SOUTHERN MISSOURI BANCORP INC, 10KSB, 2000-09-28

SOUTHERN MISSOURI BANCORP INC
10KSB, 2000-09-28
SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED

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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, 2000 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 43-1665523

(State or other jurisdiction of incorporation                                                                          (I.R.S. Employer
      or organization)                                                                                                               Identification No.)

531 Vine Street, Poplar Bluff, Missouri                                                              63901

(Address of principal executive offices) (Zip Code)

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

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


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

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

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

       The registrant's revenues for the fiscal year ended June 30, 2000 were $12.9 million.

       As of September 15, 2000, there were issued and outstanding 1,261,003 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 $13.8 million (1,072,154 shares at $12.875). (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, 2000.

       Part III of Form 10-KSB - Portions of the Proxy Statement for the 2000 Annual Meeting of Stockholders.

       Transitional Small Business Disclosure Format (check one) Yes ____ No     X

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 ("SMSB") upon completion of its conversion from a state chartered mutual to a state chartered stock savings bank ("Conversion"). The Company completed the Conversion on April 13, 1994 through the sale and issuance of 1,803,201 shares of common stock. The Company's Common Stock is quoted on the National Association of Securities Dealers Automated Quotations ("NASDAQ") National Market System under the symbol "SMBC".

             SMSB was chartered as a mutual Missouri savings and loan association in 1887 and became a stock company in April, 1994. 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, SMSB converted from a federally chartered stock savings bank to a Missouri chartered stock savings bank and changed its name to Southern Missouri Bank and Trust Co. ("Bank") and ("Charter Conversion").

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

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

             During fiscal 2000, the Bank entered into an agreement to purchase two full service banking facilities with total deposits and loans of approximately $50.0 million and $27.8 million, respectively. The Bank also entered into an agreement to sell two of its full service banking facilities with total deposits and loans of $14.8 million and $9.5 million, respectively. Both transactions were approved by the Bank's regulators and will be completed during the first quarter of fiscal 200l.

             At June 30, 2000, the Company had total assets of $184.4 million, total deposits of $123.9 million and stockholders' equity of $21.5 million. The Company has not engaged in any significant activity other than holding the stock of the Bank. Accordingly, the information set forth in this report, including financial statements and related data, relates primarily to the Bank and its subsidiaries. Additionally, the Company's revenues are derived principally from interest earned on loans, investment securities and MBS and, to a lesser extent, banking service charges, loan late charges and other fee income.

Forward Looking Statements

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

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             The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and to advise readers that various factors, including regional and national economic conditions, substantial changes in levels of market interest rates, credit and other risks of lending and investment activities and competitive and regulatory factors, could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from those anticipated or projected.

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

Market Area

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

Selected Consolidated Financial Information

             This information is incorporated by reference from pages 3 and 4 of the 2000 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 12 of the Annual Report.

Rate/Volume Analysis

             This information is incorporated by reference from page 13 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 page 10 and 11 of the Annual Report.

Lending Activities

            General. The Bank's primary focus in lending activities is on the origination of loans secured by mortgages on one- to four-family residences. To a lesser extent, the Bank also originates mortgage loans on commercial real estate, construction loans on residential and commercial properties, commercial business loans and consumer loans. The Bank has also occasionally purchased a limited amount of loan participation interests originated by other lenders within the Bank's market area and secured by properties generally located in the Bank's primary market area.

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Supervision of the loan portfolio is the responsibility of James W. Duncan, Executive Vice President and Chairman of the Loan Department. Loan officers have varying amounts of lending authority depending upon experience and types of loans. Loans beyond their authority are presented to the Officers Loan Committee, comprised of President Steffens and Loan Chairman Duncan, along with various appointed loan officers. All loans are subject to ratification by the full Board of Directors. Loans to a borrower, in aggregate, in excess of $250,000 require the approval of a majority of the Discount Committee, prior to the closing of the loan. The Loan and Discount Committees consist of all of the directors of the Bank. In addition, foreclosure actions or the acceptance of deeds in lieu of foreclosure are subject to prior approval by the 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, 2000, the maximum amount which the Bank could lend to any one borrower and the borrower's related entities was approximately $4.4 million. At June 30, 2000, the Bank's two largest extensions of credit to one entity were $4.3 million and $4.0 million, respectively. Both of these credits were secured primarily by commercial real estate 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,
	2000		1999		1998
	Amount	Percent	Amount	Percent	Amount	Percent
	(Dollars in thousands)
Type of Loan:
Mortgage Loans:
One-to four-family	$ 94,748	68.45%	$ 87,247	73.78%	$83,399	70.03%
Commercial real estate	23,303	16.83	19,048	16.11	22,530	18.92
Construction	5,704	4.12	3,553	3.00	2,708	2.27
Total mortgage loans	$123,755	89.40	$109,848	92.89	$108,637	91.22

Other Loans:
Automobile loans	6,263	4.52	5,808	4.91	7,319	6.15
Second mortgage	1,279	0.92	1,109	0.94	1,081	0.91
Mobile home	335	0.24	548	0.47	784	0.65
Loans secured by deposits	825	0.60	826	0.70	671	0.57
Commercial business	7,350	5.31	1,481	1.25	1,127	0.95
Other	952	0.69	1,169	0.99	1,480	1.24
Total other loans	17,004	12.28	10,941	9.26	12,462	10.47

Total loans	$140,759	101.68	$120,789	102.15	$121,099	101.69

Less:
Undisbursed loans in process	$ 1,021	(0.73)	$ 1,296	(1.10)	$ 653	(0.54)
Deferred fees and discounts	36	(0.03)	53	(0.04)	68	(0.06)
Allowance for loan losses	1,277	(0.92)	1,191	(1.01)	1,295	(1.09)
Net loans receivable	$138,425 ======	100.00% ======	$118,249 ======	100.00% ======	$119,083 ======	100.00% ======

Type of Security:
Residential real estate
One-to four-family	$ 94,761	68.45%	$ 88,726	75.03%	$ 82,874	69.59%
Multi-family	3,100	2.24	2,076	1.76	3,134	2.63
Commercial real estate	22,237	16.06	17,753	15.01	20,865	17.52
Land	3,657	2.64	1,294	1.09	1,764	1.48
Savings accounts	825	0.60	826	0.70	671	0.57
Commercial	7,350	5.31	1,481	1.26	1,127	0.95
Consumer and other	8,829	6.38	8,633	7.30	10,664	8.95
Total loans	$140,759	101.68	$120,789	102.15	$121,099	101.69

Less:
Undisbursed loans in process	$1,021	(0.73)	$ 1,296	(1.10)	$ 653	(0.54)
Deferred fees and discounts	36	(0.03)	53	(0.04)	68	(0.06)
Allowance for loan losses	1,277	(0.92)	1,191	(1.01)	1,295	(1.09)
Net loans receivable	$138,425 ======	100.00% ======	$118,249 ======	100.00% ======	$119,083 ======	100.00% ======

One- to Four-Family Residential Mortgage Lending. The Bank focuses its lending efforts primarily on originating loans for the acquisition or refinance of one- to four-family residences. These loans are originated as a result of customer and real estate agent referrals, existing and walk-in customers and from responses to the Bank's marketing campaigns. At June 30, 2000, net mortgage loans secured by one- to four-family residences totaled $94.7 million, or 68.5% of net loans receivable.

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             The Bank currently offers both fixed-rate and adjustable-rate mortgage ("ARM") loans. During the year ended June 30, 2000, the Bank originated $8.9 million of ARM loans and $15.3 million of fixed-rate real estate loans which were secured by one- to four-family residences. Substantially all of the one- to four-family residential mortgage originations in the Bank's portfolio are located within the Bank's primary market area.

             The Bank currently 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. Loans originated in excess of 80% do not require private mortgage insurance. The majority of new residential mortgage loans originated by the Bank conform to secondary market standards. The interest rates charged on these loans are competitively priced based on local market conditions, the availability of funding, and anticipated profit margins. Fixed and ARM loans originated by the Bank are amortized over periods as long as 30 years.

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

             Historically, most of the owner occupied residential loans originated by the Bank repriced annually at a margin of 2.50% or 2.75% over the 11th 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, 2000, loans tied to these indices totaled $41.8 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 2000, 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 ("CRE") including multi-family dwellings, land (improved and unimproved), strip shopping centers, retail establishments and other businesses generally located in the Bank's primary market area. At June 30, 2000, the Bank had $23.3 million in CRE, which represented 16.8% of net loans receivable.

             CRE loans originated by the Bank generally are based on amortization schedules of up to 25 years with monthly principal and interest payments. Generally, the interest rate received on these loans adjusts annually based upon the New York prime rate, the one year CMT, the 11^th district cost of funds or the Bank's adjustment caps. Current CRE originations typically adjust based on the New York prime rate. Generally, CRE loans do not exceed 75% of the lower of the appraised value or purchase price of the secured property. Before credit is extended, the Bank analyzes the financial condition of the borrower, the borrower's credit history, and the reliability and predictability of the cash flow generated by the property and the value of the property itself. Currently, personal guaranties are required from the borrower in addition to the secured property as collateral for such loans as well as the submission of updated financial information on the subject property and the guarantor on at least an annual basis. The Bank also generally requires appraisals on properties securing CRE to be performed by a Board-approved independent certified fee appraiser.

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             Generally, loans secured by CRE 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 CRE are often dependent on the successful operation or management of the secured property, repayment of such loans may be subject to adverse conditions in the real estate market or the economy. If the cash flow from the project securing the Bank's loan is reduced (for example, if leases are not obtained or renewed), the borrower's ability to repay the loan may be impaired. See "Asset Quality."

             Construction Lending. The Bank originates real estate loans secured by property or land that is under construction or development. At June 30, 2000, the Bank had $5.7 million, or 4.1% 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, 2000, the Bank had $3.1 million in outstanding construction loans secured by residential real estate and $2.6 million in other speculative construction loans secured by land or commercial 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 15-20 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 automobile, second mortgages, mobile homes and loans secured by deposits. The Bank originates substantially all of its consumer loans in its primary market area. Currently, all consumer loans are originated on a direct basis, where credit is extended directly to the borrower. 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 prime rate and are for a period of ten years. At June 30, 2000, the Bank's consumer loan portfolio totaled $8.8 million, or 6.4% of net loans receivable.

             Automobile loans represent 64.8% of the Bank's installment loan portfolio at June 30, 2000, and totaled $6.3 million, or 4.5% of net loans receivable. Typically, automobile loans are made for terms of up to 60 months for new vehicles and up to 48 months for used vehicles. Loans secured by automobiles have fixed rates and are generally made in amounts up to 80% of the purchase price of the vehicle.

             During prior periods, the Bank financed mobile homes for customers of a local mobile home dealer. At June 30, 2000, the remaining balance of these loans totaled $335,000. Of these loans, $29,000 were past due more than 90 days while the balance of loans past due 61 to 90 days was $24,000 and 30 to 60 days was $110,000. During fiscal 2000, the Bank charged off $39,000 of mobile home loans, which equaled the recoveries of mobile home loans previously charged off.

             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

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proposed obligations. Although creditworthiness of the applicant is a primary consideration, the underwriting process also includes a comparison of the value of the security, if any, in relation to the proposed loan amount.

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

             Commercial Business Lending. At June 30, 2000, the Bank also had $7.4 million in commercial business loans outstanding, or 5.3% 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 and equipment.

             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 one year periods and mature approximately 90-120 days following the borrower's fiscal year end. The Bank's commercial business loans are evaluated based on the loan application, a determination of the applicant's payment history on other debts, business stability and an assessment of ability to meet existing obligations and payments on the proposed loan. Although creditworthiness of the applicant is a primary consideration, the underwriting process also includes a comparison of the value of the security, if any, in relation to the proposed loan amount.

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

Loan Maturity and Repricing

             The following table sets forth certain information at June 30, 2000 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 3 Years	After 3 Years Through 5 Years	After 5 Years Through 10 Years	After 10 Years	Total
	(Dollars in thousands)

One-to four-family	$51,346	$ 4,853	$3,765	$2,485	$32,299	$ 94,748
Commercial real estate	18,335	2,910	1,161	386	511	23,303
Construction	5,704	---	---	---	---	5,704
Consumer	2,696	3,045	3,488	425	---	9,654
Commercial business	4,763	1,505	1,082	---	---	7,350
Total loan	$82,844	$12,313	$9,496	$3,296	$32,810	$140,759

The following table sets forth the dollar amount of all loans due one year after June 30, 2000, which have fixed interest rates and which have adjustable interest rates.

	Fixed Rates	Adjustable Rates
	(Dollars in thousands)

One-to four-family	$37,356	$ 6,547
Commercial real estate	2,354	3,521
Construction	---	---
Consumer	5,834	253
Commercial business	2,050	---
Total	$47,594 ======	$10,321 ======

The following table sets forth scheduled contractual amortization of loans at June 30, 2000 and June 30, 1999, and the dollar amount of loans at the date which are scheduled to mature within or after one year which have fixed or adjustable interest rates. Demand loans, loans having no stated schedule of repayments and no stated maturity and overdraft loans are reported as due in one year or less.

	At June 30, 2000				At June 30, 1999
	Mortgage Loans	Consumer Loans	Commercial Business Loans	Total Loans	Mortgage Loans	Consumer Loans	Commercial Business Loans	Total Loans
	(Dollars in thousands)
Amounts due:
Within one year	$ 75,385	$2,696	$4,763	$82,844	$ 77,630	$3,323	$1,025	$81,978
After one year through three years	7,763	3,045	1,505	12,313	4,960	2,974	204	8,138
After three years through five years	4,926	3,488	1,082	9,496	2,938	2,970	252	6,160
After five years	35,681	425	---	36,106	24,320	193	---	24,513
Total	$123,755 =====	$9,654 =====	$7,350 =====	$140,759 =====	$109,848 =====	$9,460 =====	$1,481 =====	$120,789 =====

Interest rate terms on amounts due after one year:
Fixed	$ 39,710	$5,834	$2,050	$47,594	$28,266	$6,097	$ 456	$34,819
Adjustable	10,068	253	---	10,321	3,952	40	---	3,992

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

Generally, real estate loans are originated by the Bank's staff of salaried loan officers. Loan applications are taken and processed at each of the Bank's full-service locations. The Bank has not participated in the secondary market and does not service any loans for other entities. However, the Bank is now originating loans saleable in the secondary market if the policy should change.

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 2000, the Bank originated $57.4 million of loans, compared to $50.5 million and $48.5 million in fiscal 1999 and 1998, respectively. Of these loans, mortgage loans originated were $39.7 million, $38.0 million and $33.0 million in fiscal 2000, 1999 and 1998, respective.

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             From time to time, the Bank has purchased loan participations consistent with its loan underwriting standards. In fiscal 2000, the Bank did not purchase any new loans. At June 30, 2000, loan participations totaled $1.7 million, or 1.2% of net loans receivable. All of these participations were secured by properties located in Missouri. At June 30, 2000, all of such participations were performing in accordance to their respective terms. The Bank will evaluate purchasing additional loan participations, based in part on local loan demand and portfolio growth.

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

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

	Year Ended June 30,
	2000	1999	1998
	(Dollars in thousands)

Total mortgage loans at beginning of period	$109,848	$108,637	$100,010
Loans originated:
One-to four-family residential	24,191	27,839	20,687
Multi-family residential and commercial real estate	8,441	5,878	9,736
Construction loans	7,049	4,253	2,540
Total loans originated	39,681	37,970	32,963

Loans purchased:
Total loans purchased	---	---	171

Loans sold:
Total loans sold	---	---	---

Mortgage loan principal repayments	(25,349)	(36,364)	(24,391)

Foreclosures	(425)	(395)	(116)
Net loan activity	13,907	1,211	8,627

Total mortgage loans at end of period	$123,755 ======	$109,848 ======	$108,637 ======

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.

10

The following table sets forth the Bank's loan delinquencies by type and by amount at June 30, 2000.


	Loans Delinquent For:
	60-89 Days		90 Days and Over		Total Loans Delinquent 60 Days or More
	Numbers	Amounts	Numbers	Amounts	Number	Amounts
	(Dollars in thousands)

One-to four-family	6	$152	3	$ 58	9	$210
Commercial non-real estate	1	26	3	169	4	195
Commercial real estate	1	25	2	185	3	210
Mobile home	5	24	4	29	9	53
Consumer	10	76	8	81	18	157
Totals	23 ====	$303 ====	20 ====	$522 ====	43 ====	$825 ====

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

At June 30, 2000, the Bank had nineteen loans totaling $537,000 on which interest was not being accrued in accordance with SFAS No. 114. The Bank would have recorded interest income of $51,000, $17,000 and $46,000 on non-accrual loans during the years ended June 30, 2000, 1999 and 1998, respectively, if such loans had been performing during such periods. Interest income of approximately $23,000, $13,000 and $15,000 was recognized on these loans for the years ending June 30, 2000, 1999 and 1998, respectively.

11

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,
	2000	1999	1998	1997	1996
	(Dollars in thousands)

Nonaccruing loans:
One-to four-family	$ 38	$ 35	$182	$ 922	$480
Commercial real estate	185	86	344	279	---
Consumer	145	60	7	179	45
Commercial business	169	---	---	---	21
Total	$ 537	$ 181	$533	$1,380	$546

Loans 90 days past due accruing interest:
One-to four-family	$ 26	$ 146	$661	$---	$---
Commercial real estate	13	---	3	---	---
Consumer	---	83	140	---	---
Commercial business	---	27	---	---	---
Mobile homes	---	55	---	---	---
Total	$ 39	$ 311	$ 804	$ ---	$ ---

Total nonperforming loans	$ 576	$ 492	$1,337	$1,380	$546

Foreclosed assets held for sale:
Real estate owned	$ 464	$ 478	$ 172	$ 55	$ 60
Other nonperforming assets	52	82	12	---	---
Total nonperforming assets	$1,092 =====	$1,052 =====	$1,521 =====	$1,435 =====	$606 =====

Total nonperforming loans to net loans	0.42%	0.42%	1.12%	1.28%	0.57%
Total nonperforming loans to net assets	0.31%	0.30%	0.86%	0.86%	0.34%
Total nonperforming assets to total assets	0.59%	0.64%	0.98%	0.89%	0.38%

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 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 Division, which can order the establishment of additional loss allowances.

12

             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, 2000, classified assets totaled $4.0 million, or 2.15% of total assets as compared to $5.1 million, or 3.09% of total assets at June 30, 1999.

             The largest classified commercial real estate relationship at June 30, 2000 totaled $2.6 million and was performing in accordance with its terms. In addition, the Bank had classified two other lending relationships secured primarily by commercial real estate, which in the aggregate totaled $1.3 million. The borrowing relationships were classified due to concerns over whether the property securing the Bank's loans generated sufficient cash flow to amortize the loans in accordance with their terms.

             Other Loans of Concern. In addition to the classified assets discussed above, there was also an aggregate of $1.6 million in net book value of loans five one- to four-family residential loans and 7 CRE loans) 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, 2000, the Company's balance of real estate owned totaled $464,000 and included thirteen properties secured primarily by real estate lots and one commercial lot. The balance on this commercial lot was $81,000. During fiscal 2000, the Bank began to take more aggressive action on collections.

             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, 2000, of $1.3 million, which represented 117% of nonperforming assets as compared to $1.2 million or 113% of nonperforming assets at June 30, 1999. See Note 3 of Notes to Consolidated Financial Statements contained in the Annual Report, included as Exhibit 13.

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

13

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,
	2000	1999	1998	1997	1996
		(Dollars in thousands)

Allowance at beginning of period	$1,191	$1,295	$ 706	$627	$572
Recoveries
One-to four-family	1	2	1	---	---
Consumer	71	31	42	---	---
Mobile homes	39	58	89	---	---
Total recoveries	111	91	132	---	---

Charge offs:
One-to four-family	29	28	6	---	---
Commercial real estate	---	10	---	---	---
Consumer	172	286	116	162	5
Mobile homes	39	106	204	---	---
Total charge offs	240	430	326	162	5

Net charge offs	(129)	(339)	(194)	(162)	(5)

Provision for loan losses	215	235	783	241	60

Balance at end of period	$1,277 =====	$1,191 =====	$1,295 =====	$706 =====	$627 =====

Ratio of allowance to total loans outstanding at the end of the period	0.91%	0.99%	1.07%	0.64%	0.63%
Ratio of net charge offs to average loans outstanding during the period	0.10%	0.29%	0.17%	0.16%	0.01%

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

	At June 30,
	2000		1999		1998		1997		1996
	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	$307	67.31%	$ 253	72.23%	$ 372	68.87%	$ 647	70.54%	$562	69.03%
Construction	21	4.05	17	2.94	20	2.24	---	3.46	---	4.32
Commercial real estate	529	16.55	604	15.77	612	18.60	---	16.57	---	16.75
Consumer	142	6.63	123	7.38	126	8.71	59	5.11	65	5.90
Commercial business	223	5.22	33	1.23	17	0.93	---	3.12	---	2.72
Mobile homes	32	0.24	41	0.45	127	0.65	---	1.20	---	1.28

Unallocated	23	N/A	120	N/A	21	N/A	---	N/A	---	N/A
Total allowance for loan losses	$1,277 =====	100.00% =====	$1,191 =====	100.00% =====	$1,295 =====	100.00% =====	$706 =====	100.00% =====	$627 =====	100.00% =====

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 Company's need for liquidity, to provide collateral for borrowings and public unit deposits, to help reach financial performance targets and to help maintain asset/liability management objectives.

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

             Investment purchases and/or sales must be authorized by the appropriate party, depending on the aggregate size of the investment transaction, prior to any investment transaction. The Board of Directors reviews all investment transactions. Investment purchases are identified as either held-to-maturity ("HTM") or available-for-sale ("AFS") at the time of purchase. Debt securities classified as "HTM" are reported at amortized cost only if the reporting entity has the positive intent and ability to hold these securities to maturity. The Company does not have any investment securities classified as held to maturity at June 30, 2000. 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, 2000, AFS securities totaled $22.0 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.

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

             Investment and Other Securities. At June 30, 2000, the Company's investment securities portfolio totaled $23.8 million, or 12.91% of total assets as compared to $22.1 million, or 13.40% of total assets at June 30, 1999. The increase was mostly attributed to $3.5 million in security purchases exceeding $1.4 million in sales and maturities. At June 30, 2000, the investment securities portfolio included $17.7 million in agency bonds, $4.2 million in municipal bonds, $1.7 million of which is subject to early redemption at the option of the issuer, and $1.9 million in FHLB stock. Based on contractual maturities, the weighted average maturity of the investment securities portfolio at June 30, 2000, excluding FHLB stock, was 45 months.

             Mortgage-Backed Securities. At June 30, 2000, MBS totaled $13.0 million, or 7.03%, of total assets as compared to $16.9 million, or 10.25% of total assets at June 30, 1999. During fiscal 2000, the Bank had net sales of $3.4 million in MBS and maturities of $2.2 million, and had purchases of $2.0 million. At June 30, 2000, the MBS portfolio included $2.5 million in adjustable-rate MBS and $10.4 million in collateralized mortgage obligations, which passed the Federal Financial Institutions Examination Council's sensitivity test. Of the $10.4 million in collateralized mortgage obligations, $1.2 million were adjustable rate and $9.2 million were fixed rate.

16

Investment Securities Analysis

The following table sets forth the Company's investment securities portfolio at carrying value (including securities classified as HTM and securities classified as AFS) at the dates indicated.

	At June 30,
	2000		1999		1998
	Carrying Value (1)	Percent of Portfolio	Carrying Value (1)	Percent of Portfolio	Carrying Value (1)	Percent of Portfolio
	(Dollars in thousands)

U.S. government agencies	$17,746	74.55%	$15,220	68.96%	$ 7,597	50.47%
State and political subdivisions	4,208	17.68	5,759	26.10	6,401	42.53
FHLB stock	1,850	7.77	1,091	4.94	1,054	7.00

Total	$23,804	100.00%	$22,070	100.00%	$15,052	100.00%

____________________
⁽¹⁾ The market value of the Company's investment securities portfolio amounted to $23.8 million, $22.1 million and $15.2 million at June 30, 2000, 1999 and 1998, respectively.

The following table sets forth the maturities and weighted average yields of the debt securities (classified as AFS) in the Company's investment securities portfolio at June 30, 2000.

	Securities Available for Sale June 30, 2000
	Amortized Cost	Book/ Estimated Market Value	Weighted Average Yield
	(Dollars in thousands)

U.S. government agencies:
Due within 1 year	$ ---	$ ---	---%
Due after 1 year but within 5 years	18,339	17,746	6.25
Due after 5 years but within 10 years	---	---	---
Due after 10 years	---	---	---

State and political subdivisions:
Due within 1 year	345	347	5.07
Due after 1 year but within 5 years	2,862	2,882	5.22
Due after 5 years but within 10 years	940	979	5.88

Total Available for Sale	$22,486 =======	$21,954 =======	6.09% =======

The following table sets forth certain information at June 30, 2000 regarding the dollar amount of MBS 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, 2000
	(Dollars in thousands)
Amounts due:
Within 1 year	$ 3,802
After 1 year through 3 years	---
After 3 years through 5 years	----
After 5 years	9,623
Total	$13,425

The following table sets forth the dollar amount of all MBS at amortized cost due one year after June 30, 2000, which have fixed interest rates and have floating or adjustable rates.

	At June 30, 2000
	(Dollars in thousands)
Interest rate terms on amounts due after 1 year:
Fixed	$ 9,623
Adjustable	3,802
Pending	---
Total	$13,425 =====

The following table sets forth certain information with respect to each security (other than U.S. Government and agency securities), which had an aggregate book value in excess of 10% of the Bank's retained earnings at the dates indicated.

	At June 30,
	2000		1999		1998
	Carrying Value	Market Value	Carrying Value	Market Value	Carrying Value	Market Value
	(Dollars in thousands)

FHLMC certificates	$ ---	$ ---	$ 240	$ 240	$ 1,426	$ 1,426
GNMA certificates	1,937	1,937	4,981	4,981	6,326	6,326
FNMA certificates	586	586	2,107	2,107	3,846	3,846
Collateralized mortgage obligations	10,434	10,434	9,572	9,572	2,556	2,556

Total	$12,957 =====	$12,957 =====	$16,900 =====	$16,900 =====	$14,154 =====	$14,154 =====

Deposit Activities and Other Sources of Funds

General. The Company's primary sources of funds are deposits, borrowings, payment of principal and interest on loans and MBS, 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.

18

             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. The Bank offers a variety of deposit accounts, which have a wide range of interest rates and terms as set forth in the following table. Deposit account terms vary according to the minimum balance required, the time periods funds must remain on deposit and the interest rate, among other factors. Deposits are solicited from the Bank's primary market area and are attracted and retained through competitive pricing, cross-selling, advertisement and providing quality customer service.

             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 TV, radio, and newspaper advertisements. The emphasis of these campaigns is to increase consumer awareness and market share of the Bank.

19

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			Minimum		Percentage of Total
Rate	Term	Category	Amount	Balance	Deposits
			(Dollars in thousands)

0.00%	None	Non-interest Bearing	$100	$2,049	1.65%
2.43	None	Now Accounts	100	11,409	9.21
2.50	None	Savings Accounts	25	6,865	5.54
4.19	None	Money Market Deposit Accounts	1,000	13,572	10.95

		Certificate of Deposit
5.20	91-day	Fixed-term/Fixed-rate	500	766	0.62
4.93	91-day	IRA Fixed-term/Fixed-rate	500	3	----
6.00	5 month	Fixed-term/Fixed-rate	500	2,203	1.78
6.21	5 month	IRA Fixed-term/Fixed rate	500	375	0.30
5.11	6 month	Fixed-term/Fixed-rate	500	10,337	8.34
4.90	6 month	IRA Fixed-term/Fixed-rate	500	119	0.10
5.24	9 month	Fixed-term/Fixed-rate	500	8,401	6.78
4.87	9 month	IRA Fixed-term/Fixed-rate	500	3,188	2.57
6.00	11 month	Fixed-term/Fixed-rate	500	20,690	16.70
6.05	11 month	IRA Fixed-term/Fixed-rate	500	2,730	2.20
5.39	12 month	Fixed-term/Fixed-rate	500	19,164	15.47
4.94	12 month	IRA Fixed-term/Fixed-rate	500	739	0.60
5.29	15 month	Fixed-term/Fixed-rate	500	6,164	4.97
5.21	15 month	IRA Fixed-term/Fixed-rate	500	1,695	1.37
5.07	24 month	Fixed-term/Fixed-rate	500	2,540	2.05
5.13	24 month	IRA Fixed-term/Fixed-rate	500	89	0.07
5.57	29 month	Fixed-term/Fixed-rate	500	1,758	1.42
5.30	29 month	IRA Fixed-term/Fixed-rate	500	415	0.33
6.08	30 month	IRA Fixed-term/Fixed-rate	500	345	0.28
5.16	36 month	Fixed-term/Fixed-rate	500	2,004	1.62
5.19	36 month	IRA Fixed-term/Fixed-rate	500	3,598	2.90
5.20	48 month	Fixed-term/Fixed-rate	500	397	0.32
5.15	48 month	IRA Fixed-term/Fixed-rate	500	32	0.03
5.34	60 month	Fixed-term/Fixed-rate	500	2,118	1.71
5.15	60 month	IRA Fixed-term/Fixed-rate	500	89	0.07
8.01	96 month	Fixed-term/Fixed-rate	500	66	0.05

				$123,920 ======	100.00% ======

The following table indicates the amount of the Bank's jumbo certificates of deposit by time remaining until maturity as of June 30, 2000. 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	$ 4,754
Over three through six months	7,970
Over six through twelve months	7,157
Over 12 months	627
Total	$20,508 ========

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,
	2000	1999	1998
	(Dollars in thousands)

4.00 - 4.99%	$28,951	$59,839	$ 8,850
5.00 - 5.99%	37,008	28,231	74,667
6.00 - 6.99%	23,948	--	120
7.00 - 7.99%	52	26	26
8.00 - 8.99%	66	58	59
9.00 - 9.99%	---	---	19

Total	$90,025 ========	$88,154 ========	$83,741 ========

The following table sets forth the amount and maturities of all time deposits at June 30, 2000.

	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)

4.00 - 4.99%	$28,187	$ 764	$ ---	$ ---	$ ---	$28,951	32.16%
5.00 - 5.99%	31,470	3,096	1,339	957	146	37,008	41.11
6.00 - 6.99%	23,190	214	544	---	---	23,948	26.60
7.00 - 7.99%	42	---	4	---	6	52	0.06
8.00 - 8.99%	---	---	57	9	---	66	0.07

Total	$82,889 =======	$4,074 =======	$1,944 =======	$966 =======	$ 152 =======	$90,025 =======	100.00% =======

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,
	2000			1999			1998
	Amount	Percent of Total	Increase (Decrease)	Amount	Percent of Total	Increase (Decrease)	Amount	Percent of Total	Increase (Decrease)
	(Dollars in thousands)

Noninterest bearing	$ 2,049	1.65%	$ (267)	$ 2,316	1.93%	$ (274)	$ 2,590	2.37%	$1,420
NOW checking	11,409	9.21	2,297	9,112	7.58	1,602	7,510	6.86	(277)
Regular savings accounts	6,865	5.54	(485)	7,350	6.12	31	7,319	6.69	(321)
Money market deposit	13,572	10.95	350	13,222	11.00	4,972	8,250	7.54	(51)
Fixed-rate certificates which mature⁽¹⁾:
Within one year	82,889	66.89	6,271	76,618	63.77	2,711	73,907	67.55	(11,242)
Within three years	6,018	4.86	(3,752)	9,770	8.13	6,632	3,138	2.87	(4,410)
After three years	1,118	.90	(648)	1,766	1.47	(4,930)	6,696	6.12	5,586
Total	$123,920 ======	100.00% ======	$3,766 ======	$120,154 ======	100.00% ======	$10,744 ======	$109,410 ======	100.00% ======	$(9,295) ======

___________________________
⁽¹⁾ At June 30, 2000, 1999 and 1998, certificates in excess of $100,000 totaled $20.5 million, $15.3 million and $12.0 million, respectively.

22

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

	At June 30,
	2000	1999	1998
	(Dollars in thousands)

Beginning Balance	$120,154	$109,410	$118,705

Net increase (decrease) before interest credited	(412)	7,058	(12,383)
Interest credited	4,178	3,686	3,088
Net increase (decrease) in savings deposits	3,766	10,744	(9,295)

Ending balance	$123,920 ========	$120,154 ========	$109,410 ========

             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. Substantially all of the Bank's depositors are residents of the State of Missouri.

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

             Although deposits are the Bank's primary and preferred source of funds, the Bank actively uses FHLB advances. The Bank's general policy has been to utilize borrowings to meet short-term liquidity needs, or to provide a longer-term source of funding loan growth when other cheaper funding sources are unavailable or to aide in asset/liability management. As of June 30, 2000, $18.0 million of the Bank's $37.0 million in FHLB advances were for original terms of ten years, subject to early redemption by the FHLB after an initial period of one to three years. In order for the Bank to borrow from the FHLB, it has pledged $46.3 million of its residential loans to the FHLB and has purchased $1.9 million in FHLB stock.

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

	Year Ended June 30,
	2000	1999	1998

	(Dollars in thousands)

Amount outstanding at year end	$37,000	20,550	21,069
Weighted average rate at year end	6.09%	4.92%	4.97%
Maximum amount of borrowings outstanding at any month end:
FHLB advances	37,000	21,067	24,576
Approximate average short-term borrowings outstanding with respect to:
FHLB advances	8,869	126	2,700
Other FHLB long term borrowings	17,836	19,864	16,917
Weighted average rate paid on FHLB advances	5.60%	4.92%	5.41%

Subsidiary Activities

             The Bank has one subsidiary, SMS Financial Services, Inc., which has two notes receivable totaling $537,000 from the sale of the insurance agency in May 1999. The activities of the subsidiary are not significant to the financial condition or results of the Bank's operations.

Competition

            The Bank faces strong competition, both in originating loans and in attracting deposits, from a variety of entities which include some companies which are subject to less regulatory oversight or regulation. Major competitors of the Bank include other banks and thrifts, credit unions, pension funds, mortgage bankers and insurance companies. The competitive nature of the industry is unlikely to change as larger percentages of both available deposits and loans are shifted into debt and equity markets. The Bank is one of fifteen financial institution groups located in the Bank's primary market area.

             The Bank attracts its deposits through its branch network, primarily from the communities in which those offices are located; therefore, competition for those deposits is principally from other financial entities located within those same communities. The Bank competes for these deposits by offering a variety of competitively priced products, providing friendly service, offering convenient business hours, and by being an active participant in the success of each of these communities.

REGULATION

The Bank

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

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

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

             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.

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             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, 2000, the Bank was in compliance with these reserve requirements.

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

             Federal Home Loan Bank System. The Bank is a member of the FHLB of Des Moines, which is one of 12 regional FHLBs that administers the home financing credit function of savings associations. Each FHLB serves as a reserve or central bank for its members within its assigned region. It is funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB System. It makes loans to members (i.e., advances) in accordance with policies and procedures established by the board of directors of the FHLB, which are subject to the oversight of the Federal Housing Finance Board. All advances from the FHLB are required to be fully secured by sufficient collateral as determined by the FHLB. In addition, all long-term advances are required to provide funds for residential home financing. As a member, the Bank is required to purchase and maintain stock in the FHLB of Des Moines. At June 30, 2000, the Bank had $1.9 million in FHLB stock, which was in compliance with this requirement. The Bank is paid a quarterly dividend on this stock which averaged 6.57% in 2000.

             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 of .065% of 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. BIF-assessable deposits will be charged an assessment to help pay interest on the FICO bonds at a rate of approximately .013% until the earlier of December 31, 1999 or the date upon which the last savings association ceases to exist, after which time the assessment will be the same for all insured deposits.

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             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 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, 2000, 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.

26

             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 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

27

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.

             The table below sets forth the Bank's capital position relative to its FDIC capital requirements at June 30, 2000. The definitions of the terms used in the table are those provided in the capital regulations issued by the FDIC.

	At June 30, 2000
	Amount	Percent of Adjusted Total Assets⁽¹⁾
	(Dollars in thousands)

Tier 1 (leverage) capital	$21,482	11.9%
Tier 1 (leverage) capital requirement⁽²⁾	7,229	4.0
Excess	$14,253 ======	7.9% ======

Tier 1 risk adjusted capital	$21,482	20.0%
Tier 1 risk adjusted capital requirement	4,296	4.0
Excess	$17,186 ======	16.0% ======

Total risk-based capital	$22,759	21.2%
Total risk-based capital requirement	8,593	8.0
Excess	$14,166 ======	13.2% ======

___________________________

⁽¹⁾

For the Tier 1 (leverage) capital and Missouri regulatory capital calculations, percent of total average assets of $180.7 million. For the Tier 1 risk-based capital and total risk-based capital calculations, percent of total risk-weighted assets of $107.4 million.

⁽²⁾

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

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

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

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

            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.

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

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

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             Currently, the QTL test requires that either an institution qualify as a domestic building and loan association under the Internal Revenue Code or that 65% of an institution's "portfolio assets" (as defined) consist of certain housing and consumer-related assets on a monthly average basis in nine out of every 12 months. Assets that qualify without limit for inclusion as part of the 65% requirement are loans made to purchase, refinance, construct, improve or repair domestic residential housing and manufactured housing; home equity loans; mortgage-backed securities (where the mortgages are secured by domestic residential housing or manufactured housing); FHLB stock; direct or indirect obligations of the FDIC; and loans for educational purposes, loans to small businesses and loans made through credit cards. In addition, the following assets, among others, may be included in meeting the test subject to an overall limit of 20% of the savings institution's portfolio assets: 50% of residential mortgage loans originated and sold within 90 days of origination; 100% of consumer loans; and stock issued by FHLMC or FNMA. Portfolio assets consist of total assets minus the sum of (i) goodwill and other intangible assets, (ii) property used by the savings institution to conduct its business, and (iii) liquid assets up to 20% of the institution's total assets. At June 30, 2000, the Bank was in compliance with the QTL test.

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

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

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

The Company

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

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

             Holding Company Activities. As a unitary savings and loan holding company, the Company generally is not subject to activity restrictions under the HOLA. If the Company acquires control of another savings association as a separate subsidiary other than in a supervisory acquisition, it would become a multiple savings and loan holding company. There generally are more restrictions on the activities of a multiple savings and loan holding company than on those of a unitary savings and loan holding company. The HOLA provides that, among other things, no multiple savings and loan holding company or subsidiary thereof which is not an insured association shall commence or continue for more than two years after becoming a multiple savings and loan association holding company or subsidiary thereof,

30

any business activity other than: (i) furnishing or performing management services for a subsidiary insured institution, (ii) conducting an insurance agency or escrow business, (iii) holding, managing, or liquidating assets owned by or acquired from a subsidiary insured institution, (iv) holding or managing properties used or occupied by a subsidiary insured institution, (v) acting as trustee under deeds of trust, (vi) those activities previously directly authorized by regulation as of March 5, 1987 to be engaged in by multiple holding companies or (vii) those activities authorized by the Federal Reserve Board as permissible for bank holding companies, unless the OTS by regulation, prohibits or limits such activities for savings and loan holding companies. Those activities described in (vii) above also must be approved by the OTS prior to being engaged in by a multiple savings and loan holding company.

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

TAXATION
Federal Taxation

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

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

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

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

31

"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%. The excess of the tax bad debt reserve deduction using the percentage of taxable income method over the deduction that would have been allowable under the experience method is treated as a preference item for purposes of computing the AMTI. 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 savings banks, such as the Bank, are subject to a special financial institutions tax, based on net income without regard to net operating loss carryforwards, at the rate of 7% of net income. This tax is in lieu of certain other state taxes on thrift institutions, on their property, capital or income, except taxes on tangible personal property owned by the Bank and held for lease or rental to others and on real estate, contributions paid pursuant to the Unemployment Compensation Law of Missouri, social security taxes, sales taxes and use taxes. In addition, the Company is entitled to credit against this tax all taxes paid to the State of Missouri or any political subdivision except taxes on tangible personal property owned by the Bank and held for lease or rental to others and on real estate, contributions paid pursuant to the Unemployment Compensation Law of Missouri, social security taxes, sales and use taxes, and taxes imposed by the Missouri Financial Institutions Tax Law. Missouri savings banks are not subject to the regular state corporate income tax.

Audits

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

             For additional information regarding taxation, see Note 10 of Notes to Consolidated Financial Statements contained in the Annual Report.

32

Personnel

As of June 30, 2000, the Company had 63 full-time employees and 9 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.

Item 2. Description of Properties

The following table sets forth certain information regarding the Bank's offices as of June 30, 2000.

Location	Year Opened	Building Net Book Value as of June 30, 2000	Land Owned/ Leased	Building Owned/ Leased
	(Dollars in thousands)
Main Office
531 Vine Street Poplar Bluff, Missouri	1966	$480	Owned	Owned

Branch Offices

Highway 60 Van Buren, Missouri	1982	137	Owned	Owned

1330 Highway 67 Poplar Bluff, Missouri	1976	---	Leased⁽¹⁾	Owned

Business 60 West Dexter, Missouri	1979	241	Owned	Owned

100 South Madison Malden, Missouri	1974	---	Leased⁽²⁾	Leased

308 First Street Kennett, Missouri	1982	159	Owned	Owned

116 Washington Doniphan, Missouri	1976	---	Leased⁽³⁾	Leased

Highway 106 & 2nd Street Ellington, Missouri	1987	---	Leased⁽⁴⁾	Leased

______________________

⁽¹⁾	Lease expired on September 3, 1999 and was renewed for its final 5 year period.
⁽²⁾	Month-to-month lease.
⁽³⁾	Leased for $400 per month. Lease expires November 1, 2002.
⁽⁴⁾	Month-to-month lease.

Item 3. Legal Proceedings

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

33

the Bank's business. Aside from such pending claims and lawsuits, which are incident to the conduct of the Bank's ordinary business, the Bank is not a party to any material pending legal proceedings that would have a material effect on the financial condition or operations of the Bank.

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

No matters were submitted to a vote of security holders during the quarter ended June 30, 2000.

PART II

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

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

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

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

Item 7. Financial Statements

      Independent Auditors' Report*

            (a)      Consolidated Statements of Financial Condition as of June 30, 2000 and 1999*
            (b)      Consolidated Statements of Income for the Years Ended June 30, 2000, 1999 and 1998*
            (c)      Consolidated Statements of Stockholders' Equity For the Years Ended June 30, 2000, 1999 and 1998*
            (d)      Consolidated Statements of Cash Flows For the Years Ended June 30, 2000, 1999 and 1998*
            (e)      Notes to Consolidated Financial Statements*

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

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

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

PART III

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

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, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required during the fiscal year ended June 30, 2000, all Section 16(a) filing requirements applicable to its officers, directors and greater than 10% beneficial owners were complied with except for the inadvertent failure to timely report on Form 4 one transaction by each of L. Douglas Bagby and Ronald D. Black, directors of the Company.

34

The following table sets forth certain information with respect to the executive officers of the Company and the Bank.

		Position
Name	Age at June 30, 2000	Company	Bank

Thadis R. Seifert	81	Chairman of the Board and President	Director
Samuel H. Smith	62	Secretary/Treasurer	Chairman of the Board
Greg A. Steffens	33	Chief Financial Officer	President, Chief Executive Officer and Chief Finanical Officer

In addition to the above, the Bank's executive officer group includes:

Name	Age at June 30, 2000	Position

James W. Tatum	74	Vice Chairman
James D. Duncan	43	Executive Vice President and Chairman Loan Department

             The principal occupation of each executive officer of the Company is set forth below. All of the officers listed above have held positions with or been employed by the Company for five years unless otherwise stated. All executive officers reside in Poplar Bluff, Missouri. There are no family relationships among or between the executive officers, unless otherwise stated.

             Thadis R. Seifert served as Executive Vice President of the Bank from 1970 his retirement in until 1985. He has been a director of the Bank since 1971. In 1997, Mr. Seifert was elected as Chairman of the Company and in 1999, he was appointed as President. Mr. Seifert also serves as an advisory Board Member for the Poplar Bluff Municipal Utilities. He is active in a variety of organizations, including the Kiwanis Club.

             Samuel H. Smith is President, Chief Executive Office and a majority stockholder of S H Smith and Company, Inc., an engineering consulting firm in Poplar Bluff, Missouri. He is a member of the Poplar Bluff Chamber of Commerce, the American Society of Civil Engineers, Missouri Society of Professional Engineers, and a member of the board of Directors of the Poplar Bluff Museum.

             Greg A. Steffens joined the Bank in 1998 and serves as the Chief Financial Officer of the Company and as President, Chief Executive Officer and Chief Financial Officer of the Bank. From 1993 to 1998, Mr. Steffens served as Chief Financial Officer of 1^st Savings Bank and Sho-Me Financial Corp. in Mount Vernon, Missouri. From 1989 to 1993, Mr. Steffens was employed by the OTS as a thrift examiner. Mr. Steffens is a member of the Rotary Club.

             James W. Tatum is the Vice President of the Company. Mr. Tatum was a member and a Partner of Kraft, Miles & Tatum, CPA's, an accounting firm, for over 40 years until his retirement in 1989. He is a past member of the Kiwanis Club and the Poplar Bluff Chamber of Commerce, the American Institute of CPA's and the Missouri Society of CPA's.

             James D. Duncan joined the Bank in August, 1999 and serves as Executive Vice President and Chairman of the loan department of the Bank. From 1996 to 1999, Mr. Duncan served as Senior Vice President of the Bank of Sullivan, Missouri. Since 1979, Mr. Duncan has held various lending positions primarily in commercial lending. He is a member of the Rotary Club.

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Item 10. Executive Compensation

The information contained under the section captioned "Proposal I -- Election of Directors" in the Proxy Statement is incorporated herein by reference.

Item 11. Security Ownership of Certain Beneficial Owners and Management

	(a)	Security Ownership of Certain Beneficial Owners
		Information required by this item is incorporated herein by reference to the section captioned "Voting Securities and Security Ownership of Certain Beneficial Owners and Management" of the Proxy Statement.
	(b)	Security Ownership of Management
		Information required by this item is incorporated herein by reference to the sections captioned "Voting Securities and Security Ownership of Certain Beneficial Owners and Management" and "Proposal I - Election of Directors" of the Proxy Statement.
	(c)	Changes in Control
		The Company is not aware of any arrangements, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.

Item 12. Certain Relationships and Related Transactions

The information required by this item is incorporated herein by reference to the section captioned "Proposal I -- Election of Directors -- Certain Transactions."

Item 13. Exhibits, List and Reports on Form 8-K

      (a)      Exhibits

                  See Index to Exhibits.

      (b)      Report on Form 8-K

                  No reports on Form 8-K were filed during the quarter ended June 30, 2000.

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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 28, 2000	By:	/s/ Thadis R. Seifert Thadis R. Seifert President (Duly Authorized Representative)

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

By:	/s/ Thadis R. Seifert Thadis R. Seifert President (Principal Executive Officer)	September 28, 2000

By:	Donald R. Crandell Director	September 28, 2000

By:	/s/ Greg A. Steffens Greg A. Steffens Chief Financial Officer (Principal Financial and Accounting Officer)	September 28, 2000

By:	/s/ Leonard W. Ehlers Leonard W. Ehlers Director	September 28, 2000

By:	/s/ Samuel H. Smith Samuel H. Smith Director	September 28, 2000

By:	/s/ James W. Tatum James W. Tatum Vice President and Director	September 28, 2000

By:	/s/ Ronnie D. Black Ronnie D. Black Director	September 28, 2000

By:	/s/ L. Douglas Bagby L. Douglas Bagby Director	September 28, 2000

Index to Exhibits

Regulation S-B Exhibit Number	Document	Reference to Prior Filing or Exhibit Number Attached Hereto

3(i)	Certificate of Incorporation of the Registrant	3(i)
3(ii)	Bylaws of the Registrant	3(ii)
10	Material contracts:
	(a) Registrant's 1994 Stock Option Plan	*
	(b) Southern Missouri Savings Bank, FSB Management Recognition and Development Plans	*
	(c) Employment Agreement with Greg A. Steffens	**
	(d) Director's Retirement Agreements (i) Robert A. Seifert (ii) Thadis R. Seifert (iv) Leonard W. Ehlers (v) James W. Tatum (vi) Samuel H. Smith	***
	(e) Tax Sharing Agreement	***
11	Statement Regarding Computation of Per Share Earnings	11
13	2000 Annual Report to Stockholders	13
21	Subsidiaries of the Registrant	21
23	Consent of Auditors	23
27	Financial Data Schedule	27

_______________________

*	Incorporated by reference to the Registrant's 1994 annual meeting proxy statement dated October 21, 1994.
**	Incorporated by reference to the Registrant's Annual Report on Form 10-KSB for the year ended June 30, 1999.
***	Incorporated by reference to the Registrant's Annual Report on Form 10-KSB for the year ended June 30, 1995.