Southern Missouri Bancorp (SMBC)

COMPENSATION OF EXECUTIVE OFFICERS

Compensation Restrictions in TARP Capital Purchase Program.

          In December 2008, we participated in the TARP Program, and the Treasury invested approximately $9.55 million in our preferred stock and received a warrant for 114,326 shares of our common stock for $12.53 per share. As a participant in the TARP Program, we have implemented the following restrictions and requirements on executive compensation and are subject to additional limits on our tax deductions for senior executive pay:

• A prohibition from making golden parachute payments to our senior executive officers triggered by an involuntary termination of employment (but not based solely on a change in control) over the limits in Section 280G of the Internal Revenue Code. For purposes of these TARP program limits, our senior executive officers constitute our named executive officers included in our Summary Compensation Table).

• Condition the payment of bonus and incentive compensation paid to the senior executive officers based on financial statements or financial performance to repayment (often referred to as "clawback") if such financial statements or performance figures later prove to be materially inaccurate.

• Review within 90 days of the TARP Program closing and annually thereafter our senior executive bonus and incentive compensation programs to determine if they encourage our senior executive officers to take unnecessary and excessive risks that threaten the value of the Company.

• Limitation on our tax deduction for compensation earned annually by each of the senior executive officers to $500,000.

          As part of the analysis and decision-making relating to our participation in the TARP Program, the Compensation Committee and the Board of Directors was apprised of these restrictions and requirements on executive compensation. Our participation in the TARP Program was a catalyst for several actions by our Compensation Committee and senior executive officers:

• Our three senior executive officers entered into compensation modification agreements with the Compensation Committee and executed waivers consenting to the restrictions and limitations required by the TARP Program rules.

• The Compensation Committee conducted a review of our senior executive incentive programs from a risk perspective and concluded they do not encourage unnecessary or excessive risk.

          The economic stimulus bill, entitled the American Recovery and Reinvestment Act of 2009 (the "ARRA"), which became effective February 17, 2009 contains additional restrictions and requirements on the executive compensation paid by participants in the TARP Program, including the following:

• Prohibition on paying or accruing any bonus, incentive or retention compensation for the Chief Executive Officer, other than certain awards of long-term restricted stock or bonuses payable under existing employment agreements.

• Prohibition on any golden parachute payments to the five senior executive officers and the next five most highly compensated employees for an involuntary departure from the Company, other than compensation earned for services rendered or accrued benefits.

• Condition on bonus, incentive and retention payments made to our Chief Executive Officer subjecting him to repayment (clawback) if based on statements of earnings, revenues, gains or other criteria that are later found to be materially inaccurate.

• Prohibition on any compensation plan that would encourage manipulation of reported earnings.

• Adoption of a company-wide policy regarding excessive or luxury expenditures including office and facility renovations, aviation or other transportation services and other activities or events that are not reasonable expenditures for staff development, reasonable performance incentives or similar measures in the ordinary course of business.

          ARRA also requires all participants in the TARP Program to submit a "say-on-pay" proposal to a non-binding vote of shareholders at future annual meetings, whereby shareholders vote to adopt a resolution approving our executives' compensation as disclosed in this Proxy Statement. As a result of the foregoing, the Board, Compensation Committee and management have ensured that executive compensation complies with the requirements of the ARRA. All of these TARP restrictions and requirements on executive compensation are in place so long as Treasury owns our preferred stock.