Press Release

Southern Missouri Bancorp Reports Record First-Quarter Net Income of $0.35 Per Share; Board Declares Quarterly Dividend of $.09 Per Share

Company Release - 10/20/2004

POPLAR BLUFF, Mo.--(BUSINESS WIRE)--Oct. 20, 2004--Southern Missouri Bancorp, Inc., ("Company") (NASDAQ:SMBC), the parent corporation of Southern Missouri Bank and Trust Co. ("Bank"), today announced record net income for the first quarter of fiscal 2005 of $793,000, or $.35 per diluted share, an increase of 21% from the $.29 per diluted share earned during the same period of the prior year. These earnings resulted in a return on average assets of 1.00% and a return on average equity of 12.02% as compared to respective returns of .99% and 10.93% during the same period of the prior year. The improvement in earnings per share was primarily due to asset growth and increased non-interest income, partially offset by the increase in provision for loan losses.

The Company's net interest income for the first quarter of fiscal 2005 increased $136,000 to $2.3 million as compared to the same period of the prior year. The increase was primarily due to an increase in average interest earning assets, partially offset by a decrease in average spread. The net interest rate spread for the three-month period ended September 30, 2004, was 2.89% as compared to 2.90% for the fourth quarter of fiscal year 2004, (ended June 30, 2004) and 3.06% for the same period of the prior year. The decrease in interest rate spread was a result of interest earning assets repricing downward at a faster pace than interest bearing liabilities.

Provisions for loan losses increased $120,000 to $150,000 as compared to $30,000 for the same period of the prior year. The increase was primarily due to loan growth and an increase in outstanding loan commitments as asset quality remained strong with non-performing assets to total assets of .07% as of September 30, 2004, as compared to .11% as of September 30, 2003.

The Company's non-interest income for the first quarter of fiscal 2005 was $691,000, which represented a 53.2% increase from the $451,000 earned during the same period of the prior year. The increase was primarily due a $121,000 gain realized on sale of investments, increases in banking service charges and other miscellaneous income.

Overall, the 21% increase in earnings per share is a result of management's continued focus on core business-enhancing customer relationships as well as attracting new ones and managing the Company's resources. Sources of revenue expanded due to strong balance sheet growth, and in particular, growth in loans. In addition, continued efforts in controlling expense resulted in an improved efficiency ratio from 57.85% for the first quarter of the prior year to 54.51% for the current period.

As mentioned, the Company continues to experience balance sheet growth with total assets increasing $9.0 million, or 2.9%, to $320.9 million at September 30, 2004, as compared to $311.9 million at June 30, 2004. This growth was attributed primarily to a $9.3 million increase in the loan portfolio to $257.7 million, partially offset by a $1.1 million decline in the investment portfolio. Changes in the composition of the loan portfolio included growth in commercial, residential and consumer loans of $7.1 million, $1.6 million and $900,000, respectively. Asset growth has been funded primarily with FHLB advances, which have increased $8.8 million, since June 30, 2004.

The Company's stockholders' equity increased $689,000, to $26.6 million at September 30, 2004, from $26.0 million at June 30, 2004. The increase was primarily due to net income and the increase in market value of the investment portfolio, partially offset by stock repurchases and cash dividends.

The Company is pleased to announce that the Board of Directors, on October 19, 2004, declared its 42nd consecutive quarterly dividend since the inception of the Company. The $.09 cash dividend will be paid November 30, 2004, to shareholders of record at the close of business on November 15, 2004.

The Company has previously announced the intention to repurchase up to 115,000 shares of its common stock, or approximately 5% of its outstanding common shares. To date, the Company has repurchased 75,000 shares at an average cost of $15.24 per share. The Company will continue to repurchase shares of its common stock under this plan from time to time, subject to market conditions, business opportunities and other economic considerations, and the Company's determination of the most efficient use of capital in order to maximize shareholder value.

On September 30, 2004, the Company had 2,226,768 common shares outstanding. The common stock traded between $16.29 and $15.05 per share during the quarter ended September 30, 2004, with the last trade of the quarter occurring at $15.90. The Company, through its banking subsidiary, provides a wide array of financial services to Southeastern Missouri through its main office located in Poplar Bluff and seven other full-service facilities located in Poplar Bluff, Dexter, Qulin, Kennett, Doniphan, and Van Buren, Missouri.

Except for the historical information contained herein, the matters discussed in this press release may be deemed to be forward-looking statements that involve risks and uncertainties, including changes in economic conditions in the Company's market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company's market area and competition. Actual strategies and results in future periods may differ materially from those currently expected. These forward-looking statements represent the Company's judgement as of the date of this release. The Company disclaims however, any intent or obligation to update these forward-looking statements.


Selected Financial Data at:             September 30,    June 30,
---------------------------                 2004           2004
                                        -------------  ------------
Total assets                            $320,907,000   $311,893,000
Available-for-sale securities             39,064,000     40,206,000
Loans, net                               257,659,000    248,355,000
Allowance for losses on loans              2,094,000      1,978,000
Non-performing assets                        235,000        298,000
Deposits                                 211,941,000    211,959,000
FHLB advances                             68,000,000     59,250,000
Securities sold under repurchase
 agreements                                5,549,000      6,448,000
Stockholders' equity                      26,641,000     25,952,000

Equity to assets ratio                          8.30%          8.32%
Allowance for possible loan losses to
 loans                                          0.81%          0.80%
Non-performing loans as a percentage of
 loans                                          0.04%          0.05%

Per common share:

Closing Market Price                           15.90          15.76
Tangible book value                            10.71          10.26
                                            Three Months Ended
                                               September 30,
Selected Operating Data:                    2004          2003
------------------------                    ----          ----
Net interest income                      $2,323,000    $2,187,000
Provision for loan losses                   150,000        30,000
Noninterest income                          691,000       451,000
Noninterest expense                       1,643,000     1,526,000
Income taxes                                428,000       390,000
                                         -----------   -----------
Net income                                 $793,000      $692,000
                                         ===========   ===========

Per common share:
Net earnings:
    Basic                                      $.36          $.30
    Diluted                                    $.35          $.29

Cash dividends                                 $.09          $.09

Average basic shares outstanding          2,231,856     2,273,269
Average diluted shares outstanding        2,295,654     2,349,451

Profitability Ratios:

Return on average assets                       1.00%          .99%

Return on average common equity               12.02%        10.93%

Net interest margin                            3.11%         3.30%
Net interest spread                            2.89%         3.06%

Efficiency Ratio                              54.51%        57.85%
    CONTACT: Southern Missouri BancorpGreg Steffens, 573-785-1421

    SOURCE: Southern Missouri Bancorp