the customer elects to receive an emailed statement. This results in reduced costs to the Company. Another enhancement installed in the last year was a new communication system converting a multitude of telephone lines at the Poplar Bluff locations into one trunk line, reducing communication expenses. Two products continuing to show effectiveness are telephone and Internet banking. These two services not only enhance our relationship with customers and offer them banking services 24/7, they allow our customers to get information on their accounts without contacting the Company's customer service department, reducing the costs associated with adding customer service staff. The Company recognizes the importance of delivering personal service to our customers, so we will continue to seek solutions that increase operating efficiency and produce valuable customer services.

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What does 2006 hold?
While it is difficult to predict rates, we anticipate that short-term interest rates will continue to increase in fiscal year 2006 and long-term interest rates will increase only slightly or remain stable for the year, thus further flattening the market yield curve. The Company's strategy to increase variable rate loans tied to prime and increase less rate sensitive deposits should reduce the impact of a flatter yield curve on our net interest income. In addition to exploring opportunities for acquisitions and de novo branches, the Company purchased land for expansion purposes during 2005 in order to maintain key Company operations in one location to maximize efficiency and to reduce overhead expenses. A new customer enhancement will be available in the first quarter of 2006. Through a program called Branch Capture, the Company will be able to extend the end of the business day past the traditional 2:00 p.m. closing on Monday through Thursday. This allows individuals and commercial customers extra time to deposit funds and make loan payments. It also saves the Company money in courier costs, since these items will be transmitted electronically.

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In Summary
I want to express my heartfelt thanks. To our customers, for choosing us as your financial institution. To our employees, for your commitment and extra effort during a challenging year. To our Board of Directors, for your valuable advice and counsel. And finally, to our Shareholders, thank you for your continuing interest in Southern Missouri Bancorp, your investment in our Company ... and for sharing our confidence in the future.

GREG STEFFENS
PRESIDENT, SOUTHERN MISSOURI BANCORP, INC.

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New Board Members
Shortly after last year's report was published, we announced several new Board members, to replace members who had retired. We want to gratefully acknowledge the contributions of Charles Love, Rebecca Brooks and Charles Moffitt as members of the Board of Directors of Southern Missouri Bank and Southern Missouri Bancorp, Inc. during the past year. We look forward to their continuing support as we work together to keep our bank growing.

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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 market 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, 2005, there were approximately 282 stockholders of record. This does not reflect the number of persons or entities who hold stock in nominee or "street name."

2005	High	Low	Close	Book Value At End Of Period	Market Price To Book Value	Dividends Declared
4th Quarter (6-30-05)	$16.43	$13.85	$14.50	$11.24	129.00%	$0.09
3rd Quarter (3-31-05)	$18.48	$15.80	$15.85	$11.57	136.99%	$0.09
2nd Quarter (12-31-04)	$19.00	$14.81	$18.49	$12.19	151.68%	$0.09
1st Quarter (9-30-04)	$16.29	$15.01	$15.90	$11.96	132.94%	$0.09
2004
4th Quarter (6-30-04)	$17.50	$14.70	$15.76	$11.52	136.81%	$0.09
3rd Quarter (3-31-04)	$15.76	$13.61	$15.40	$11.53	133.56%	$0.09
2nd Quarter (12-31-03)	$14.55	$13.61	$13.85	$11.40	121.49%	$0.09
1st Quarter (9-30-03)	$14.37	$12.38	$13.76	$11.16	123.30%	$0.09
2003
4th Quarter (6-30-03)	$12.88	$12.00	$12.70	$10.94	116.09%	$0.07
3rd Quarter (3-31-03)	$12.50	$10.48	$12.00	$10.69	112.25%	$0.07
2nd Quarter (12-31-02)	$11.13	$9.12	$10.45	$10.59	98.68%	$0.07
1st Quarter (9-30-02)	$ 9.55	$ 8.73	$ 9.50	$10.39	91.43%	$0.07

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 12 of Notes to Consolidated Financial Statements included elsewhere in this report.

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BUSINESS OF THE COMPANY AND THE BANK
    Southern Missouri Bancorp, Inc. (Southern Missouri or Company) is a Missouri corporation and owns all of the outstanding stock of Southern Missouri Bank & Trust Co. (SMBT or the Bank). The Company's earnings are primarily dependent on the operations of the Bank. As a result, the following discussion relates primarily to the operations of the Bank.
    The Bank was originally chartered by the State of Missouri in 1887 and converted from a state-chartered stock savings and loan association to a Federally-chartered stock savings bank effective June 1995. Then, effective February 1998, the Bank converted its charter to a state-chartered stock savings bank. On June 28, 2004, the Bank converted to a state chartered trust company with banking powers. 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 consists of attracting deposits from the communities it serves and investing those funds in permanent loans secured by one-to-four family residences, commercial real estate, commercial business and consumer loans. The Company's results of operations are primarily dependent on its net interest margin, which is the difference between the average yield on loans, mortgage-related securities and investments and the average rate paid on deposits, securities sold under agreements to repurchase and borrowings.
    The net interest margin is affected by economic, regulatory and competitive factors that influence interest rates, loan demand and deposits. Lending activities are funded through the attraction of deposit accounts consisting of checking accounts, passbook accounts, money market deposit accounts, certificate of deposit accounts with terms of 60 months or less, securities sold under agreements to repurchase, advances from the Federal Home Loan Bank of Des Moines, and to a lesser extent brokered deposits. The Bank currently conducts its business through its home office located in Poplar Bluff and seven full service branch facilities in Poplar Bluff, (2), Van Buren, Dexter, Kennett, Doniphan and Qulin, Missouri.

(dollars in thousands)
	At June 30
Financial Condition Data:	2005	2004	2003	2002	2001
Total assets	$ 330,360	$ 311,893	$ 279,455	$ 266,288	$ 240,494
Loans receivable, net	267,568	248,355	222,840	211,212	180,857
Mortgage-backed securities	17,243	20,994	25,019	22,609	26,224
Cash, interest-bearing deposits    and investment securities	21,344	23,794	13,602	18,763	19,607
Deposits	224,666	211,959	194,532	188,947	173,281
Borrowings	72,257	64,698	58,734	51,311	41,115
Subordinated debt	7,217	7,217	-	-	-
Stockholders' equity	25,003	25,952	25,108	24,511	23,582
(dollars in thousands)
	For The Year Ended June 30
Operating Data:	2005	2004	2003	2002	2001
Interest income	$  17,284	$  15,700	$  16,404	$  16,993	$  16,161
Interest expense	8,032	6,545	7,120	8,139	9,490
Net interest income	9,252	9,155	9,284	8,854	6,671
Provision for loan losses	4,815	275	330	350	510
Net interest income after    provision for loan losses	4,437	8,880	8,954	8,504	6,161
Noninterest income	2,313	1,875	1,415	874	1,447
Noninterest expense	6,728	6,445	6,165	5,872	5,219
Income before income taxes	22	4,310	4,204	3,506	2,389
Income tax (benefit) expense	(82)	1,427	1,466	1,197	840
Net income	$     104	$   2,883	$   2,738	$   2,309	$   1,549
Basic earnings per common share	$      .05	$    1.27	$    1.17	$      .97	$      .63
Diluted earnings per common share	$      .05	$    1.23	$    1.14	$      .95	$      .63
Dividends per share	$      .36	$      .36	$      .28	$      .25	$      .25

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	At June 30
Other Data:	2005	2004	2003	2002	2001
Number of:
Real estate loans	2,850	2,877	2,842	2,952	2,910
Deposit accounts	17,336	16,995	16,455	15,975	15,630
Full service offices	8	8	8	8	8
	At Or For The Year Ended June 30
Key Operating Ratios:	2005	2004	2003	2002	2001
Return on assets (net income    divided by average assets)	.03%	.98%	1.00%	.91%	.71%
Return on average equity (net    income divided by average equity)	.39	11.09	11.08	9.77	6.86
Average equity to average assets	8.18	8.82	9.02	9.29	10.29
Interest rate spread (spread between    weighted average rate on all interest-    earning assets and all interest-    bearing liabilities)	2.84	3.06	3.29	3.33	2.76
Net interest margin (net interest    income as a percentage of average    interest-earning assets)	3.06	3.28	3.57	3.67	3.22
Noninterest expense to average assets	2.07	2.19	2.25	2.31	2.38
Average interest-earning assets to    average interest-bearing liabilities	108.10	109.42	110.67	110.15	110.26
Allowance for loan losses to total    loans (1)	.75	.80	.81	.73	.79
Allowance for loan losses to    nonperforming loans (1)	353.36	1,460.14	2,062.59	466.22	299.08
Net charge-offs to average out-    standing loans during the period	1.85	.06	.03	.12	.35
Ratio of nonperforming assets    to total assets(1)	.20	.10	.11	.27	.69
Dividend payout ratio	776.14	28.50	23.97	25.46	39.72

(1) At end of period

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

OVERVIEW     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. On June 25, 2004, the Bank converted to a state chartered trust company with banking powers, and the Company became a bank holding company supervised by the Federal Reserve.     The principal business of SMBT consists 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, commercial real estate loans and commercial business loans. These funds have also been used to purchase investment securities, mortgage-backed securities (MBS), U.S. government and federal agency obligations and other permissible securities.     Southern Missouri's results of operations are primarily dependent on the levels of its net interest margin and noninterest income, and its ability to control operating expenses. Net interest margin is dependent primarily on the difference or spread between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities, as well as the relative amounts of these assets and liabilities. Southern Missouri is subject to interest rate risk to the degree that its interest-earning assets mature or reprice at different times, or on a varying basis, from its interest-bearing liabilities.     Southern Missouri's noninterest income consists primarily of fees charged on transaction and loan accounts and increased cash surrender value of bank owned life insurance ("BOLI"). Southern Missouri's operating expenses include: employee compensation and benefits, occupancy expenses, legal and professional fees, federal deposit insurance premiums, amortization of intangible assets and other general and administrative expenses.     Southern Missouri's operations are significantly influenced by general economic conditions including monetary and fiscal policies of the U.S. government and the Federal Reserve Board. Additionally, Southern Missouri is subject to policies and regulations issued by financial institution regulatory agencies, including the Federal Deposit Insurance Corporation, the Federal Reserve and the Missouri Division of Finance. Each of these factors may influence interest rates, loan demand, prepayment rates and deposit flows. Interest rates available on competing investments as well as general market interest rates influence the Bank's cost of funds. Lending activities are affected by the demand for 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 real estate, commercial business and consumer financing on loans secured by properties or collateral located primarily in Southeastern Missouri. FORWARD-LOOKING STATEMENTS     This document, including information incorporated by reference, contains forward-looking statements about the Company and its subsidiaries which we believe are within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements with respect to anticipated future operating and financial performance, growth opportunities, interest rates, cost savings and funding advantages expected or anticipated to be realized by management. Words such as "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar expressions are intended to identify these forward looking statements. Forward-looking statements by the Company and its management are based on beliefs, plans, objectives, goals, expectations,

anticipations, estimates and the intentions of management and are not guarantees of future performance. The important factors we discuss below, as well as other factors discussed under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and identified in our filings with the SEC and those presented elsewhere by our management from time to time, could cause actual results to differ materially from those indicated by the forward-looking statements made in this document: further developments in the Company's ongoing review of and efforts to resolve the problem credit relationship described in this report, which could result in, among other things, further downgrades of the aforementioned loans, additional provisions to the loan loss reserve and the incurrence of other material non-cash and cash charges; the strength of the United States economy in general and the strength of the local economies in which we conduct operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; inflation, interest rate, market and monetary fluctuations; the timely development and acceptance of our new products and services and the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors' products and services; the willingness of users to substitute our products and services for products and services of our competitors; the impact of changes in financial services' laws and regulations (including laws concerning taxes, banking, securities and insurance); the impact of technological changes; acquisitions; changes in consumer spending and saving habits; and our success at managing the risks involved in the foregoing.     The Company disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information, or otherwise. CRITICAL ACCOUNTING POLICIES     The Company has established various accounting policies, which govern the application of accounting principles generally accepted in the United States of America in the preparation of our financial statements. Our significant accounting policies are described in the footnotes to the Consolidated Financial Statements. Certain accounting policies involve significant judgments and assumptions by management that have a material impact on the carrying value of certain assets and liabilities; management considers such accounting policies to be critical accounting policies. The judgments and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ from these judgments and estimates that could have a material impact on the carrying values of assets and liabilities and the results of operations of the Company.     The allowance for losses on loans represents management's best estimate of probable losses in the existing loan portfolio. The allowance for losses on loans is increased by the provision for losses on loans charged to expense and reduced by loans charged off, net of recoveries. The provision for losses on loans is determined based on management's assessment of several factors: reviews and evaluations of specific loans, changes in the nature and volume of the loan portfolio, current economic conditions and the related impact on specific borrowers and industry groups, historical loan loss experience, the level of classified and nonperforming loans and the results of regulatory examinations.

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    Integral to the methodology for determining the adequacy of the allowance for loan losses is portfolio segmentation and impairment measurement. Under the Company's methodology, loans are first segmented into 1) those comprising large groups of smaller-balance homogeneous loans, including single-family mortgages and installment loans, that are collectively evaluated for impairment and 2) all other loans that are individually evaluated. Those loans in the second category are further segmented utilizing a defined grading system which involves categorizing loans by severity of risk based on conditions that may affect the ability of the borrowers to repay their debt, such as current financial information, collateral valuations, historical payment experience, credit documentation, public information, and current trends. The loans subject to credit classification represent the portion of the portfolio subject to the greatest credit risk and where adjustments to the allowance for losses on loans as a result of provisions and charge-offs are most likely to have a significant impact on operations.
    A periodic review of selected credits (based on loan size and type) is conducted to identify loans with heightened risk or probable losses and to assign risk grades. The primary responsibility for this review rests with the loan administration personnel. This review is supplemented with periodic examinations of both selected credits and the credit review process by applicable regulatory agencies and external auditors. The information from these reviews assists management in the timely identification of problems and potential problems and provides a basis for deciding whether the credit represents a probable loss or risk that should be recognized.
    Loans are considered impaired if, based on current information and events, it is probable that Southern Missouri will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. The measurement of impaired loans is generally based on the fair value of the collateral for collateral-dependent loans. If the loan is not collateral-dependent, the measurement
of impairment is based on the present value of expected future cash flows discounted at the historical effective interest rate or the observable market price of the loan. In measuring the fair value of the collateral, management uses the assumptions (i.e., discount rates) and methodologies (i.e., comparison to the recent selling price of similar assets) consistent with those that would be utilized by unrelated third parties. Impairment identified through this evaluation process is a component of the allowance for loan losses. If a loan that is individually evaluated for impairment is found to have none, it is grouped together with loans having similar characteristics (i.e., the same risk grade), and an allowance for loan losses is based upon historical average charge-offs for similar loans over the past five years, the historical average charge-off rate for developing trends in the economy, in industries and other factors. For portfolio loans that are evaluated for impairment as part of homogenous pools, an allowance is maintained based upon the average charge-offs for the past five years.
    Changes in the financial condition of individual borrowers, in economic conditions, in historical loss experience and in the conditions of the various markets in which collateral may be sold may all affect the required level of the allowance for losses on loans and the associated provision for losses on loans. FINANCIAL CONDITION General. The Company's total assets increased $18.7 million, or 6.0%, to $330.4 million at June 30, 2005, when compared to $311.7 million at June 30, 2004. The growth was primarily due to growth in the loan portfolio of $19.2 million, or 7.7%, an increase in bank owned life insurance of $2.0 million or 52.2%, primarily through additional purchases and the increase in premises and equipment of $1.8 million or 29.9%; partially offset by a $5.5 million or 13.7% decline in the investment portfolio. Asset growth was primarily funded by deposit growth of $12.7 million, or 6.0%, increase in securities sold under agreements to repurchase of $4.3 million or 66.8% and the increase in FHLB advances of $2.3 million, or 3.8%.
    Loans. Loans increased $19.2 million, or 7.74%, to $267.6 million at June 30, 2005, from the $248.4 million at June 30, 2004. The growth in the loan portfolio exceeded the Company's growth targets and was comprised principally of commercial business loans, one-to-four-family real estate loans and commercial real estate loans of $13.4 million, $2.0 million and $4.0 million, respectively. During fiscal 2005, the Company had a credit relationship of approximately $4.9 million which is suspected to have performed fraudulent activities; hence, the Company wrote the value of this credit relationship down by $4.6 million and sold collateral for $150,000. The outstanding credit relationship balance at June 30, 2005 was approximately $300,000. Excluding the reduction in the aforementioned credit relationship, loan growth would have been $24.1 million or 9.7%.
    Allowance for Loan Losses. Allowance for loan losses increased $38,000 or 2.0%, from $2.0 million at June 30, 2004, to $2.0 million at June 30, 2005. The allowance for loan losses represented 0.8% of loans receivable at June 30, 2005, and June 30, 2004. At June 30, 2005, nonperforming loans, which includes loans past due greater than 90 days and nonaccruing loans, were $571,000 compared to $136,000 at June 30, 2004. (see Provision for Loan Losses)
    Investments. The investment portfolio decreased $5.5 million, or 13.7% to $34.7 million at June 30, 2005 from the $40.2 million at June 30, 2004. The decrease in the investment portfolio was comprised principally of equity securities, MBSs including CMOs and other investments of $3.5 million, $3.7 million and $2.2 million, respectively, partially offset by a $3.9 million increase in debt securities issued by government sponsored entities.
    Premises and Equipment. Premises and equipment increased $1.8 million to $7.9 million at June 30, 2005, from $6.1 million at June 30, 2004. The increase was primarily due to the purchase of land to be used for future expansion purposes and other equipment purchases, partially offset by depreciation expense for the year.
    Bank Owned Life Insurance. The Bank purchased "key person" life insurance policies on six employees for a cash surrender value of $4.0 million in February, 2003. In addition, in October, 2004 the Bank purchased "key person" life insurance policies on 20 employees for $2.0 million. At June 30, 2005, the cash surrender value had increased to $6.5 million.
    Intangible Assets. Intangible assets generated through branch acquisitions in 2000 decreased $255,000 to $2.6 million as of June 30, 2005, and will continue to be amortized in accordance with Statement of Financial Accounting Standards (SFAS) No. 142.
    Deposits. Deposits increased $12.7 million, or 6.0%, to $224.7 million at June 30, 2005, from $212.0 million at June 30, 2004. The deposit growth was comprised of increases in CDs and money market passbooks of $17.3 million and $1.2 million, respectively, partially offset by a decrease in money market demand accounts and savings accounts of $5.2 million and $524,000, respectively. The Bank instituted several CD promotions during the period January 2005 through March 2005 offering an 11 to 15 month special rate, anticipating that the Federal Reserve Bank will continue to raise rates, which may benefit interest expense during the next several months.
    Borrowings. FHLB advances increased $2.3 million, or 3.8%, to $61.5 million at June 30, 2005, from $59.3 million at June 30, 2004. Of the outstanding advances, $52.0 million have fixed interest rates, $37.0 million of which are subject to early redemption by the issuer. The remaining $9.5 million was borrowed overnight and reprices daily. At June 30, 2005, the fixed rate advances had a weighted average cost of 4.84% and a weighted average maturity of 3.1 years when compared to a weighted average cost of 4.84% and a weighted average maturity of 4.1 years at June 30, 2004.
    Subordinated Debt. In March, 2004, the Company issued $7.0 million of Floating Rate Capital Securities of Southern Missouri Statutory Trust I with a liquidation value of $1,000 per share. The securities are due in 30 years, redeemable after five years and bear interest at a floating rate based on three month LIBOR.

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    Stockholders' Equity. The Company's stockholders' equity decreased by $949,000, or 3.7%, to $25.0 million at June 30, 2005, from $26.0 million at June 30, 2004. This decrease was primarily due to the repurchase of $449,000 in common stock and the payment of cash dividends of $809,000, partially offset by net income of $104,000. On September 26, 2003, the Company effected a two-for-one split of the Company's common stock in the form of a stock dividend of one additional share of Southern Missouri Bancorp, Inc. common stock for each share held. Share and per share data for all periods presented have been adjusted to give effect to the stock split. The Company has approximately 26,000 shares of common stock remaining to be purchased under its current stock repurchase program of approximately 115,000 shares announced on April 22, 2004. COMPARISON OF THE YEARS ENDED JUNE 30, 2005 AND 2004
    Net Income. Southern Missouri's net income decreased to $104,000 for fiscal 2005 when compared to the results of the prior fiscal year. The decrease in net income was primarily due to the increased provision for loan losses. The increase in the provision for loan losses was primarily due to the alleged fraudulent activities performed by a substantial credit relationship of $4.9 million. The Bank, after inspections, evaluations and discussions with attorneys, increased the provision for loan loss by $4.5 million and proceeded to write down the credit by $4.6 million. In addition to the provision for loan loss, this credit relationship resulted in a variety of other expenditures, which included a $210,000 loss on a deposit account, a write off of accrued interest of $41,000, legal fees of $150,000, and repossession expense of $52,000. Excluding the aforementioned loss and the related expenses, the Company would have earned approximately $3.2 million.     Net Interest Income. Net interest income increased $97,000, or 1.0%, to $9.3 million for fiscal 2005 when compared to the prior fiscal year. The increase was primarily due to a 9% increase in average interest-earning assets, partially offset by a 22 basis point decrease in the average interest rate spread. The decrease in interest rate spread was a result of short term rates increasing while long term rates decreased over the fiscal year, resulting in a flatter yield curve and increased competition. An example of this is the prime rate which increased 200 basis points over the year, from 4.25% to 6.25%, while the 10-year treasury rate decreased by 68 basis points from 4.62% to 3.94%. For fiscal 2005, the average interest rate spread was 2.84% compared to 3.06% for fiscal year 2004.     Interest Income. Interest income increased $1.6 million, or 10.1%, to $17.3 million for fiscal 2005 when compared to the prior fiscal year. The increase was primarily due to the $24.6 million increase in average balance of interest-earning assets and the 8 basis point increase in average yield earned on these assets from 5.63% to 5.71%.
    Interest income on loans receivable increased by $1.2 million, or 8.4%, to $15.8 million for fiscal 2005 when compared to the prior fiscal year. The increase was primarily due to a $21.4 million increase in average loans receivable partially offset by a 3 basis point decrease in the average yield on the loans.
    Interest income on the investment and MBS portfolio increased by $336,000, or 29.7%, to $1.5 million for fiscal 2005 when compared to the prior fiscal year. The increase was primarily due to a 74 basis point increase in the average yield on these investments and a $2.7 million increase in the average balance outstanding. The increase in yield over the prior year was primarily related to fiscal year 2004's yields being negatively impacted by rapid prepayment rates on the MBS portfolio.
    Other interest income increased $22,000 in fiscal 2005 when compared to the prior year due to higher average balances.     Interest Expense. Interest expense increased $1.5 million, or 22.7%, to $8.0 million for fiscal 2005 when compared to the prior fiscal year. The increase was primarily due to the 29 basis point increase in the average rate paid on interest-bearing liabilities from 2.58% in fiscal 2004 to 2.87% in fiscal 2005 and the $25.8 million increase in the average balance of interest-bearing liabilities.     Interest expense on deposits increased $934,000, or 26.2%, to $4.5 million for fiscal 2005 when compared to the prior fiscal year. The increase in interest expense was due to an increase in the average rate paid on interest-bearing deposits to 2.21% for fiscal 2005 from 1.89% for the year ended June 30, 2004. The increase was primarily due to upward repricing of deposits from the general rise in short term interest rates, from growth in the CD portfolio and from the increase in the average balance of interest-bearing deposits from $189.4 million in fiscal 2004 to $203.5 million for the year ended June 30, 2005.
    Interest expense on FHLB advances increased $154,000, or 5.5%, to $3.0 million for fiscal 2005 when compared to the prior fiscal year. The increase in interest expense was primarily due to the $4.0 million increase in average balance of FHLB advances for fiscal 2005, and the general rise in overnight borrowing rates, partially offset by the 8 basis point decrease in average rate paid on advances. The increase in average balances was attributed to increased loan funding in fiscal 2005.
    The Company issued $7.0 million of Floating Rate Capital Securities in March, 2004, with an interest rate of three month LIBOR plus 275 basis points and reprices quarterly. Interest expense was $370,000 for fiscal 2005 as compared to $84,000 for the prior year. Interest expense increased due to the TRUP being in effect for four months in fiscal 2004, compared to 12 months in fiscal 2005.     Provision for Loan Losses. A provision for loan losses is charged to earnings to bring the total allowance for loan losses to a level considered adequate by management to provide for probable loan losses based on prior loss experience, type and amount of loans in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral and current economic conditions. Management also considers other factors relating to the collectibility of the loan portfolio.
    The provision for loan losses was $4.8 million for fiscal 2005, compared to $275,000 for the prior fiscal year. The increase in the loan loss provision was primarily due to the aforementioned problem credit relationship. At June 30, 2005, classified assets totaled $1.3 million, compared to $2.2 million at June 30, 2004. The improvement in classified assets was primarily due to improved financial capacity of the borrowers and the receipt of cash payments on previously classified credit relationships.
    The above provision was made based on management's analysis of the various factors which affect the loan portfolio and management's desire to maintain the allowance at a level considered adequate. Management performed a detailed analysis of the loan portfolio, including types of loans, the charge-off history and an analysis of the allowance for loan losses. Management also considered the continued origination of loans secured by commercial businesses and commercial real estate. These loans bear an inherently higher level of credit risk than one-to four-family residential real estate loans. While management believes the allowance for loan losses at June 30, 2005, 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.     Noninterest Income. Noninterest income increased $438,000, or 23.4%, to $2.3 million for fiscal 2005, when compared to the $1.9 million earned during fiscal 2004. Bank service charges decreased $117,000, or 10.3%, for fiscal 2005 when compared to the prior year. The decrease was primarily due to the $210,000 deposit loss related to the aforementioned problem credit relationship. The Bank's non-interest income was enhanced by a $371,000 increase in gains on sales of available for sale investments and equities when compared to the prior year. The funds generated from these sales were used to purchase property for future branch expansion. Other non-interest income increased $159,000 when compared to the prior year, primarily due to increases in cash surrender value on BOLI, increases in loan fees collected and the overall increase of our customer base.

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    Noninterest Expense. Noninterest expense increased $283,000, or 4.4%, to $6.7 million for fiscal 2005, when compared to the $6.4 million expensed during fiscal 2004. The increased expense resulted primarily from higher compensation and benefits, professional services and other expenses.
    Compensation expense increased $102,000, or 3.0%, for fiscal 2005 when compared to the prior year. The increase was due to increased salaries and other compensation related expenditures. Professional services increased $98,000 to $277,000 for fiscal 2005 when compared to the prior year primarily due to $150,000 in legal expenses associated with the aforementioned problem credit relationship. At June 30, 2005, the Bank had approximated $119,000 in accrued legal expense associated with the credit relationship. Other expense increased $110,000 to $973,000 for fiscal 2005 when compared to the prior year as a result of an increase in expenses associated with our expanded customer base.     Provision for Income Taxes. Provision for income taxes decreased $1.5 million to a benefit of $82,000 for fiscal 2005, when compared to the prior fiscal year. The decrease was attributed to the decrease in net income from the prior year. COMPARISON OF THE YEARS ENDED JUNE 30, 2004 AND 2003
    Net Income. Southern Missouri's net income increased $145,000, or 5.3%, to $2.9 million for fiscal 2004 when compared to the results of the prior fiscal year. The improvement in net income was primarily due to increased noninterest income, partially offset by higher noninterest expense and decreased net interest income.     Net Interest Income. Net interest income decreased $129,000, or 1.4%, to $9.2 million for fiscal 2004 when compared to the prior fiscal year. The decrease was primarily due to the 22 basis point decrease in the average interest rate spread, partially offset by a 7% increase in average interest- earning assets. The decrease in interest rate spread was a result of interest-earning assets repricing downward at a faster pace than interest-bearing liabilities. For fiscal 2004, the average interest rate spread was 3.06% when compared to 3.28% over the same period of the prior year. Interest Income. Interest income decreased $704,000, or 4.3%, to $15.7 million for fiscal 2004 when compared to the prior fiscal year. The decrease was primarily due to the 69 basis point decline in the average yield earned on these assets, from 6.32% to 5.63%, partially offset by the $18.3 million increase in the average balance of interest-earning assets.
    Interest income on loans receivable decreased by $641,000, or 4.2%, to $14.6 million for fiscal 2004 when compared to the prior fiscal year. The decrease was primarily due to a 75 basis point decline in the average yield on the loans partially offset by a $16.7 million increase in average loans receivable. The 75 basis point decline in average interest yield on loans was primarily due to the combination of new loans originated at lower rates, repayments of higher yielding loans and downward repricing of adjustable rate loans.
    Interest income on the investment and MBS portfolio decreased by $42,000, or 3.6%, to $1.2 million for fiscal 2004 when compared to the prior fiscal year. The decrease was primarily due to a 53 basis point decrease in the average yield on these investments, partially offset by a $3.7 million increase in the average balance outstanding. The decline was due to rapid prepayment rates causing increased premium amortization on MBSs during the first half of the fiscal year and the general decline in interest rates.     Other interest income decreased $21,000 in fiscal 2004 when compared to the prior year due to lower average balances and lower yields earned on these assets.     Interest Expense. Interest expense decreased $575,000, or 8.1%, to $6.5 million for fiscal 2004 when compared to the prior fiscal year. The decrease was primarily due to the 45 basis point decrease in the average rate paid on interest-bearing liabilities from 3.03% in fiscal 2003 to 2.58% in fiscal 2004, partially offset by the $19.4 million increase in the average balance of interest-bearing liabilities.
    Interest expense on deposits declined $800,000, or 18.3%, to $4.4 million for fiscal 2004 when compared to the prior fiscal year. The decline in interest expense was due to a decline in the average rate paid on interest-bearing deposits to 1.89% for fiscal 2004 from 2.42% for the year ended June 30, 2003. The decline was primarily due to downward repricing of deposits and from growth in lower yielding checking accounts. Partially offsetting the decline in the average rate paid on deposits was the $8.5 million increase in the average balance of interest-bearing deposits to $189.4 million in fiscal 2004 from $180.9 million for the year ended June 30, 2003.
    Interest expense on FHLB advances increased $142,000, or 5.3%, to $2.8 million for fiscal 2004 when compared to the prior fiscal year. The increase in interest expense was primarily due to the $7.9 million increase in the average balance of FHLB advances for fiscal 2004, partially offset by the 53 basis point decrease in average rate paid on advances. The increase in average balances was attributed to increased loan funding and investment purchases in fiscal 2004.
    The Company issued $7.0 million of Floating Rate Capital Securities in March, 2004, with an interest rate of three month LIBOR plus 275 basis points and reprices quarterly. Interest expense was $84,000 for fiscal 2004.     Provision for Loan Losses. A provision for loan losses is charged to earnings to bring the total allowance for loan losses to a level considered adequate by management to provide for probable loan losses based on prior loss experience, type and amount of loans in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral and current economic conditions. Management also considers other factors relating to the collectibility of the loan portfolio.
    The provision for loan losses was $275,000 for fiscal 2004 when compared to $330,000 for the prior fiscal year. The decrease in the loan loss provision was primarily due to declines in non-performing assets, loan delinquencies, and classified assets. At June 30, 2004, classified assets totaled $2.2 million when compared to $3.7 million at June 30, 2003. The improvement in classified assets was primarily due to receiving cash payments of $2.2 million on previously classified assets.
    The above provision was made based on management's analysis of the various factors which affect the loan portfolio and management's desire to maintain the allowance at a level considered adequate. Management performed a detailed analysis of the loan portfolio, including types of loans, the charge-off history and an analysis of the allowance for loan losses. Management also considered the continued origination of loans secured by commercial businesses and commercial real estate. These loans bear an inherently higher level of credit risk than one-to four-family residential real estate loans. While management believes the allowance for loan losses at June 30, 2004, 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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    Noninterest Income. Noninterest income increased $460,000, or 32.5%, to $1.9 million for fiscal 2004, when compared to the $1.4 million earned during fiscal 2003. Bank service charges increased $273,000, or 31.6%, for fiscal 2004 when compared to the prior year. The increase of 32.5% was primarily due to the implementation of an overdraft privilege program in February, 2003, which resulted in increased banking service charges as well as increased cash surrender value on BOLI and an expanded customer base. The number of checking accounts increased 632 or 8.4% to 8,175 for fiscal 2004 when compared to the prior year.     Noninterest Expense. Noninterest expense increased $280,000, or 4.6%, to $6.4 million for fiscal 2004, when compared to the $6.2 million expensed during fiscal 2003. The increased expense resulted primarily from higher compensation and benefits, professional services and other expenses.
    Compensation expense increased $168,000, or 5.2%, for fiscal 2004 when compared to the prior year. The increase was due to increased salaries, higher employee stock ownership plan expenses and increased incentive bonuses. Professional services increased $84,000 to $179,000 for fiscal 2004 when compared to the prior year as a result of the Company's strategic planning process. Other expense increased $65,000 to $863,000 for fiscal 2004 when compared to the prior year as a result of an increase in expenses associated with the increased customer base.     Provision for Income Taxes. Provision for income taxes decreased $39,000 to $1.4 million for fiscal 2004, when compared to the prior fiscal year. The decrease was attributed to the change in charters from a Missouri savings bank to a Missouri chartered trust company with banking powers which resulted in a net tax benefit of $109,000. 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 may have on future operating results. The primary asset/liability management strategy has been to focus on matching the anticipated repricing intervals of interest-earning assets and interest-bearing liabilities. At times, however, depending on the level of general interest rates, the relationship between long- and short-term interest rates, market conditions and competitive factors, the Company may determine to increase its interest rate risk position somewhat in order to maintain its net interest margin.     In an effort to manage the interest rate risk resulting from fixed rate lending, the Bank has utilized longer term (up to 10 year maturities) FHLB advances, subject to early redemption and fixed terms. Other elements of the Company's current asset/liability strategy include: (i) increasing originations of commercial real estate and commercial business loans, which typically provide higher yields and shorter repricing periods, but inherently increase credit risk; (ii) increasing loans receivable through the origination of adjustable-rate residential loans, (iii) expanding the consumer loan portfolio, (iv) limiting the price volatility of the investment portfolio by maintaining a weighted average maturity of less than five years, (v) actively soliciting less rate-sensitive deposits, and (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.
    The Bank continues to generate long term, fixed-rate residential loans. During the year ended June 30, 2005, fixed rate residential loan originations totaled $20.7 million compared to $30.6 million during the same period of the prior year. At June 30, 2005, the fixed-rate residential loan portfolio totaled $84.3 million with a weighted average maturity of 186 months compared to $81.3 million at June 30, 2004, with a weighted average maturity of 188 months. At June 30, 2005, fixed rate loans with remaining maturities in excess of 10 years totaled $73.0 million, or 27.3%, of loans receivable compared to $76.4 million, or 30.8%, of loans receivable at June 30, 2004. The Company originated $25.4 million in fixed rate commercial loans during the year ended June 30, 2005, compared to $31.8 million during the prior fiscal year. The Company also originated $65.4 million in adjustable rate commercial loans during the year ended June 30, 2005, compared to $81.8 million during the prior year. The Bank originated $10.6 million in adjustable rate residential loans during the year ended June 30, 2005, compared to $11.7 million during the prior year. At June 30, 2005, home equity loans had increased to $7.5 million as compared to $5.9 million as of June 30, 2004. Over the last several years, the Company has maintained a weighted average life of its investment portfolio of less than 4 years. At June 30, 2005, CDs with original terms of two years or more totaled $36.3 million compared to $40.5 million at June 30, 2004. AVERAGE BALANCE, INTEREST AND AVERAGE YIELDS AND RATES
    The following table sets forth certain information relating to the Company's average interest-earning assets and interest-bearing liabilities and reflects the average yield on assets and the average cost of liabilities for the periods indicated. These yields and costs are derived by dividing income or expense by the average month-end balance of assets or liabilities, respectively, for the years indicated. Nonaccrual loans are included in the net loan category.
    The table also presents information with respect to the difference between the weighted-average yield earned on interest-earning assets and the weighted-average rate paid on interest-bearing liabilities, or interest rate spread, which financial institutions have traditionally used as an indicator of profitability. Another indicator of an institution's net interest income is its net yield on interest-earning assets, which is its net interest income divided by the average balance of interest-earning assets. Net interest income is affected by the interest rate spread and by the relative amounts of interest-earning assets and interest-bearing liabilities. When interest-earning assets approximate or exceed interest-bearing liabilities, any positive interest rate spread will generate net interest income.

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(dollars in thousands)

	2005			2004			2003
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)	$ 181,368	$ 11,206	6.18%	$ 175,554	$ 10,910	6.21%	$ 169,440	$ 11,753	6.94%
Other loans (1)	78,613	4,585	5.83	62,996	3,653	5.80	52,395	3,452	6.59
Total net loans	259,981	15,791	6.07	238,550	14,563	6.10	$ 221,835	15,205	6.85
Mortgage-backed securities	19,521	720	3.69	21,865	604	2.76	22,348	737	3.30
Investment securities (2)	19,462	747	3.84	14,413	492	3.41	10,700	436	4.07
Other interest-earning assets	3,585	26	0.73	3,137	4	.14	4,833	26	.54
TOTAL INTEREST- EARNING ASSETS (1)	302,549	17,284	5.71	277,965	15,663	5.63	259,716	16,404	6.32
Other noninterest-earning assets (3)	22,000	-	-	16,702	37	-	14,143	-	-
TOTAL ASSETS	$ 324,549	$ 17,284	-	$ 294,667	$ 15,700	-	$ 273,859	$ 16,404
Interest-bearing liabilities:
Savings accounts	$ 68,640	$   1,407	2.05	$ 56,825	$    764	1.34	$ 55,514	$   1,074	1.93
Now accounts	30,308	341	1.13	29,181	270	.92	20,746	169	.81
Money market accounts	14,867	206	1.38	19,244	230	1.19	17,434	323	1.85
Certificates of deposit	89,728	2,550	2.84	84,118	2,307	2.74	87,198	2,805	3.22
TOTAL INTEREST- BEARING DEPOSITS	203,543	4,504	2.21	189,368	3,571	1.89	180,892	4,371	2.42
Borrowings:
Securities sold under       agreements to repurchase	8,847	186	2.11	6,341	73	1.15	5,480	73	1.33
FHLB advances	60,263	2,972	4.93	56,234	2,818	5.01	48,309	2,676	5.54
Junior subordinated debt	7,217	370	5.12	2,093	84	4.02	-	-	-
TOTAL INTEREST- BEARING LIABILITIES	279,870	8,032	2.87	254,036	6,546	2.58	234,681	7,120	3.03
Noninterest-bearing       demand deposits	15,439	-	-	11,570	-	-	10,871	-	-
Other liabilities	2,678	-	-	3,057	-	-	3,604	-	-
TOTAL LIABILITIES	297,987	8,032	-	268,663	-	-	249,156	7,120	-
Stockholders' equity	26,562	-	-	26,004	-	-	24,703	-	-
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 324,549	$ 8,032	-	$ 294,667	$ 6,546	-	$ 273,859	$ 7,120	-
Net interest income		$ 9,252			$ 9,154			$ 9,284
Interest rate spread (4)			2.84%			3.06%			3.29%
Net interest margin (5)			3.06%			3.28%			3.57%
Ratio of average interest-earning    assets to average interest-bearing    liabilities	108.10%			109.42%			110.67%

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

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YIELDS EARNED AND RATES PAID

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

	At June 30,	For The Year Ended June 30,
	2005	2005	2004	2003
Weighted-average yield on loan portfolio	6.29%	6.07%	6.10%	6.85%
Weighted-average yield on mortgage-backed    securities	3.74	3.69	2.76	3.30
Weighted-average yield on investment    securities (1)	4.12	3.84	3.41	4.07
Weighted-average yield on other    interest-earning assets	.51	.73	.14	.54
Weighted-average yield on all    interest-earning assets	5.97	5.71	5.63	6.32
Weighted-average rate paid on deposits	2.53	2.21	1.89	2.42
Weighted-average rate, paid on securities    sold under agreements to repurchase	2.75	2.11	1.15	1.33
Weighted-average rate paid on FHLB    advances	5.09	4.93	5.01	5.54
Weighted-average rate paid on all    interest-bearing liabilities	3.10	2.87	2.58	3.03
Interest rate spread (spread between weighted    average rate on all interest-earning assets    and all interest-bearing liabilities)	2.87	2.84	3.06	3.29
Net interest margin (net interest income    as a percentage of average interest-    earning assets)	3.14	3.06	3.28	3.57

(1) Includes Federal Home Loan Bank stock.

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RATE/VOLUME ANALYSIS

    The following table sets forth the effects of changing rates and volumes on net interest income of the Company. 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, 2005 Compared to 2004 Increase (Decrease) Due to				Years Ended June 30, 2004 Compared to 2003 Increase (Decrease) Due to
(dollars in thousands)	Rate	Volume	Rate/ Volume	Net	Rate	Volume	Rate/ Volume	Net
Interest-earning assets:
Loans receivable (1)	(73)	1,308	(7)	1,228	(1,664)	1,145	(122)	(641)
Mortgage-backed       securities	203	(65)	(22)	116	(121)	(16)	4	(133)
Investment securities (2)	25	185	9	219	(71)	152	(25)	56
Other interest-       earning deposits	18	1	3	22	(18)	(9)	41	14
Total net change in    income on interest-    earning assets	173	1,429	(17)	1,585	(1,874)	1,272	(102)	(704)
Interest-bearing liabilities:
Deposits	580	271	83	934	(835)	28	6	(801)
Securities sold under       agreements to repurchase	61	29	23	113	(10)	11	(2)	(1)
Subordinated debt	23	206	57	286	0	0	85	85
FHLB advances	(44)	202	(4)	154	(256)	439	(41)	142
Total net change in expense on    interest-bearing liabilities	620	708	159	1,487	(1,101)	478	48	(575)
Net change in net    interest income	(447)	721	(176)	98	(773)	794	(150)	(129)

(1) Does not include interest on loans placed on nonaccrual status.
(2) Does not include dividends earned on equity securities.

INTEREST RATE SENSITIVITY ANALYSIS

    The following table sets forth as of June 30, 2005, and 2004, management's estimates of the projected changes in net portfolio value and net interest income in the even tof 1%, 2% and 3%, instantaneous, permanent increases or decreases in market interest rates.

June 30, 2005						June 30, 2004
	Net Portfolio			NPV as % of PV of Assets			Net Portfolio			NPV as % of PV of Assets
	$ Amount	$ Change	% Change	NPV Ratio	Change		$ Amount	$ Change	% Change	NPV Ratio	Change
Change in Rates	(dollars in thousands)					Change in Rates	(dollars in thousands)
+300 bp	$ 20,404	(11,753)	(37)	7.07	-2.81	+300 bp	$ 27,291	(4,166)	(13)	8.69	-.70
+200 bp	25,210	(6,947)	(22)	8.20	-1.68	+200 bp	28,673	(2,784)	(9)	8.86	-.53
+100 bp	29,179	(2,978)	(9)	9.16	-.72	+100 bp	29,796	(1,661)	(5)	9.01	-.38
0 bp	32,157	-		9.88		0 bp	31,457	-		9.39
-100 bp	34,079	1,922	6	10.35	.48	-100 bp	32,284	827	3	9.90	.51
-200 bp	35,985	3,828	12	10.85	.97	-200 bp	34,164	2,707	9	10.23	.84
-300 bp	37,013	4,856	15	11.10	1.22	-300 bp	34,073	2,616	8	10.54	1.15

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    Computations in the table above are based on prospective effects of hypothetical changes in interest rates and are based on an internally generated model using the actual maturity and repricing schedules for Southern Missouri's loans and deposits, adjusted by management's assumptions for prepayment rates and deposit runoff. Further, the computations do not consider any reactions that the Bank may undertake in response to changes in interest rates. These projected changes should not be relied upon as indicative of actual results in any of the aforementioned interest rate changes.
    Management cannot accurately predict future interest rates or their effect on the Bank's NPV and net interest income in the future. Certain shortcomings are inherent in the method of analysis presented in the computation of NPV and net interest income. For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types of assets and liabilities may lag behind changes in market interest rates. Additionally, most of Southern Missouri's loans have features which restrict changes in interest rates on a short-term basis and over the life of the asset. Further, in the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the foregoing table. Finally, the ability of many borrowers to service their debt may decrease in the event of an interest rate increase. LIQUIDITY AND CAPITAL RESOURCES
    Southern Missouri's primary potential sources of funds include deposit growth, securities sold under agreements to repurchase, FHLB advances, amortization and prepayment of loan principal, investment maturities and sales, and ongoing operating results. While scheduled repayments on loans and securities as well as the maturity of short-term investments are a relatively predictable source of funding, deposit flows, FHLB advance redemptions and loan and security prepayment rates are significantly influenced by factors outside of the Bank's control, including general economic conditions and market competition. The Bank has relied on FHLB advances as a source for funding cash or liquidity needs.
    Southern Missouri uses its liquid assets as well as other funding sources to meet ongoing commitments, to fund loan commitments, to repay maturing certificates of deposit and FHLB advances, to make investments, to fund other deposit withdrawals and to meet operating expenses. At June 30, 2005, the Bank had outstanding commitments to extend credit of $29.3 million (including $25.4 million on lines of credit). Total commitments to originate fixed-rate loans with terms in excess of one year were $1.5 million at interest rates ranging from 5.75% to 6.75%. 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, 2005, Southern Missouri increased deposits, FHLB advances and securities sold under agreements to repurchase by $12.7 million, $4.3 million and $2.3 million, respectively. During the prior year, Southern Missouri increased deposits, FHLB advances and securities sold under agreements to repurchase by $17.4 million, $5.8 million and $1.2 million, respectively. At June 30, 2005, the Bank had additional borrowing capacity from the FHLB of $34.5 million when compared to $32.9 million at June 30, 2004. In addition to the $34.5 million, the Bank has the ability to pledge additional loan portfolios including commercial real estate, home equity and commercial business, which could provide additional borrowing capacity of approximately $63.4 million at June 30, 2005.
    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, 2005, the Bank had $60.7 million in CDs maturing within one year and $134.5 million in other deposits and securities sold under agreements to repurchase without a specified maturity as compared to the prior year of $53.9 million in CDs maturing within one year and $135.2 million in other deposits and securities sold under agreements to repurchase. Management believes that most maturing interest-bearing liabilities will be retained or replaced by new interest-bearing liabilities. Also at June 30, 2005, the Bank had $27.0 million in FHLB advances eligible for early redemption within one year.

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REGULATORY CAPITAL
    Federally insured savings banks are required to maintain a minimum level of regulatory capital. FDIC regulations established capital requirements, including a leverage (or core capital) requirement and a risk-based capital requirement. The FDIC is also authorized to impose capital requirements in excess of these standards on individual institutions on a case-by-case basis.
    At June 30, 2005, the Bank exceeded regulatory capital requirements with core and risk-based capital of $24.9 million and $27.0 million, or 7.8% and 11.5% of adjusted total assets and risk-weighted assets, respectively. These capital levels exceeded minimum requirements of 4.0% and 8.0% for adjusted total assets and risk-weighted assets. (See Note 12 - Stockholders' Equity and Regulatory Capital) IMPACT OF 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.

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>  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  <

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>  CONSOLIDATED BALANCE SHEETS  <
JUNE 30, 2005 AND 2004
Southern Missouri Bancorp, Inc.

Assets		2005	2004
Cash and cash equivalents		$ 3,886,961	$ 4,582,225
Available for sale securities (Note 2)		34,700,408	40,205,907
Stock in FHLB of Des Moines		3,121,100	3,171,000
Loans, less allowance for loan losses    of $2,016,514 and $1,978,491 at    June 30, 2005 and 2004, respectively (Note 3)		267,567,930	248,354,980
Accrued interest receivable		1,394,120	1,357,325
Premises and equipment, net (Note 4)		7,884,366	6,069,506
Bank owned life insurance - cash surrender value		6,485,757	4,260,466
Intangible assets, net		2,603,675	2,858,933
Prepaid expenses and other assets		2,715,311	869,747
	TOTAL ASSETS	$ 330,359,628	$ 311,703,229
Liabilities and Stockholders' Equity
Deposits (Note 5)		$ 224,665,697	$ 211,958,597
Securities sold under agreements to repurchase (Note 6)		10,757,200	6,447,819
Advances from FHLB of Des Moines (Note 7)		61,500,000	59,250,000
Accounts payable and other liabilities		718,991	541,372
Accrued interest payable		497,241	336,023
Subordinated debt (Note 8)		7,217,000	7,217,000
	TOTAL LIABILITIES	305,356,129	285,750,811
Commitments and contingencies (Note 13)
Preferred stock, $.01 par value; 500,000 shares    authorized; none issued or outstanding		-	-
Common stock, $.01 par value; 4,000,000 shares    authorized; 2,957,226 shares issued		29,572	29,572
Additional paid-in capital		17,363,542	17,287,099
Retained earnings		20,531,752	21,236,686
Treasury stock of 724,410 shares in 2005 and    695,222 shares in 2004, at cost		(12,702,489)	(12,253,732)
Unearned employee benefits		(45,763)	(109,051)
Accumulated other comprehensive income (loss)		(173,115)	(238,156)
	TOTAL STOCKHOLDERS' EQUITY	25,003,499	25,952,418
	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 330,359,628	$ 311,703,229

See accompanying notes to consolidated financial statements.

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YEARS ENDED JUNE 30, 2005, 2004 AND 2003
Southern Missouri Bancorp, Inc.

Interest income:
		2005	2004	2003
Loans		$ 15,790,675	$ 14,563,974	$ 15,204,984
Investment securities		747,378	527,664	436,366
Mortgage-backed securities		720,104	603,965	737,116
Other interest-earning assets		26,175	4,511	25,896
	TOTAL INTEREST INCOME	17,284,332	15,700,114	16,404,362
Interest expense:
Deposits		4,504,594	3,570,700	4,371,163
Securities sold under agreements       to repurchase		186,224	72,968	73,060
Advances from FHLB of Des Moines		2,971,936	2,817,568	2,676,044
Subordinated debt		369,733	84,152	-
	TOTAL INTEREST EXPENSE	8,032,487	6,545,388	7,120,267
	NET INTEREST INCOME	9,251,845	9,154,726	9,284,095
Provision for loan losses (Note 3)		4,815,000	275,000	330,000
	NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	4,436,845	8,879,726	8,954,095
Noninterest income:
Net gains (losses) on sales of       available for sale securities		351,508	(19,186)	-
Customer service charges		1,018,337	1,135,736	862,862
Loan late charges		147,704	121,932	116,741
Increase in cash surrender value       of bank owned life insurance		225,291	187,849	72,617
Other		570,640	448,935	362,692
	TOTAL NONINTEREST INCOME	2,313,480	1,875,266	1,414,912
Noninterest expense:
Compensation and benefits		3,510,841	3,408,432	3,240,085
Occupancy and equipment		1,263,055	1,286,651	1,305,241
SAIF deposit insurance premium		30,282	30,251	31,452
Professional fees		276,587	178,922	94,965
Advertising		164,169	161,357	159,212
Postage and office supplies		254,440	261,120	280,187
Amortization of intangible assets		255,258	255,258	255,258
Other		973,334	863,100	798,489
	TOTAL NONINTEREST EXPENSE	6,727,966	6,445,091	6,164,889
	INCOME BEFORE INCOME TAXES	22,359	4,309,901	4,204,118
Income taxes (Note 10)
Current		9,000	1,448,000	1,695,900
Deferred		(90,900)	(21,000)	(230,000)
		(81,900)	1,427,000	1,465,900
	NET INCOME	$   104,259	$ 2,882,901	$ 2,738,218
Basic earnings per common share		$ 0.05	$ 1.27	$ 1.17
Diluted earnings per common share		$ 0.05	$ 1.23	$ 1.14

See accompanying notes to consolidated financial statements.

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>  CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY  <
YEARS ENDED JUNE 30, 2005, 2004 and 2003
Southern Missouri Bancorp, Inc.

	Common Stock	Additional Paid-in Capital	Retained Earnings	Treasury Stock	Unearned Employee Benefits	Accumulated Other Comprehensive Income (Loss)	Total Stockholders' Equity
BALANCE AT JUNE 30, 2002	18,032	17,456,872	17,093,398	(10,122,620)	(255,361)	320,884	24,511,205
Net income			2,738,218				2,738,218
Change in unrealized gain (loss)    on available for sale securities						(184,433)	(184,433)
TOTAL COMPREHENSIVE INCOME							2,553,785
Purchase of treasury stock				(1,641,518)			(1,641,518)
Dividends paid ($.28 per share)			(656,247)				(656,247)
Release of ESOP awards		79,763			67,190		146,953
MRP expense					7,266		7,266
Tax benefit of MRP		2,500					2,500
Exercise of stock options		(41,427)		225,920			184,493
BALANCE AT JUNE 30, 2003	18,032	17,497,708	19,175,369	(11,538,218)	(180,905)	136,451	25,108,437
Net income			2,882,901				2,882,901
Change in unrealized gain (loss)    on available for sale securities						(374,607)	(374,607)
TOTAL COMPREHENSIVE INCOME							2,508,294
Two for one stock split effective    in the form of 100% stock dividend	11,540	(11,540)					-
Purchases of treasury stock				(1,297,366)			(1,297,366)
Dividends paid ($.36 per share)			(821,584)				(821,584)
Release of ESOP awards		121,348			62,740		184,088
MRP expense					9,114		9,114
Tax benefit of MRP		2,250					2,250
Exercise of stock options		(322,667)		581,852			259,185
BALANCE AT JUNE 30, 2004	$ 29,572	$ 17,287,099	$ 21,236,686	$ (12,253,732)	$ (109,051)	$(238,156)	$25,952,418
Net income			104,259				104,259
Change in unrealized gain (loss)    on available for sale securities						65,041	65,041
TOTAL COMPREHENSIVE INCOME							169,300
Purchases of treasury stock				(585,884)			(585,884)
Dividends paid ($.36 per share)			(809,193)				(809,193)
Release of ESOP awards		132,638			59,140		191,777
MRP expense		11,083			4,148		15,231
Tax benefit of MRP		3,887					3,888
Exercise of stock options		(71,165)		137,127			65,962
BALANCE AT JUNE 30, 2005	$ 29,572	$ 17,363,542	$ 20,531,752	$ (12,702,489)	$  (45,763)	$(173,115)	$25,003,499

See accompanying notes to consolidated financial statements.

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>  CONSOLIDATED STATEMENTS OF CASH FLOWS  <
YEARS ENDED JUNE 30, 2005, 2004 AND 2003
Southern Missouri Bancorp, Inc.

Cash flows from operating activities:	2005	2004	2003
Net income	$   104,259	$ 2,882,901	$ 2,738,218
Items not requiring (providing) cash:
Depreciation	535,433	654,859	677,138
MRP expense and ESOP expense	207,008	193,202	154,219
Net realized losses (gains) on sale       of available for sale securities	(351,508)	19,186	-
Loss on sale of foreclosed assets	14,977	32,273	-
Amortization of intangible assets	255,258	255,258	255,258
Increase in cash surrender value       of bank owned life insurance	(225,291)	(187,849)	(72,617)
Provision for loan losses	4,815,000	275,000	330,000
Amortization of premiums and discounts on securities	81,630	450,317	592,761
Deferred income taxes	(90,900)	(21,000)	(230,000)
Changes in:
Accrued interest receivable	(73,453)	(86,991)	289,340
Prepaid expenses and other assets	(1,891,167)	31,295	(242,503)
Accounts payable and other liabilities	177,620	44,853	250,336
Accrued interest payable	161,218	(57,818)	(177,327)
NET CASH PROVIDED BY OPERATING ACTIVITIES	3,720,084	4,485,486	4,564,823
Cash flows from investing activities:
Net increase in loans	(23,995,293)	(25,809,510)	(11,952,333)
Proceeds from sales of    available for sale securities	7,017,287	2,932,500	-
Proceeds from maturities of    available for sale securities	8,907,916	24,157,837	28,259,798
Purchase of available for    sale securities	(10,046,587)	(37,357,504)	(27,389,311)
Sale (purchase) of Federal Home Loan Bank stock	49,900	(496,000)	(325,000)
Purchase of premises and equipment	(310,422)	(520,980)	(955,523)
Purchase of land	(5,537,842)	-	-
Proceeds from sale of land	3,497,971	-	-
Purchase of bank owned life insurance	(2,000,000)	-	(4,000,000)
Purchase of investment in statutory trust	-	(217,000)	-
Proceeds from sale of foreclosed real estate	64,355	42,352	78,199
NET CASH USED IN INVESTING ACTIVITIES	$ (22,352,715)	$ (37,268,305)	$ (16,284,170)

See accompanying notes to consolidated financial statements.

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>  CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)  <
YEARS ENDED JUNE 30, 2005, 2004 AND 2003
Southern Missouri Bancorp, Inc.

Cash flows from financing activities:	2005	2004	2003
Net increase (decrease) in demand    deposits and savings accounts	$ (4,627,461)	$ 21,134,872	$ 3,441,910
Net (decrease)increase in    certificates of deposit	17,334,562	(3,708,230)	2,143,190
Net increase in securities sold under    agreements to repurchase	4,309,381	1,213,427	923,155
Proceeds from Federal Home Loan Bank advances	83,050,000	121,900,000	24,200,000
Repayments of Federal Home Loan Bank advances	(80,800,000)	(116,150,000)	(17,700,000)
Net decrease in advances from    borrowers for taxes and insurance	-	-	(170,610)
Proceeds from issuance of subordinated debt	-	7,217,000	-
Dividends paid on common stock	(809,193)	(821,584)	(656,247)
Exercise of stock options	65,962	259,185	184,493
Purchase of treasury stock	(585,884)	(1,297,366)	(1,641,518)
NET CASH PROVIDED BY FINANCING ACTIVITIES	17,937,367	29,747,304	10,724,373
Decrease in cash and cash equivalents	(695,264)	(3,035,515)	(994,974)
Cash and cash equivalents at beginning of year	4,582,225	7,617,740	8,612,714
CASH AND CASH EQUIVALENTS AT END OF YEAR	$ 3,886,961	$ 4,582,225	$ 7,617,740
Supplemental disclosures of cash flow information:
Noncash investing and financing activities
Conversion of loans to foreclosed real estate	$  4,000	$ 94,500	$ 147,370
Conversion of foreclosed real estate to loans	-	74,625	123,662
Cash paid during the period for
Interest (net of interest credited)	3,871,180	3,731,297	3,725,562
Income taxes	1,204,884	1,280,000	1,540,899

See accompanying notes to consolidated financial statements.

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>  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  <
Southern Missouri Bancorp, Inc.

NOTE 1: Organization and Summary of Significant Accounting Policies

Organization. Southern Missouri Bancorp, Inc., a Missouri corporation (the Company) was organized in 1994 and is the parent company of Southern Missouri Bank & Trust (the Bank). Substantially all of the Company's consolidated revenues are derived from the operations of the Bank, and the Bank represents substantially all of the Company's consolidated assets and liabilities. Basis of Financial Statement Presentation. The financial statements of the Company have been prepared in conformity with U.S. generally accepted accounting principles and general practices within the banking industry. In the normal course of business, the Company encounters two significant types of risk: economic and regulatory. Economic risk is comprised of interest rate risk, credit risk, and market risk. The Company is subject to interest rate risk to the degree that its interest-bearing liabilities reprice on a different basis than its interest-earning assets. Credit risk is the risk of default on the Company's loan portfolio that results from the borrowers' inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of collateral underlying loans receivable and the value of the Company's investment in real estate. Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, the Bank. All significant intercompany accounts and transactions have been eliminated. Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.     Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses. In connection with the determination of the allowance for loan losses, management obtains independent appraisals for significant properties. Cash and Cash Equivalents. For purposes of reporting cash flows, cash and cash equivalents includes cash due from depository institutions and interest-bearing deposits in other depository institutions with original maturities of three months or less. Interest-bearing deposits in other depository institutions were $1,437,518 and $2,339,727 at June 30, 2005 and 2004, respectively. Available for Sale Securities. Available for sale securities, which include any security for which the Company has no immediate plan to sell but which may be sold in the future are carried at fair value. Unrealized gains and losses, net of tax, are reported in accumulated other comprehensive income, a component of stockholders' equity. All securities have been classified as available for sale.
    Premiums and discounts on debt securities are amortized or accreted as adjustments to income over the estimated life of the security using the level yield method. Realized gains or losses on the sale of securities is based on the specific identification method. The fair value of securities is based on quoted market prices or dealer quotes. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.
    The Company does not invest in collateralized mortgage obligations that are considered high risk. Federal Home Loan Bank Stock. The Bank is a member of the Federal Home Loan Bank (FHLB) system. Capital stock of the FHLB is a required investment based upon a predetermined formula and is carried at cost. Loans. Loans are stated at unpaid principal balances, less the allowance for loan losses and net deferred loan origination fees.
    Interest on loans is accrued based upon the principal amount outstanding. The accrual of interest on loans is discontinued when, in management's judgment, the collectibility of interest or principal in the normal course of business is doubtful. A loan is considered delinquent when a payment has not been made by the contractual due date. Interest income previously accrued but not collected at the date a loan is placed on nonaccrual status is reversed against interest income. Cash receipts on a nonaccrual loan are applied to principal and interest in accordance with its contractual terms unless full payment of principal is not expected, in which case cash receipts, whether designated as principal or interest, are applied as a reduction of the carrying value of the loan. A nonaccrual loan is generally returned to accrual status when principal and interest payments are current, full collectibility of principal and interest is reasonably assured and a consistent record of performance has been demonstrated.
    The allowance for losses on loans represents management's best estimate of losses probable in the existing loan portfolio. The allowance for losses on loans is increased by the provision for losses on loans charged to expense and reduced by loans charged off, net of recoveries. Loans are charged off in the period deemed uncollectible. Recoveries of loans previously charged off are recorded when received. The provision for losses on loans is determined based on management's assessment of several factors: reviews and evaluations of specific loans, changes in the nature and volume of the loan portfolio, current economic conditions and the related impact on specific borrowers and industry groups, historical loan loss experience, the level of classified and nonperforming loans and the results of regulatory examinations.

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>  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  <
Southern Missouri Bancorp, Inc.

    Valuation allowances are established for impaired loans for the difference between the loan amount and fair value of collateral less estimated selling costs. Impairment losses are recognized through an increase in the allowance for loan losses.
    Loans are considered impaired if, based on current information and events, it is probable that the company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.
    Loan fees and certain direct loan origination costs are deferred, and the net fee or cost is recognized as an adjustment to interest income using the interest method over the contractual life of 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. 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. Intangible Assets. The Bank adopted the provisions of SFAS No. 142, Goodwill and Other Intangible Assets, effective July 1, 2002. Intangible assets acquired through the purchase of branches were excluded from the scope of SFAS No. 142. In October 2002, the FASB issued SFAS No. 147, Acquisitions of Certain Financial Institutions. SFAS No. 147 clarified that the carrying amount of an unidentified intangible asset continue to be amortized. The Bank's gross amount of this intangible asset at June 30, 2005 and 2004 was $3,837,416 and $3,837,416, respectively, with accumulated amortization of $1,233,741 and $978,484, respectively. The intangible asset is being amortized over 15 years with amortization expense over the next five years expected to be $255,258 per year. Income Taxes. The Company and its subsidiary file consolidated income tax returns. Deferred assets and liabilities are recognized for the tax effects of differences between the financial reporting bases and income tax bases of the Company's assets and liabilities. Incentive Plans. The Company accounts for its management and recognition plan (MRP) in accordance with Accounting Principle Board Opinion (APB) No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES. The aggregate purchase price of all shares owned by the incentive plan is reflected as a reduction of stockholder's equity. Compensation expense is based on the market price of the Company's stock on the date the shares are granted and is recorded over the vesting period. The difference between the aggregate purchase price and the fair value on the date granted of the shares earned is recorded as an adjustment to additional paid in capital. Outside Directors' Retirement. The Bank adopted a directors' retirement plan in April 1994 for outside directors. The directors' retirement plan provides that each non-employee director (participant) shall receive, upon termination of service on the Board on or after age 60, other than termination for cause, a benefit in equal annual installments over a five year period. The benefit will be based upon the product of the participant's vesting percentage and the total Board fees paid to the participant during the calendar year preceding termination of service on the Board. The vesting percentage shall be determined based upon the participant's years of service on the Board, whether before or after the reorganization date.
    In the event that the participant dies before collecting any or all of the benefits, the Bank shall pay the participant's beneficiary. No benefits shall be payable to anyone other than the beneficiary, and shall terminate on the death of the beneficiary. Stock Options. The Company has elected not to adopt the recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, which requires a fair-value-based method of accounting for stock options. As permitted under SFAS No. 123, the Company continues to apply APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its stock option plan, and accordingly, does not recognize compensation cost for its stock option plan. Had compensation cost for the Company's stock option plan been consistently expensed based upon the fair value at the grant date for awards under the methodology prescribed under SFAS No. 123, the Company's net income and earnings per share would have been reduced as shown in the table below. Detailed information for activity in the Company's stock plan and the assumptions used in the fair-value-based method can be found in Note 9.

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>  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  <
Southern Missouri Bancorp, Inc.

	June 30
	2005	2004	2003
Net income as reported	$   104,259	$ 2,882,900	$ 2,738,218
Add: Stock-based employee compensation    expense included in reported income,    net of related tax effects	207,008	193,202	154,219
Deduct: Total stock-based employee    compensation expense determined under    fair-value-based method for all awards,    net of related tax effects	(243,469)	(203,702)	(159,219)
Pro forma net income	$    67,798	$ 2,872,400	$ 2,733,218
Earnings per share
Basic as reported	$  .05	$ 1.27	$ 1.17
Basic pro forma	$  .03	1.26	1.17
Diluted as reported	$  .05	1.23	1.14
Diluted pro forma	$  .03	1.23	1.14

Employee Stock Ownership Plan. The Company accounts for its employee stock ownership plan (ESOP) in accordance with American Institute of Certified Public Accountants (AICPA) Statement of Position 93-6. The cost of shares issued to the ESOP but not yet allocated to participants are presented in the consolidated balance sheet as a reduction of stockholders' equity. Compensation expense is recorded based on the market price of the shares as they are committed to be released for allocation to participant accounts. The difference between the market price and the cost of shares committed to be released is recorded as an adjustment to additional paid-in capital. Dividends on allocated ESOP shares are recorded as a reduction of retained earnings; dividends on unallocated ESOP shares are reflected as a reduction of debt. Shares are considered outstanding for earnings per share calculations when they are committed to be released; unallocated shares are not considered outstanding.     As of June 30, 2005, the ESOP shares have been fully distributed and the Bank will purchase additional shares under the ESOP plan. 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. The two for one stock split effected as a 100% stock dividend in September, 2003, has been reflected for all per share data. Treasury Stock. Treasury stock is stated at cost. Cost is determined by the first-in, first-out method. Reclassification. Certain amounts included in the 2004 and 2003 consolidated financial statements have been reclassified to conform to the 2005 presentation. These reclassifications had no effect on net income. The following paragraphs summarize the impact of new accounting pronouncements:     In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 123R, Share-Based Payment, which is a revision of SFAS No. 123, Accounting for Stock-based Compensation, that sets accounting requirements for "share-based" compensation to employees. This statement will require the Company to recognize in the income statement the grant-date fair value of the stock options and other equity-based compensation issued to employees, but expresses no preference for a type of valuation model. This Statement is effective on July 1, 2006. The unvested stock options that are outstanding on the effective date of SFAS No. 123R that were previously included as part of the net income in Note 1 will be charged to expense over the remaining vesting period, without any changes in measurement. The adoption of SFAS No. 123R is not expected to have a material impact on the Company's results of operations, financial position or cash flows.     The Emerging Issues Task Force (EITF) of FASB previously issued EITF Issue 03-1, The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments. EITF Issue 03-1 provides guidance on the meaning of the phrase other-than-temporary impairment and its application to several types of investments, including debt securities classified as held-to-maturity and available-for-sale under FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities. EITF Issue 03-1 attempts to better define whether impairment losses should be recognized on available-for-sale securities prior to sale of the securities. It provides guidance for evaluating whether and when unrealized losses should be deemed "other-than-temporary," requiring immediate recognition of those losses through earnings. Certain portions of EITF 03-1 were delayed in order for the FASB Staff to provide implementation guidance and clarify several issues that were raised by interested par ties during the public comment period. FASB ultimately decided not to provide additional guidance on the meaning of other-than-temporary impairment, but directed the FASB Staff to issue a Staff Position (FSP) which will complete and codify the guidance on this topic. This FSP is expected to be issued in late 2005.

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>  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  <
Southern Missouri Bancorp, Inc.

NOTE 2: Securities

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

	June 30, 2005
	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
Investment securities:
U.S. government and Federal       agency obligations	$ 14,482,985	$ 19,300	$(128,981)	$ 14,373,304
Obligations of states and       political subdivisions	1,582,148	26,538	(8,493)	1,600,193
FNMA preferred stock	1,000,000	-	(16,000)	984,000
Other securities	500,000	-	-	500,000
TOTAL INVESTMENT SECURITIES	17,565,133	45,838	(153,474)	17,457,497
Mortgage-backed securities:
FHLMC certificates	2,705,260	8,003	(40,361)	2,672,902
GNMA certificates	258,626	711	(735)	258,602
FNMA certificates	7,127,202	22,506	(83,421)	7,066,287
CMOs issued by government agencies	7,319,003	895	(74,778)	7,245,120
TOTAL MORTGAGE-BACKED SECURITIES	17,410,091	32,115	(199,295)	17,242,911
TOTAL	$ 34,975,224	$  77,953	$(352,769)	$ 34,700,408

	June 30, 2004
	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
Investment securities:
U.S. government and Federal       agency obligations	$ 11,420,348	$ 11,940	$(118,095)	$ 11,314,193
Obligations of states and       political subdivisions	726,870	50,006		776,876
FNMA preferred stock	1,000,000	3,500	(1,300)	1,002,200
Equity securities	3,357,227	119,959	(62,332)	3,414,854
Other securities	2,712,723	8,315	(17,000)	2,704,038
TOTAL INVESTMENT SECURITIES	19,217,168	193,720	(198,727)	19,212,161
Mortgage-backed securities:
FHLMC certificates	3,633,352	14,062	(95,127)	3,552,287
GNMA certificates	350,103	-	(2,134)	347,969
FNMA certificates	9,225,163	56,780	(188,236)	9,093,707
CMOs issued by government agencies	8,158,177	14,675	(173,069)	7,999,783
TOTAL MORTGAGE-BACKED SECURITIES	21,366,795	85,517	(458,566)	20,993,746
TOTAL	$ 40,583,963	$ 279,237	$(657,293)	$ 40,205,907

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>  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  <
Southern Missouri Bancorp, Inc.

   The amortized cost and estimated fair value of investment and mortgage-backed securities, including equity 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, 2005
Available for Sale		Amortized Cost	Estimated Fair Value
Within one year		$   729,993	$   730,208
One to five years		14,369,873	14,270,343
After 10 years		2,465,267	2,456,946
Total investment securities		17,565,133	17,457,497
Mortgage-backed securities		17,410,091	17,242,911
	TOTAL	$ 34,975,224	$ 34,700,408

    The carrying value of investment and mortgage-backed securities pledged as collateral to secure public deposits and securities sold under agreements to repurchase amounted to $20,092,364 and $27,051,040 at June 30, 2005 and 2004, respectively.
    Certain investments in debt and marketable equity securities are reported in the financial statements at an amount less than their historical cost. Total fair value of these investments at June 30, 2005, was $29.1 million, which is approximately 83.8% of the Bank's available-for-sale investment portfolio. These declines primarily resulted from recent increases in market interest rates.
    Adjustable rate mortgage loans included in mortgage-backed securities at June 30, 2005 and 2004 amounted to $1,272,829 and $1,717,999, respectively.

    Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary.
    Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.
    The following table shows our investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2005.

	Less than 12 months		12 months or more		Total
Description of Securities	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
For the year ended June 30, 2005
U.S. Treasury	$ 525,156	$ 6,318	$      -	$      -	$ 525,156	$ 6,318
U.S. government    agencies	8,003,857	48,180	2,925,516	74,483	10,929,373	122,663
Mortgage-backed    securities	10,971,366	96,196	4,742,866	103,099	15,714,232	199,295
FNMA preferred    stock	984,000	16,000	-	-	984,000	16,000
Other securities	925,952	8,493	-	-	925,952	8,493
Total temporarily    impaired    securities	$ 21,410,331	$ 175,187	$ 7,668,382	$ 177,582	$ 29,078,713	$ 352,769

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Southern Missouri Bancorp, Inc.

	Less than 12 months		12 months or more		Total
Description of Securities	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
For the year ended June 30, 2004
U.S. Treasury	$ 541,093	$ 5,203	$       -	$       -	$ 541,093	$ 5,203
U.S. government    agencies	7,765,930	112,892	-	-	7,765,930	112,892
Mortgage-backed    securities	17,777,655	458,279	112,386	287	17,890,041	458,566
FNMA preferred    stock	498,700	1,300	-	-	498,700	1,300
Equity services	1,044,250	62,332	-	-	1,044,250	62,332
Other securities	108,000	17,000	-	-	108,000	17,000
Total temporarily    impaired    securities	$ 27,735,628	$ 657,006	$ 112,386	$ 287	$ 27,848,014	$ 657,293

NOTE 3: Loans

    Loans are summarized as follows:

		June 30
		2005	2004
Real estate loans:
Conventional		$ 125,775,000	$ 122,392,028
Construction		8,557,307	7,533,011
Commercial		58,143,981	56,111,695
Consumer loans		21,413,427	21,478,904
Commercial		59,284,196	45,922,527
		273,173,911	253,438,165
Loans in process		(3,626,953)	(3,093,210)
Deferred loan fees, net		37,486	(11,484)
Allowance for loan losses		(2,016,514)	(1,978,491)
	TOTAL	$ 267,567,930	$ 248,354,980

    Adjustable rate loans included in the loan portfolio amounted to $126,308,061 and $118,321,901 at June 30, 2005 and 2004, respectively.
    One-to four-family residential real estate loans amounted to $125,033,542 and $120,995,684 at June 30, 2005 and 2004, 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.

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

	June 30
	2005	2004	2003
Balance, beginning of period	$ 1,978,491	$ 1,835,705	$ 1,569,266
Loans charged-off	(4,821,112)	(158,557)	(125,862)
Recoveries of loans previously charged-off	44,135	26,343	62,301
Net charge-offs	(4,776,977)	(132,214)	(63,561)
Provision charged to expense	4,815,000	275,000	330,000
Balance, end of period	$ 2,016,514	$ 1,978,491	$ 1,835,705

   Total loans past due ninety days or more and still accruing interest amounted to $143,000, $131,000, and $82,000 at June 30, 2005, 2004, and 2003, respectively. The Company ceased recognition of interest income on loans with a book value of $428,000, $4,332, and $7,099, at June 30, 2005, 2004, and 2003, respectively. The average balance of nonaccrual loans for the years ended June 30, 2005, 2004, and 2003 was $717,000, $6,000, and $52,000, respectively. Allowance for losses on nonaccrual loans amounted to $6,000, $0, and $0, at June 30, 2005, 2004, and 2003. Interest income of approximately $8,000, $200, and $400, was recognized on these loans for the years ended June 30, 2005, 2004, and 2003, respectively. Gross interest income would have been approximately $146,000, $700, and $800 for the years ended June 30, 2005, 2004, and 2003, 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, 2005, 2004, and 2003, none were considered to be impaired. There were no impaired loans during the years ended June 30, 2005, 2004, and 2003.

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, 2004	$ 5,057,623
Additions	8,838,792
Repayments	7,714,032
Balance, June 30, 2005	$ 6,182,383
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.

NOTE 4: Premises and Equipment

    Following is a summary of premises and equipment:

	June 30
	2005	2004
Land	$ 3,256,273	$ 1,235,380
Buildings and improvements	4,851,199	4,739,754
Furniture, fixtures and equipment	3,640,409	3,451,994
Automobiles	31,388	31,388
	11,779,269	9,458,516
Less accumulated depreciation	(3,894,903)	(3,389,010)
TOTAL	$ 7,884,366	$ 6,069,506

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>  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  <
Southern Missouri Bancorp, Inc.

NOTE 5: Deposits

    Deposits are summarized as follows:

		June 30
		2005	2004
Noninterest-bearing accounts		$ 15,658,008	$ 14,143,212
NOW accounts		28,970,548	30,578,091
Money market deposit accounts		14,559,584	19,731,193
Savings accounts		65,550,357	64,913,463
	TOTAL TRANSACTION ACCOUNTS	$ 124,738,497	$ 129,365,959
Certificates:
0.00 - 0.99%		-	12,925
1.00 - 1.99%		9,291,207	40,380,538
2.00 - 2.99%		40,481,477	9,209,074
3.00 - 3.99%		36,305,933	14,629,028
4.00 - 4.99%		10,600,253	14,262,299
5.00 - 5.99%		3,035,626	3,834,289
6.00 - 6.99%		212,704	264,485
Total certificates, 3.09%    and 2.69%, respectively		99,927,200	82,592,638
	TOTAL DEPOSITS	$ 224,665,697	$ 211,958,597

    The aggregate amount of certificates of deposit with a minimum denomination of $100,000 was $33,723,245 and $23,978,176 at June 30, 2005 and 2004, respectively.

    Certificate maturities at June 30, 2005 are summarized as follows:

July 1, 2005 to June 30, 2006	$ 60,706,846
July 1, 2006 to June 30, 2007	29,947,889
July 1, 2007 to June 30, 2008	5,406,622
July 1, 2008 to June 30, 2009	2,066,909
July 1, 2009 to June 30, 2010	1,794,745
Thereafter	4,189
TOTAL	$ 99,927,200

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>  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  <
Southern Missouri Bancorp, Inc.

NOTE 6: 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.

	June 30
	2005	2004
Year-end balance	$10,757,200	$ 6,447,819
Average balance during the year	8,846,482	6,340,861
Maximum month-end balance during the year	13,230,961	8,073,994
Average interest during the year	2.11%	1.15%
Year-end interest rate	2.75%	1.00%

    The market value of the securities underlying the agreements at June 30, 2005 and 2004, was $12,005,329 and $7,395,583, respectively. The securities sold under agreements to repurchase are under the Company's control.

NOTE 7: Advances from Federal Home Loan Bank

    Advances from Federal Home Loan Bank are summarized as follows:

			June 30
Maturity	Call Date or Quarterly Thereafter	Interest Rate	2005	2004
Overnight borrowings	-	3.62%	$ 9,500,000	$             -
Overnight borrowings	-	1.46%	-	7,250,000
06-19-06	-	4.33%	1,000,000	1,000,000
09-08-06	-	5.00%	5,000,000	5,000,000
12-18-06	-	3.01%	2,000,000	2,000,000
01-08-07	-	2.65%	2,000,000	2,000,000
06-11-07	-	4.89%	1,000,000	1,000,000
06-19-07	-	4.63%	1,000,000	1,000,000
08-30-07	-	3.91%	1,000,000	1,000,000
10-17-07	-	4.84%	2,000,000	2,000,000
02-06-08	08-06-03	5.17%	3,000,000	3,000,000
10-26-09	09-01-03	5.50%	10,000,000	10,000,000
01-20-10	07-20-03	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
		TOTAL	$ 61,500,000	$ 59,250,000
Weighted-average rate			5.03%	4.84%

In addition to the above advances, the Bank had an available line of credit amounting to $32,291,000 and $32,108,000, with FHLB at June 30, 2005 and 2004, respectively.     Advances from FHLB of Des Moines are secured by FHLB stock and one-to four-family mortgage loans of $73,800,000 and $71,100,000 at June 30, 2005 and 2004, respectively. The principal maturities of FHLB advances at June 30, 2005, are as follows:
	July 1, 2005 to June 30, 2006	$ 10,500,000
	July 1, 2006 to June 30, 2007	11,000,000
	July 1, 2007 to June 30, 2008	6,000,000
	July 1, 2008 to June 30, 2009	-
	July 1, 2009 to June 30, 2010	15,000,000
	July 1, 2010 to June 30, 2011	19,000,000
	TOTAL	$ 61,500,000

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>  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  <
Southern Missouri Bancorp, Inc.

Note 8: Subordinated Debt
    Southern Missouri Statutory Trust I issued $7.0 million of Floating Rate Capital Securities (the "Trust Preferred Securities") with a liquidation value of $1,000 per share. The securities are due in 30 years, redeemable after five years and bear interest at a floating rate based on LIBOR. At June 30, 2005, the current rate was 6.17%. The securities represent undivided beneficial interests in the trust, which was established by Southern Missouri for the purpose of issuing the securities. The Trust Preferred Securities were sold in a private transaction exempt from registration under the Securities Act of 1933, as amended (the "Act") and have not been registered under the Act. The securities may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
    Southern Missouri Statutory Trust I used the proceeds from the sale of the Trust Preferred Securities to purchase Junior Subordinated Debentures of Southern Missouri Bancorp. Southern Missouri Bancorp, Inc. intends to use its net proceeds for working capital and investment in its subsidiaries.

NOTE 9: Employee Benefits
    401(k). The Bank has a 401(k) profit sharing plan that covers substantially all eligible employees. Contributions to the plan are at the discretion of the Board of Directors of the Bank. During 2005, 2004, and 2003, there were no contributions made to the plan.
    Employee Stock Ownership Plan (ESOP). The Bank established a tax-qualified ESOP in April 1994. The plan covers substantially all employees who have attained the age of 21 and completed one year of service.
    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 2005, 2004 and 2003 was $191,777, $184,088 and $146,953, respectively. Management Recognition Plan (MRP). The Bank adopted an (MRP) for the benefit of non-employee directors and two MRPs for officers and key employees (who may also be directors) in April 1994. During 2004, the Bank granted 5,000 MRP shares to employees. The shares granted are in the form of restricted stock payable at the rate of 20% of such shares per year. During 2005, 1,000 MRP shares vested, which were awarded in 2004. 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 2005 and 2004 was $15,231 and $9,114, respectively.
    Stock Option Plan. The Company adopted a stock option plan in April 1994. The purpose of the plan was to provide additional incentive to certain directors, officers and key employees of the Bank. In October 1999, the stockholders voted to increase the number of shares reserved for options by 67,932 shares. The stock options were granted at the fair market value of the common stock on the date of the grant. Through June 30, 1999, all options granted were 100% vested at the grant date. For shares granted after June 30, 1999, the vesting period ranged from the grant date up to a five year period. All options expired ten years from the date of the grant. The 1994 stock option plan expired in April 2004. In October 2003, a new stock option and incentive plan was adopted ("2003 Plan"). Under the 2003 plan, the Company has granted 77,000 options to employees and directors.

    The number of ESOP shares at June 30, 2005 and 2004 were as follows:

		2005	2004
Allocated shares		136,728	137,554
Unreleased shares		-	11,828
	TOTAL ESOP SHARES	136,728	149,382

At June 30, 2005, the ESOP had no unreleased shares. The fair value of unreleased ESOP shares at June 30, 2004 was $186,409.

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> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) <
Southern Missouri Bancorp, Inc.

Changes in options outstanding were as follows:

	Years Ended June 30,
	2005		2004		2003
	Weighted Average Price	Number	Weighted Average Price	Number	Weighted Average Price	Number
Outstanding at beginning of year	$10.24	186,972	$ 7.20	162,406	$ 6.84	194,114
Granted	15.30	15,000	15.23	66,000	-	-
Exercised	6.97	(9,457)	6.26	(41,434)	5.00	(31,788)
Forfeited	15.23	(4,000)	-	-	-	-
Outstanding at year-end	$10.70	188,515	$10.24	186,972	$ 7.20	162,406
Options exercisable at year-end	$ 8.37	123,915	$ 7.51	116,972	$ 7.24	156,046

The following is a summary of the assumptions used by the Black-Scholes pricing model in determining the fair values of options granted during fiscal 2005:

	2005	2004
Assumptions:
Expected dividend yield	2.35%	2.36%
Expected volatility	18.74%	18.93%
Risk-free interest rate	3.31%	3.87%
Weighted-average expected life	5 years	5 years
Weighted-average fair value of     options granted during the year	$ 3.55	$ 3.71

The following table summarizes information about stock options under the plan outstanding at June 30, 2004

		Options Outstanding		Options Exercisable
Exercise Price	Number Outstanding	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price	Number Exercisable	Weighted Average Exercise Price
6.5000	21,515	57.6mo.	6.5000	21,515	6.5000
6.7500	60,000	49.9 mo.	6.7500	60,000	6.7500
9.9375	30,000	31.1 mo.	9.9375	30,000	9.9375
15.2300	62,000	106.7 mo.	15.2300	13,200	15.2300
15.3000	15,000	110.2 mo.	15.3000	-	15.3000

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>  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  <
Southern Missouri Bancorp, Inc.

NOTE 10: Income Taxes

    The components of net deferred tax assets (liabilities) are summarized as follows:

		2005	2004
Deferred tax assets:
Provision for losses on loans		$ 776,743	$ 762,104
Unrealized loss of available for sale securities		101,701	157,978
Accrued compensation and benefits		133,936	146,996
Other		101,346	-
Total deferred tax assets		1,113,726	1,067,078
Deferred tax liabilities:
FHLB stock dividends		$ 188,612	$ 188,612
Purchase accounting adjustments		52,832	52,832
Depreciation		342,392	402,842
Total deferred tax liabilities		583,836	644,286
	NET DEFERRED TAX ASSET	$ 529,890	$ 422,792

    The provision for income taxes includes these components:

	Year Ended June 30
	2005	2004	2003
Current:
Federal	$     9,000	$ 1,448,000	$ 1,529,900
State	-	-	166,000
	9,000	1,448,000	1,695,900
Deferred:
Federal	(81,900)	(19,000)	(224,000)
State	(9,000)	(2,000)	(6,000)
	(90,900)	(21,000)	(230,000)
TOTAL	$   (81,900)	$ 1,427,000	$ 1,465,900

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>  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  <
Southern Missouri Bancorp, Inc.

    A reconciliation of income tax expense at the statutory rate to the Company's actual income tax expense is shown below:

		Year Ended June 30
		2005	2004	2003
Tax at statutory Federal rate		$    7,602	$1,457,423	$1,429,411
Increase (reduction) in taxes    resulting from:
Nontaxable municipal income		(20,695)	(27,275)	(69,174)
State tax, net of Federal benefit		(12,138)	-	102,300
Nondeductible ESOP expenses		45,097	39,218	27,925
Cash surrender value of bank          owned life insurance		(76,599)	(63,869)	(27,376)
Other, net		(25,167)	21,503	2,814
	ACTUAL PROVISION	$   (81,900)	$ 1,427,000	$ 1,465,900

NOTE 11: Other Comprehensive Income (Loss)

    Other comprehensive income (loss) components are as follows:

	Year Ended June 30
	2005	2004	2003
Unrealized gains (losses) on    available for sale securities:
Unrealized holding gains (losses)          arising during period	$  454,748	$ (613,831)	$ (292,751)
Less: reclassification          adjustments for (gains) losses          realized in net income	(351,508)	19,186	-
Total unrealized gains (losses)          on securities	103,240	(594,645)	(292,751)
Income tax (expense) benefit	(38,199)	220,038	108,318
Other comprehensive income (loss)	$  65,041	$ (374,607)	$ (184,433)

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>  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  <
Southern Missouri Bancorp, Inc.

NOTE 12: Stockholders' Equity and Regulatory Capital

    The Company and Bank are subject to various regulatory capital requirements administered by the Federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory -- and possibly additional discretionary -- actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
    Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total capital and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier I capital (as defined) to average total assets (as defined). Management believes, as of June 30, 2005, that the Bank meets all capital adequacy requirements to which it is subject.     As of June 30, 2005, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Bank's category. The Company's only significant activity is ownership of the Bank, and, therefore, its capital, capital ratios, and minimum required levels of capital are materially the same as the Bank's.
    The following table summarizes the Bank's actual and required regulatory capital:

(dollars in thousands)	Actual		For Capital Adequacy Purposes		To Be Well Capitalized Under Prompt Corrective Action Provisions
As of June 30, 2005	Amount	Ratio	Amount	Ratio	Amount	Ratio
Total Capital (to Risk-Weighted Assets)
Consolidated	$ 31,574	13.42%	$ 18,825	≥8.00%		N/A
Southern Missouri Bank & Trust	26,958	11.46%	18,825	≥8.00%	23,531	10.0%
Tier I Capital (to Risk-Weighted Assets)
Consolidated	29,558	12.56%	9,412	≥4.00%		N/A
Southern Missouri Bank & Trust	24,942	10.60%	9,412	≥4.00%	14,119	6.0%
Tier I Capital (to Average Assets)
Consolidated	29,558	8.34%	14,183	≥4.00%		N/A
Southern Missouri Bank & Trust	24,942	7.76%	12,849	≥4.00%	16,061	5.0%
As of June 30, 2004
Total Capital (to Risk-Weighted Assets)
Consolidated	$ 32,341	14.96%	$ 17,292	≥8.00%		N/A
Southern Missouri Bank & Trust	25,454	11.82%	17,292	≥8.00%	21,616	10.0%
Tier I Capital (to Risk-Weighted Assets)
Consolidated	30,362	14.05%	8,646	≥4.00%		N/A
Southern Missouri Bank & Trust	23,475	10.90%	8,646	≥4.00%	12,969	6.0%
Tier I Capital (to Average Assets)
Consolidated	30,362	9.91%	12,253	≥4.00%		N/A
Southern Missouri Bank & Trust	23,475	7.81%	12,020	≥4.00%	15,025	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.

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>  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  <
Southern Missouri Bancorp, Inc.

NOTE 13: Commitments and Credit Risk

    Standby Letters of Credit. In the normal course of business, the Bank issues various financial standby, performance standby and commercial letters of credit for its customers. As consideration for the letters of credit, the institution charges letter of credit fees based on the face amount of the letters and the creditworthiness of the counterparties. These letters of credit are stand-alone agreements, and are unrelated to any obligation the depositor has to the Bank.
    Standby letters of credit are irrevocable conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Financial standby letters of credit are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions. Performance standby letters of credit are issued to guarantee performance of certain customers under non-financial contractual obligations. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loans to customers.
    The Bank had total outstanding standby letters of credit amounting to $947,000 and $1,337,000 at June 30, 2005 and 2004, respectively, with terms ranging from 12 to 24 months. At June 30, 2005, the Bank's deferred revenue under standby letters of credit agreements was nominal.
    Off-balance-sheet and Credit Risk. The Company's Consolidated Financial Statements do not reflect various financial instruments to extend credit to meet the financing needs of its customers.
    These financial instruments include commitments to extend credit. These instruments involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the statements of financial condition. Lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without being drawn upon, the total unused lines do not necessarily represent future cash requirements. Each customer's creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management's credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate. Management uses the same credit policies in granting lines of credit as it does for on-balance-sheet instruments.
    The Company had $28.3 million in commitments to extend credit at June 30, 2005 and $35.7 million at June 30, 2004.
    At June 30, 2005, total commitments to originate fixed-rate loans with terms in excess of one year were $1.5 million at interest rates ranging from 5.75% to 6.75%. 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 $125,775,000 at June 30, 2005, are secured by single and multi-family residential real estate in the Company's primary lending area.

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>  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  <
Southern Missouri Bancorp, Inc.

NOTE 14: Earnings Per Share

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

	Year Ended June 30
	2005	2004	2003
Net income	$   104,259	$ 2,882,901	$ 2,738,218
Denominator for basic earnings       per share -
Weighted-average shares          outstanding	2,225,493	2,277,757	2,334,892
Effect of dilutive securities          Stock options	64,255	57,543	63,468
Denominator for diluted       earnings per share	2,289,748	2,335,300	2,398,360
Basic earnings per common share	$  .05	$ 1.27	$ 1.17
Diluted earnings per common share	$  .05	$ 1.23	$ 1.14

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NOTE 15: Disclosures about Fair Value of Financial Instruments

    The following table presents estimated fair values of the Company's financial instruments. The fair values of certain of these instruments were calculated by discounting expected cash flows, which involves significant judgments by management and uncertainties. Fair value is the estimated amount at which financial assets or liabilities could be exchanged in a current transaction

between willing parties, other than in a forced or liquidation sale. Because no market exists for certain of these financial instruments and because management does not intend to sell these financial instruments, the Company does not know whether the fair values shown below represent values at which the respective financial instruments could be sold individually or in the aggregate.

	2005		2004
	Carrying Amount	Fair Value	Carrying Amount	Fair Value
	(in thousands)		(in thousands)
Financial Assets
Cash and cash equivalents	$ 3,887	$ 3,887	$ 4,582	$ 4,582
Investment and mortgage-       backed securities       available for sale	34,700	34,700	40,206	40,206
Stock in FHLB	3,121	3,121	3,171	3,171
Loans receivable, net	267,568	269,658	248,355	252,982
Bank owned life insurance	6,486	6,486	4,260	4,260
Accrued interest receivable	1,394	1,394	1,357	1,357
Financial Liabilities
Deposits	224,666	221,211	211,959	208,439
Securities sold under       agreements to repurchase	10,757	10,757	6,448	6,448
Advances from FHLB	61,500	64,252	59,250	62,684
Subordinated Debt	7,217	7,217	7,217	7,217
Accrued interest payable	497	497	336	336
Unrecognized financial instruments    (net of contract amount)
Letters of Credit	-	-	-	-
Lines of Credit	-	-	-	-

    The following methods and assumptions were used in estimating the fair values of financial instruments:
    Cash and cash equivalents are valued at their carrying amounts which approximates fair value.
    Fair values of investment and mortgage-backed securities are based on quoted market prices or, if unavailable, quoted market prices of similar securities.
    Stock in FHLB is valued at cost which approximates fair value.
    Fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics are aggregated for purposes of the calculations.
    Fair value of Bank owned life insurance is equal to the cash surrender value of the underlying life insurance policies.

    The carrying amounts of accrued interest approximate their fair values.
    Deposits with no defined maturities, such as NOW accounts, savings accounts and money market deposit accounts, are valued at their carrying amount which approximates fair value.
    The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities.
    The carrying amounts of securities sold under agreements to repurchase approximate fair value.
    Fair value of advances from the FHLB is estimated by discounting maturities using an estimate of the current market for similar instruments.
    The fair value of subordinated debt is estimated using rates currently available to the Company for debt with similar terms and maturities.

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>  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  <
Southern Missouri Bancorp, Inc.

NOTE 16: Condensed Parent Company Only Financial Statements

    The following condensed balance sheets, statements of income and cash flows for Southern Missouri Bancorp, Inc. should be read in

conjunction with the consolidated financial statements and the notes thereto.

		June 30,
Condensed Balance Sheets		2005	2004
Assets
Cash and cash equivalents		$ 2,535,054	$ 1,100,569
Available for sale securities		-	5,618,892
ESOP note receivable		-	70,566
Premise and equipment		2,010,331	-
Other assets		403,694	370,288
Investment in common stock of Bank		27,390,159	26,064,814
	TOTAL ASSETS	$ 32,339,238	$ 33,225,129
Liabilities and Stockholders' Equity
Accrued expenses and other liabilities		$118,739	$ 55,711
Subordinated debt		7,217,000	7,217,000
	TOTAL LIABILITIES	7,335,739	7,272,711
Stockholders' equity		25,003,499	25,952,418
	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 32,339,238	$ 33,225,129

		Year Ended June 30
Condensed Statements of Income		2005	2004	2003
Interest income		$ 96,653	$ 82,178	$ 12,485
Interest expense		369,733	84,152	-
Net interest income		(273,080)	(1,974)	12,485
Dividend from Bank		1,200,000	1,100,000	1,800,000
Gains on sales of securities		351,508	-	-
Operating expenses		272,643	349,245	263,406
Income before income taxes and       equity in undistributed income       of the Bank		1,005,785	748,781	1,549,079
Income tax benefit		79,900	128,000	90,743
Income before equity in undistributed    income of the Bank		1,085,685	876,781	1,639,822
Equity in undistributed (loss) income of    the Bank		(981,426)	2,006,120	1,098,396
	NET INCOME	$   104,259	$ 2,882,901	$ 2,738,218

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>  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  <
Southern Missouri Bancorp, Inc.

		Year Ended June 30
Condensed Statements		2005	2004	2003
Cash flows from operating activities:
Net income		$   104,259	$ 2,882,901	$ 2,738,218
Changes in:
Equity in undistributed income          of the Bank		981,426	(2,006,120)	(1,098,396)
Other adjustments, net		37,355	(22,635)	(50,260)
	NET CASH PROVIDED BY OPERATING ACTIVITIES	1,123,040	854,146	1,589,562
Cash flows from investing activities:
Principal collected on loan to ESOP		70,566	72,874	72,873
Purchase of available for sale securities		(1,099,000)	(5,573,272)	-
Purchase of investment real estate		(5,537,842)	-	-
Sale of investment real estate		3,497,971	-	-
Depreciation		39,916	-	-
Proceeds from sales available for sale       securities		6,668,949	-	-
Capital contributed to Bank		(2,000,000)	-	-
Investment in statutory trust		-	(217,000)	-
Proceeds from sales of other assets		-	-	4,500
	NET CASH PROVIDED OR (USED IN) INVESTING ACTIVITIES	1,640,560	(5,717,398)	77,373
Cash flows from financing activities:
Proceeds from issuance of       subordinated debt		-	7,217,000	-
Dividends on common stock		(809,193)	(821,584)	(656,247)
Exercise of stock options		65,962	259,185	184,493
Payments to acquire treasury stock		(585,884)	(1,297,366)	(1,641,518)
	NET CASH (USED IN) OR PROVIDED BY FINANCING ACTIVITIES	(1,329,115)	5,357,235	(2,113,272)
Net increase (decrease) in cash and    cash equivalents		1,434,485	493,983	(446,337)
Cash and cash equivalents at beginning    of year		1,100,569	606,586	1,052,923
	CASH AND CASH EQUIVALENTS AT END OF YEAR	$ 2,535,054	$ 1,100,569	$ 606,586

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>  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)  <
Southern Missouri Bancorp, Inc.

NOTE 17: Quarterly Financial Data (Unaudited)

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

		June 30, 2005
		First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Interest income		$ 4,171	$ 4,312	$ 4,325	$ 4,476
Interest expense		1,848	1,928	2,050	2,206
Net interest income		2,323	2,384	2,275	2,270
Provision for loan losses		150	95	2,610	1,960
Noninterest income		691	764	322	536
Noninterest expense		1,643	1,605	1,664	1,816
Income (loss) before income taxes		1,221	1,448	(1,677)	(970)
Income tax expense (benefit)		428	574	(701)	(383)
	NET INCOME (LOSS)	$ 793	$ 874	$ (976)	$ (587)
		June 30, 2004
		First Quarter	Second Quarter	Third Quarter	Fourth Quarter
Interest income		$ 3,795	$ 3,935	$ 3,950	$ 4,020
Interest expense		1,608	1,592	1,620	1,725
Net interest income		2,187	2,343	2,330	2,295
Provision for loan losses		30	85	60	100
Noninterest income		451	488	480	456
Noninterest expense		1,526	1,598	1,670	1,651
Income before income taxes		1,082	1,148	1,080	1,000
Income tax expense		390	413	377	247
	NET INCOME	$ 692	$ 735	$ 703	$ 753

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>  CORPORATE INFORMATION  <

CORPORATE HEADQUARTERS 531 Vine Street Poplar Bluff, Missouri 63901 INDEPENDENT AUDITORS BKD, LLP St. Louis, Missouri 63102 SPECIAL COUNSEL Silver, Freedman & Taff, LLP 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 17, 2005, 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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SOUTHERN MISSOURI BANCORP, INC.
Directors		Executive Officers
James W. Tatum	Sammy A. Schalk	Greg A. Steffens
Chairman of the Board	President of Gamblin Lumber Company	President
Retired certified public accountant		Chief Financial Officer
	Greg A. Steffens
L. Douglas Bagby	President	James W. Tatum
Vice-Chairman	Chief Executive Officer	Chairman of the Board
City Manager of Poplar Bluff and
General Manager of Municipal Utilities	Rebecca M. Brooks	James D. Duncan
of Poplar Bluff	Financial Manager	Executive Vice President
	McLane Transport
Samuel H. Smith
Engineer and majority owner of	Charles R. Love
S.H. Smith and Company, Inc.	Certified Public Accountant
	Kraft, Miles and Tatum
Ronnie D. Black
Executive Director General Association	Charles R. Moffitt
of General Baptists	Agency Manager
	Morse Harwell Jiles Insurance Agency
SOUTHERN MISSOURI BANK AND TRUST
Directors		Senior Officers
Samuel H. Smith	Sammy A. Schalk	Greg A. Steffens
Chairman of the Board	President of Gamblin Lumber Company	President
Engineer and majority owner of		Chief Executive Officer
S.H. Smith and Company, Inc.	Greg A. Steffens
	President	James D. Duncan
James W. Tatum	Chief Executive Officer	Executive Vice President
Vice-Chairman
Retired certified public accountant	Rebecca M. Brooks	Kimberly A. Capps
	Financial Manager	Chief Financial Officer
Ronnie D. Black	McLane Transport
Executive Director General Association		William D. Hribovsek
of General Baptists	Charles R. Love	Senior Commercial Loan Officer
	Certified Public Accountant
L. Douglas Bagby	Kraft, Miles and Tatum	Adrian Rushing
City Manager of Poplar Bluff and		Senior Vice President
General Manager of Municipal Utilities	Charles R. Moffitt
of Poplar Bluff	Agency Manager	Valerie Yates
	Morse Harwell Jiles Insurance Agency	Controller
		Tammy Curtis
		Branch Coordinator
		Matt Funke
		Head of Internal Audit

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Southern Missouri Bancorp, Inc. (NASDAQ: SMBC) is the holding company for
Southern Missouri Bank and Trust Company (Southern Missouri Bank).

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

SOUTHERN MISSOURI BANCORP, INC. 531 Vine Street Poplar Bluff, Missouri 63901 (573) 778-1800

EX-21

EXHIBIT 21

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.; subsidiary is inactive.

EX-31

EXHIBIT 31

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 a 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;
4)	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and
	d)	disclosed in this annual report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5)	I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: September 27, 2005 By: /s/ Greg A. SteffensGreg A. Steffens
President
(Principal Executive and Principal Financial and Accounting Officer)

EX-32

EXHIBIT 32

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, 2005 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 27, 2005 By: /s/ Greg A. SteffensGreg A. Steffens
President
(Principal Executive and Principal Financial and Accounting Officer)