UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended December 31, 1998
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission number 0-23325
-------
Guaranty Federal Bancshares, Inc.
---------------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-1792717 .
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1341 West Battlefield 65807
- ------------------------------- -----------------------
Springfield, Missouri (Zip Code) .
(Address of principal executive offices)
Telephone Number: (417) 889-2494
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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 the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Class Outstanding at February 12, 1999
----- --------------------------------
Common Stock, Par Value $0.10 5,742,138 Shares
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC
Form 10-Q
TABLE OF CONTENTS
Item Page
- ---- ----
PART I. Financial Information
-----------------------------
1. Consolidated Financial Statements (Unaudited):
Statements of Financial Condition 3
Statements of Income 4
Statements of Changes in Stockholders' Equity 5
Statements of Cash Flow 7
Notes to Consolidated Financial Statements 8
2. Management's Discussion and Analysis of Financial Condition and 11
Results of Operations
3. Quantitative and Qualitative Disclosures about Market Risk 20
PART II. Other Information
--------------------------
1. Legal Proceedings 24
2. Changes in Securities and Use of Proceeds 24
3. Defaults Upon Senior Securities 24
4. Submission of Matters to Vote of Security-holders 24
5. Other Information 25
6. Exhibits and Reports on Form 8-K 25
Signatures 26
2
<PAGE>
PART I
Item 1. Financial Statements
--------------------
GUARANTY FEDERAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1998 (UNAUDITED) AND JUNE 30, 1998
ASSETS
------
<TABLE>
<CAPTION>
December 31, June 30,
1998 1998
------------- -------------
(Unaudited)
<S> <C> <C>
Cash $ 1,031,468 $ 846,691
Interest-bearing deposits in other financial institutions 7,429,930 6,458,232
------------- -------------
Cash and cash equivalents 8,461,398 7,304,923
Available-for-sale securities 6,803,988 4,765,021
Held-to-maturity securities 7,736,251 8,922,389
Mortgage-backed securities, held-to-maturity 9,657,993 11,948,654
Mortgage-backed securities, available-for-sale 8,299,848 9,055,658
Mortgage loans held for sale 3,276,101 805,183
Loans receivable, net 230,800,228 205,414,561
Accrued interest receivable
Loans 1,287,459 1,188,162
Investments 205,864 252,865
Mortgage-backed securities 136,880 163,117
Prepaid expenses and other assets 4,455,798 2,503,055
Foreclosed assets held for sale 31,236 286,000
Premises and equipment 7,284,911 7,432,971
------------- -------------
$ 288,437,955 $ 260,042,559
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES
Deposits $ 136,809,516 $ 140,975,336
Federal Home Loan Bank advances 81,827,988 45,081,028
Advances from borrowers for taxes and insurance 369,325 870,476
Accrued expenses and other liabilities 626,922 513,943
Accrued interest payable 425,195 256,975
Income taxes payable 180,823 417,532
Deferred income taxes 1,769,221 1,237,171
------------- -------------
Total Liabilities 222,008,990 189,352,461
------------- -------------
STOCKHOLDERS' EQUITY
Capital Stock
Common stock, $0.10 par value; authorized 10,000,000 shares;
issued and outstanding 6,228,698 shares - December 31;
issued and outstanding 6,228,035 shares - June 30 622,870 622,804
Additional paid-in capital 46,995,257 49,016,992
Unearned ESOP shares (3,214,900) (3,444,540)
Retained earnings, substantially restricted` 22,461,583 21,682,950
Accumulated other comprehensive income
Unrealized appreciation on available-for-sale securities,
net of income taxes of $2,257,818 and $1,651,429
at December 31, 1998 and June 30, 1998, respectively 3,844,393 2,811,892
------------- -------------
70,709,203 70,690,098
Treasury stock, at cost, - 311,390 shares (4,280,238) --
------------- -------------
Total Stockholders' Equity 66,428,965 70,690,098
------------- -------------
$ 288,437,955 $ 260,042,559
============= =============
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ending Six Months Ending
------------------- -----------------
12/31/98 12/31/97 12/31/98 12/31/97
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans $ 4,590,813 3,646,258 $ 8,974,029 7,097,589
Investment securities 123,535 96,043 207,981 193,293
Mortgage-backed securities 318,438 267,442 666,595 565,340
Other 150,205 200,551 268,275 293,574
------------ ------------ ------------ ------------
Total Interest Income 5,182,991 4,210,294 10,116,880 8,149,796
------------ ------------ ------------ ------------
INTEREST EXPENSE
Deposits 1,516,084 1,776,873 3,102,268 3,607,586
Federal Home Loan Bank advances 1,173,633 462,573 2,089,612 820,018
Other borrowed funds -- 79,043 -- 79,043
------------ ------------ ------------ ------------
Total Interest Expense 2,689,717 2,318,489 5,191,880 4,506,647
------------ ------------ ------------
Net Interest Income 2,493,274 1,891,805 4,925,000 3,643,149
Provision for Loan Losses 45,000 30,000 90,000 63,352
------------ ------------ ------------ ------------
Net Interest Income after
Provision for Loan Losses 2,448,274 1,861,805 4,835,000 3,579,797
------------ ------------ ------------
NONINTEREST INCOME (LOSS)
Service charges 221,252 153,730 427,152 274,625
Late charges and other fees 25,909 28,224 51,297 53,486
Gain on loans, investment
securities and mortgage-backed securities 28,953 19,240 38,703 57,371
Income (expense) on foreclosed assets (820) 2,178 (6,990) 2,086
Other income 28,126 35,800 64,166 63,070
------------ ------------ ------------ ------------
Total Noninterest Income 303,420 239,172 574,328 450,638
------------ ------------ ------------ ------------
NONINTEREST EXPENSE
Salaries and employee benefits 711,315 501,791 1,485,160 1,083,065
Occupancy 198,175 185,607 372,505 348,863
SAIF deposit insurance premiums 20,702 23,982 43,076 46,952
Data processing fees 128,099 109,990 244,417 197,302
Advertising 116,955 101,704 224,851 188,746
Other expense 329,857 215,342 544,891 394,251
------------ ------------ ------------ ------------
Total Noninterest Expense 1,505,103 1,138,416 2,914,900 2,259,179
------------ ------------ ------------ ------------
Income before Income Taxes 1,246,591 962,561 2,494,428 1,771,256
Provision for Income Taxes 426,162 367,773 875,896 659,965
------------ ------------ ------------ ------------
NET INCOME 820,429 594,788 1,618,532 1,111,291
OTHER COMPREHENSIVE INCOME
Unrealized appreciation on available-
for-sale securities 919,135 440,321 1,032,501 455,441
------------ ------------ ------------ ------------
COMPREHENSIVE INCOME $ 1,739,564 $ 1,035,109 $ 2,651,033 $ 1,566,732
============ ============ ============ ============
BASIC EARNINGS PER SHARE $ .15 n/a $ .29 n/a
============ ============ ============ ============
DILUTED EARNINGS PER SHARE $ .14 n/a $ .28 n/a
============ ============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statement
4
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED DECEMBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
Accumulated
Other
Comprehensive
Income
Unrealized
Appreciation
Additional Unearned on Available-
Common Paid-In ESOP Treasury Retained for-Sale
Stock Capital Shares Stock Earnings Securities, Net Total
-------- ------------ ------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1998 $622,804 $ 49,016,992 ($ 3,444,540) -- $ 21,682,950 $ 2,811,892 $ 70,690,098
Net Income -- -- -- -- 1,618,532 -- 1,618,532
Dividends on common stock,
($0.16 per share) -- -- -- -- (839,899) -- (839,899)
Dividends on RRP stock -- 7,500 -- -- -- -- 7,500
Recognition and Retention Plan
(RRP) expense &
Restricted Stock
Plan (RSP) expense -- 263,534 -- -- -- -- 263,534
Stock options exercised 66 3,925 -- -- -- -- 3,991
RSP stock purchased -- (2,373,065) -- -- -- -- (2,373,065)
Treasury stock purchased -- -- -- (4,280,238) -- -- (4,280,238)
Release of ESOP shares -- 52,817 229,640 -- -- -- 282,457
Tax benefit of RRP/RSP shares -- 23,554 -- -- -- -- 23,554
Change in unrealized
appreciation on
available-for-sale
securities, net of
income taxes of $606,389 -- -- -- -- -- 1,032,501 1,032,501
-------- ------------ ------------ ------------ ------------ ------------- ------------
Balance, December 31, 1998 $622,870 $ 46,995,257 ($ 3,214,900) ($ 4,280,238) $ 22,461,583 $ 3,844,393 $ 66,428,965
======== ============ ============ ============ ============ ============= ============
</TABLE>
5
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED DECEMBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Accumulated
Other
Comprehensive
Income
Unrealized
Appreciation
Additional Unearned on Available-
Common Paid-In ESOP Retained for-Sale
Stock Capital Shares Earnings Securities, Net Total
------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1997 $ 3,125,000 $ 3,687,356 -- $ 18,620,219 $ 2,057,580 $ 27,490,155
Net Income -- -- -- 1,111,291 -- 1,111,291
Dividends on common stock,
($0.22 per share on 3,125,000 shares) -- -- -- (687,500) -- (687,500)
Dividends on RRP stock -- 5,905 -- -- -- 5,905
Recognition and Retention Plan
(RRP) expense -- 47,979 -- -- -- 47,979
Stock options exercised -- 18,516 -- -- -- 18,516
Transfer from MHC -- -- -- 1,842,981 -- 1,842,981
Stock redeemed and stock issued under
plan of conversion to stock
ownership, net (2,502,848) 45,170,969 (3,444,540) -- -- 39,223,581
Tax benefit of RRP/RSP shares -- 32,229 -- -- -- 32,229
Change in unrealized appreciation on
available-for-sale securities, net
of income taxes of $267,481 -- -- -- -- 455,441 455,441
------------ ------------ ------------ ------------ ------------ ------------
Balance, December 31, 1997 $ 622,152 $ 48,962,954 ($ 3,444,540) $ 20,886,991 $ 2,513,021 $ 69,540,578
============ ============ ============ ============ ============ ============
</TABLE>
6
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997 (UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,618,532 $ 1,111,291
Items not requiring (providing) cash:
Deferred income taxes (74,339) 87,606
Depreciation 200,386 217,149
Provision for loan losses 90,000 63,352
Gain on loans, investment securities
and mortgage-backed securities (38,703) (57,371)
Gain on sale of foreclosed assets (138) --
Amortization of deferred income, premiums and discounts 67,416 (21,765)
RRP/RSP expense 263,534 47,979
Origination of loans held for sale (8,443,733) (4,920,734)
Proceeds from sale of loans held for sale 6,011,518 4,511,679
Changes in:
Accrued interest receivable (26,059) (35,437)
Prepaid expenses and other assets (115,443) (26,361)
Accounts payable and accrued expenses 281,199 (41,024)
Income taxes payable (236,709) (43,094)
------------ ------------
Net cash provided by (used in) operating activities (402,539) 893,270
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in loans (25,536,974) (14,947,877)
Principal payments on mortgage-backed securities,
Available-for-sale 737,963 --
Principal payments on mortgage-backed securities,
held-to-maturity 2,290,661 1,693,448
Purchase of premises and equipment (52,326) (259,788)
Purchase of available-for-sale securities (394,554) --
Proceeds from maturities or calls of
held-to-maturity securities 1,144,371 2,044,433
Purchase of FHLB stock (1,837,300) --
Proceeds from sale of foreclosed assets 302,562 --
Capitalized costs on foreclosed assets 322 --
------------ ------------
Net cash used in investing activities (23,345,275) (11,469,784)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Tax benefit of vested RRP shares 23,554 32,229
Proceeds from sale of common stock, net -- 42,668,120
Release of ESOP shares 282,457 (3,444,540)
Stock options exercised 3,991 18,516
Cash dividends paid (839,899) (687,500)
Cash dividends received on RRP Stock 7,500 5,905
Net increase in demand deposits,
NOW accounts and savings accounts 4,924,655 5,384,078
Net decrease in certificates of deposit (9,090,475) (12,516,420)
Proceeds from FHLB advances 40,302,500 30,000,000
Repayments of FHLB advances (3,555,540) (33,019,918)
Advances from borrowers for taxes and insurance (501,151) (463,393)
RSP stock purchased (2,373,065) --
Treasury stock purchased (4,280,238) --
------------ ------------
Net cash provided by financing activities 24,904,289 27,977,077
------------ ------------
INCREASE IN CASH AND CASH EQUIVALENTS 1,156,475 17,400,563
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 7,304,923 3,817,351
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 8,461,398 $ 21,217,914
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
7
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Conversion, Reorganization and Stock Issuance
---------------------------------------------
On December 30, 1997, Guaranty Federal Bancshares, Inc. completed the
conversion from a federally chartered mutual holding company, (formerly Guaranty
Federal Bancshares, M. H. C.) to a Delaware-chartered stock corporation.
Stockholders' equity increased to $69.5 million primarily due to the conversion
in which Guaranty Federal Bancshares, Inc. exchanged 1,880,710 shares of its
common stock for all the Bank's common stock not held by Guaranty Federal
Bancshares, M. H. C. This exchange ratio was 1.931. In addition 4,340,812 shares
at $10.00 per share were sold in the stock offering, including 344,454 shares to
the employee stock ownership plan ( the "ESOP"). Total shares of common stock
outstanding following the offering and exchange was 6,221,522.
In April 1995 Guaranty Federal Savings and Loan Association (the
"Association") reorganized from a federally chartered mutual savings and loan
association into a federal mutual holding company, Guaranty Federal Bancshares,
M. H. C. (the "MHC"). As part of the reorganization, the Association
incorporated a de novo federally chartered stock savings bank, Guaranty Federal
Savings Bank (the "Bank") and transferred most of its assets and all its
liabilities to the Bank. The Bank issued 3,125,000 shares of its common stock
(par value $1.00) of which 972,365 shares were sold to parties other than the
MHC, thus creating a minority ownership interest in the Bank. The shares had an
initial public offering price of $8 per share, resulting in gross sales proceeds
of $7,778,920. Costs related to the stock issuance of $654,388 were applied to
reduce the gross proceeds. Also $100,000 was transferred to the MHC for the
initial capitalization in connection with reorganization.
Note 2: Basis of Presentation
---------------------
The accompanying unaudited interim consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) considered necessary for a fair
presentation have been included.
8
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 2: Basis of Presentation, continued
--------------------------------
Operating results for the three-month and six-month periods ended
December 31, 1998 and 1997, are not necessarily indicative of the results that
may be expected for the full year. The Company engaged in no significant
business activity other than formation activities prior to December 30, 1997.
Between December 30, 1997 and December 31, 1998, the company engaged in no
significant business activity other than ownership of the common stock of the
Bank. Accordingly, all consolidated financial statements for periods prior to
December 30, 1997, relate solely to the Bank and Guaranty Financial Services,
Inc. of Springfield, a wholly owned subsidiary of the Bank.
Note 3: Principles of Consolidation
---------------------------
As more fully described in Note 1, the Company is a Delaware-chartered
stock corporation organized to facilitate the conversion from the mutual holding
company form of ownership of the Bank to the stock holding company form of
ownership of the Bank and hold all of the capital stock of the Bank. In
connection with the conversion, Guaranty Federal Bancshares, M. H. C., which had
owned 69% of the common stock of the Bank, was merged with and into the Bank,
and its shares of the Bank were canceled.
The consolidated financial statements include the accounts of the
Company, its wholly -owned subsidiary, Guaranty Federal Savings Bank and the
wholly-owned subsidiary of the Bank, Guaranty Financial Services of Springfield,
Inc. Significant intercompany accounts and transactions have been eliminated in
consolidation.
Note 4: Earnings Per Share
------------------
As more fully described in the preceding Notes, the Company had no
operations prior to December 30, 1997 and earnings per share information for the
common stock of the Company for the three months and six months ended December
31, 1997 has not been presented because the information is not available or
would not be meaningful.
9
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4: Earnings Per Share, continued
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31, 1998 December 31, 1998
----------------- -----------------
Income Shares Per-share Income Shares Per-share
------ ------ --------- ------ ------ ---------
Basic EPS
<S> <C> <C> <C> <C> <C> <C>
Income available to common stockholders $820,429 5,572,548 $0.15 $1,618,532 5,628,249 $0.29
===== =====
Effect of Dilutive Securities
Stock Options 66,226 68,289
Income available to common stockholders $820,429 5,638,774 $0.14 $1,618,532 5,696,538 $0.28
======== ========= ===== ========== ========= =====
</TABLE>
Options to purchase 5,000 shares and 436,347 shares of common stock at
$12.63 per share and $13.44 per share, respectively were outstanding during the
three months and six months ended December 31, 1998, but were not included in
the computation of diluted EPS because the options' exercise price was greater
than the average market price of the common shares.
Note 5: Benefit Plans
-------------
On October 18, 1995, the Bank's stockholders voted to approve both a
Recognition and Retention Plan ("RRP") and a Stock Option Plan ("SOP"). On July
22, 1998, the Company's stockholders voted to approve the 1998 Restricted Stock
Plan (" RSP") and 1998 Stock Option Plan ("1998 SOP"). The RRP and RSP
authorized shares to be issued to directors, officers and employees of the Bank.
As of December 31, 1998, all of the RRP and RSP shares have been purchased and
all except 9,338 shares have been awarded. The Bank is amortizing the RRP and
RSP expense over each participant's vesting period and the financial statements
reflect RRP and RSP expense of $263,534 and $47,979 for the six month periods
ended December 31, 1998 and 1997, respectively. The SOP and 1998 SOP authorized
stock options on shares to be issued to officers and employees of the Bank. As
of December 31, 1998, all options except those on 33,995 shares have been
granted. The RRP, RSP, SOP and 1998 SOP vest over a five year period. The RRP
and SOP have been adjusted to reflect the conversion, reorganization and stock
issuance described in Note 1 with all vesting periods remaining unchanged. At
December 31, 1998, there were 577,393 unexercised options that have been granted
at prices ranging from $5.83 to $13.44 per share and 200,351 RRP and RSP shares
were unvested.
Note 6: New Accounting Pronouncements
-----------------------------
During the quarter ending September 30, 1998, the Company adopted SFAS
130, "Reporting Comprehensive Income." This Statement establishes standards for
reporting and display of comprehensive income and its components in a set of
financial statements.
10
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations
-------------
General
- -------
The accompanying Consolidated Financial Statements include the accounts
of Guaranty Federal Bancshares, Inc. (the "Company"), and all accounts of its
wholly owned subsidiary, Guaranty Federal Savings Bank (the "Bank") and all
accounts of the wholly-owned subsidiary of the Bank, Guaranty Financial Services
of Springfield, Inc. All significant intercompany transactions and balances have
been eliminated in consolidation.
However, because the conversion, reorganization and stock issuance of
the Company, the Bank and related entities did not occur until December 30,
1997, all results prior to that date reflect the accounts of the Bank and its
subsidiary. The Company realized approximately $39.2 million in net proceeds
from the stock issuance of which the Company provided $19.9 million to the Bank
as capital and the Company provided a loan of $3.44 million to fund the purchase
of stock for the employee stock ownership plan. Other than the loan for the
ESOP, most of the funds received have been invested in loans.
The primary function of the Company has been to monitor its investment
in the Bank, as a result, the results of operation of the Company are derived
primarily from operations of the Bank. The Bank's results of operations are
primarily dependent on net interest margin, which is the difference between
interest income on interest-earning assets and interest expense on
interest-bearing liabilities. The Bank's income is also affected by the level of
its noninterest expenses, such as employee salary and benefits, occupancy
expenses and other expenses. The following discussion reviews the financial
condition at December 31, 1998, and the results of operations for the three and
six months ended December 31, 1998 and 1997.
The discussion set forth below, as well as other portions of this Form
10-Q, may contain forward-looking comments. Such comments are based upon the
information currently available to management of the Company and management's
perception thereof as of the date of the Form 10-Q. Actual results of the
Company's operations could materially differ from those forward-looking
comments. The differences could be caused by a number of factors or combination
of factors including, but limited to; changes in demand for banking services;
changes in portfolio composition; changes in management strategy; increased
competition from both bank and non-bank companies; and the ability to discover
and correct potential Year 2000 problem, which is discussed later.
11
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC
Financial Condition
- -------------------
The Bank's total assets increased $28,395,396, or 10.9%, from
$260,042,559 as of June 30, 1998, to $288,437,955 as of December 31, 1998.
Cash and cash equivalents increased $1,156,475, or 15.8% from
$7,304,923 as of June 30, 1998, to $8,461,398 as of December 31, 1998.
Securities available-for-sale increased $2,038,967, or 42.8% from
$4,765,021 as of June 30, 1998, to $6,803,988 as of December 31, 1998, this is
primarily due to the increase in value of Federal Home Loan Corporation
("FHLMC") stock. The Bank continues to hold 96,000 shares of FHLMC stock with a
amortized cost of $94,000 in the available-for-sale category. As of December 31,
1998, the gross unrealized gain on the stock was $6,092,000 an increase from
$4,424,000 as of June 30, 1998. Securities held-to-maturity decreased due to
principal repayments, by $1,186,138, or 13.3%, from $8,922,389 as of June 30,
1998 to $7,736,251 as of December 31, 1998.
Mortgage-backed securities, held-to-maturity, decreased $2,290,661, or
19.2%, from $11,948,654 as of June 30, 1998, to $9,657,993, as of December 31,
1998. The decrease is attributable to prepayments received on various pools of
mortgage-backed securities during the three months ending December 31, 1998.
Mortgage-backed securities, available-for-sale, decreased $755,810, or 8.3% from
$9,055,658 as if June 30, 1998, to $8,299,848 as of December 31, 1998. The
decrease is attributable to a decrease in the market value of these securities
during this period, as well as prepayments.
Net loans receivable increased by $25,385,667, or 12.4%, from
$205,414,561, as of June 30, 1998, to $230,800,228, as of December 31, 1998, and
loans held-for-sale increased by $2,470,918, or 306.9%, from $805,183 as of June
30, 1998 to $3,276,101 as of December 31, 1998. Growth consisted primarily of
loans secured by both owner and non-owner occupied residential real estate,
which increased by $23,472,000. Growth in loans receivable is anticipated to
continue and represents a major part of the Bank's planned assets growth.
Allowance for loan losses increased $98,489 or 4.5% from $2,191,557 as
of June 30, 1998, to $2,290,046 as of December 31, 1998. The allowance increased
due to an increase in the provision for loan losses, as well as experiencing
recoveries in excess of charge-offs for the period. The allowance for loan
losses as of December 31, 1998 and June 30, 1998 was 1.0%, and 1.1%
respectively, of net loans outstanding. As of December 31, 1998, the allowance
for loan losses was 231.8% of nonperforming loans versus 216.6% as of June 30,
1998.
12
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC.
Financial Condition, continued
- ------------------------------
Fair value of foreclosed assets held-for-sale decreased $254,764 or
89.1% from $286,000 as of June 30, 1998, to $31,236 as of December 31, 1998.
This decrease was due to the sale of three duplexes and a partially constructed
single-family residence. These properties were sold at their book value.
Premises and equipment decreased $148,060, or 2.0%, from $7,432,971 as
of June 30, 1998, to $7,284,911 as of December 31, 1998, primarily due to the
depreciation recorded for the period ended December 31, 1998.
Deposits decreased $4,165,820, or 3.0%, from $140,975,336 as of June
30, 1998, to $136,809,516 as of December 31, 1998. For the six months ending
December 31, 1998, checking and passbook accounts increased by $4,924,655, or
13.4%, while certificates of deposits decreased by $9,090,475, or 8.7%. The
majority of this increase in checking and passbook accounts can be attributed to
an aggressive marketing campaign initiated in early 1997 designed to attract
checking deposit customers. The decrease in certificates of deposit can be
attributed to management's decision to allow high cost certificates of deposit
accounts to run off and replace these funds with FHLB advances at an overall
lower marginal cost.
As a result of the decrease in deposits, and the continued increase in
loan demand, FHLB advances increased $36,746,960 or 81.5%, from $45,081,028 as
of June 30, 1998, to $81,827,988 as of December 31, 1998. As of December 31,
1998, the Bank had the ability to borrow an additional $67.9 million from the
FHLB.
Stockholders' equity (including unrealized appreciation on securities
available-for-sale, net of tax) decreased $4,261,133, or 6.0%, from $70,690,098
as of June 30, 1998, to $66,428,965 as of December 31, 1998. This decrease was
due to several factors. In connection with the RSP, $2,373,065 was contributed
to purchase 173,632 shares of Company stock, which was accounted for as a
reduction of stockholders' equity. In addition, a total of 311,290 shares of
treasury stock were purchased in the open market at a cost of $4,280,238.
Finally, dividends in the amount of $839,899 ($0.16 per share) were declared as
discussed above. On a per share basis, stockholders' equity decreased from
$12.01 as of June 30, 1998 to $11.87 as of December 31, 1998.
13
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC
Analysis of core earnings
The Company's profitability is primarily dependent upon net interest
income, which represents the difference between interest and fees earned on
loans, MBSs and debt and equity securities, and the cost of deposits and
borrowings. Net interest income is dependent on the difference between the
average balances and rates earned on interest-earning assets and the average
balances and rates paid on interest-bearing liabilities. Net income is further
affected by non-interest income, non-interest expense and income taxes.
The following table sets forth certain information relating to the Company's
average consolidated statements of financial condition and reflects the average
yield on assets and average cost of liabilities for the periods indicated. Such
yields and costs are derived by dividing income or expense annualized by the
average balance of assets or liabilities, respectively, for the periods shown.
Average balances were derived from average daily balances. The average balance
of loans includes loans on which the Company has discontinued accruing interest.
The yields and costs include fees which are considered adjustments to yields.
<TABLE>
<CAPTION>
Six months ended Six months ended
December 31, 1998 December 31, 1997
----------------- -----------------
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning:
Loans $222,614 $8,974 8.06% $166,163 $7,098 8.54%
Investment securities 8,422 208 4.39% 6,575 193 5.30%
Mortgage-backed Securities 19,595 667 6.80% 14,901 565 7.59%
Other assets 13,208 268 2.91% 12,792 294 2.77%
-------- ------ ----- ------ ------ -----
Total interest-earning 263,839 10,117 7.67% 200,431 8,150 8.13%
Noninterest-earning 7,468 6,557
-------- -------
$271,307 $206,988
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing:
Savings accounts $8,371 110 2.63% $8,883 124 2.79%
Transaction accounts 26,892 378 2.81% 20,602 301 2.92%
Certificates of Deposit 96,884 2,614 5.40% 114,361 3,182 5.57%
FHLB Advances 69,274 2,090 6.03% 26,797 820 6.12%
Other Borrowed Funds -- -- -- 5,747 79 2.75%
-------- ------ ------- ------- ------ ------
Total interest-bearing 201,421 5,192 5.16% 176,390 4,507 5.11%
Noninterest-bearing 3,618 2,503
-------- -------
Total liabilities 205,039 178,893
Stockholders' equity 66,268 28,095
-------- -------
$271,307 $206,988
======== ========
Net earning balance $ 62,418 $ 24,041
======== =========
Earning yield less costing rate 2.51% 3.02%
==== ====
Net interest income, and
net yield spread on
interest earning assets $4,925 3.73% $3,643 3.64%
====== ======= ====== ======
Ratio on interest-earning assets to
interest-bearing liabilities 131% 114%
==== ===
</TABLE>
14
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC.
Results of Operations - Comparison of Three Month and
Six Month Periods Ended December 31, 1998 and 1997
Net income for the three months and six months ended December 31, 1998
was $820,429 and $1,618,532, as compared to $594,788 and $1,111,291 for the
three months and six months ended December 31, 1997 which represents an increase
in earnings of $225,641 or 37.9% for the three month period, and a increase in
earnings of $507,241 or 45.6% for the six month period.
Interest Income
- ---------------
Total interest income for the three months and six months ended
December 31, 1998, increased $972,697 or 23.1% and $1,967,084 or 24.1% as
compared to the three months and six months ended December 31, 1997. For the six
month period ended December 31, 1998 compared to the same period in 1997, the
average yield on interest earning assets decreased 46 basis points to 7.67%,
while the average balance of interest earnings assets increased $63,400,000 over
the same period one year ago.
Interest Expense
- ----------------
Total interest expense for the three months and six months ended
December 31, 1998, increased $371,228 or 16.0% and $685,233 or 15.2% when
compared to the three months and six months ended December 31, 1997. For the six
month period ended December 31, 1998, the average cost of interest bearing
liabilities increased 5 basis points to 5.16% while the average balance
increased $25,031,000, when compared to the same period in 1997.
Net Interest Income
- -------------------
Net interest income for the three months and six months ended December
31, 1998, increased $601,469, or 31.8% and $1,281,851, or 35.2% when compared to
the same period in 1997. The increase in net interest income for the six months
ended December 31, 1998 was the result of a $38,377,000 increase in average net
interest earnings assets offset by a 51 basis point decrease in net interest
margin compared to the same period in 1997. This increase in net interest
earning assets was primarily due to the inflow of cash from the stock
conversion, which was converted to interest earning assets, primarily in the
form of loans originated by the Bank. This resulted in an increase in net
interest income for the six month period ended December 31, 1998 even though the
yield on interest earning assets decreased by 46 basis points, compared to an
increase of 6 basis points on interest bearing liabilities, when compared to the
same period in 1997.
15
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC
Provision for Loan Losses
- -------------------------
Based primarily on the continued growth of the loan portfolio
management decided to increase the allowance for loan loss reserve through a
provision for loan loss of $45,000 and $90,000 for the three months and six
months ended December 31, 1998, respectively, compared to $30,000 and $63,352
for the same period in 1997. The Bank will continue to monitor its allowance for
loan losses and make future additions based on economic and regulatory
conditions. Although the Bank maintains its allowance for loan losses at a level
which it considers to be sufficient to provide for potential losses, there can
be no assurance that future losses will not exceed internal estimates. In
addition, the amount of the allowance for loan losses is subject to review by
regulatory agencies which can order the establishment of additional loss
provisions.
Noninterest Income
- ------------------
Noninterest income increased $64,248, or 26.9% and $123,690, or 27.4%
for the three months and six months ended December 31, 1998, when compared to
the three months and six months ended December 31, 1997. The increase was
primarily due to a increase in checking account service charges, which increased
$67,522 or 43.9% and $152,527 or 55.5% for the three months and six months ended
December 31, 1998, when compared to the same period in 1997.
Noninterest Expense
- -------------------
Noninterest expense increased $366,687, or 32.2% for the three months
ended December 31, 1998, and increased $655,721, or 29.0% for the six month
period ending December 31, 1998 when compared to the three months and six months
ended December 31, 1997. In general this increase can be attributed to the
overall increase in accounts served, in addition to the added costs associated
with the ESOP and RSP that were formed in connection with the conversion.
Salaries and employee benefits increased $209,524, or 41.8% for the
three months ended December 31, 1998, and increased $402,095, or 37.1% for the
six months ended December 31, 1998, when compared to the same period in 1997.
This included an increase in RRP/RSP expense of $77,233, or 374.0% for the three
months ended December 31, 1998, and an increase of $161,978, or 549.6% for the
six months ended December 31, 1998, when compared to the same period in 1997, as
well as the addition of $65,896 for the three months ended December 31, 1998,
and $136,306 for the six months ended December 31, 1998, for the ESOP expense.
There was no ESOP expense for the same period in 1997.
16
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC
Noninterest Expense, continued
- ------------------------------
Advertising expense increased $15,251, or 15.0% for the three months
ended December 31, 1998, and increased $36,105, or 19.1% for the six months
ended December 31, 1998, when compared to the same period in 1997. The primary
reason for this increase was the additional expense in connection with the
marketing campaign designed to attract checking accounts.
Data processing fees increased $18,109, or 16.5%, for the three months
ended December 31, 1998, and increased $47,115, or 23.9% for the six months
ended December 31, 1998, when compared to the same period in 1997. These
increases in data processing were primarily due to the increases in accounts
serviced and the volume of transactions handled.
Provision for Income Taxes
- --------------------------
There was a $58,389 and $215,931 increase in the provision for income
taxes for the three months and six months ended December 31, 1998, as compared
to the same period in 1997. This increase was due to the increase in before tax
income for the three months and six months ended December 31, 1998, compared to
the same period in 1997.
Nonperforming Assets
- --------------------
The allowance for loan losses is calculated based upon an evaluation of
pertinent factors underlying the various types and quality of the loans.
Management considers such factors as the repayment status of a loan, the
estimated net realizable value of the underlying collateral, the borrower's
intent and ability to repay the loan, local economic conditions and the Bank's
historical loss ratios. The Bank's allowance for loan losses as of December 31,
1998, was $2,290,046 or 1.0% of loans receivable. Total assets classified as
substandard or loss as of December 31, 1998, were $1,345,671 or 0.5% of total
assets. Management has considered nonperforming and total classified assets in
evaluating the adequacy of the Bank's allowance for loan losses.
The ratio of nonperforming assets to total assets is another useful tool in
evaluating exposure to credit risk. Nonperforming assets of the Bank include
nonperforming loans (nonaccruing loans) and assets which have been acquired as a
result of foreclosure or deed-in-lieu of foreclosure.
17
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC.
Nonperforming Assets, continued
- -------------------------------
<TABLE>
<CAPTION>
12/31/98 6/30/98 6/30/97
(Dollars In Thousands)
<S> <C> <C> <C>
Nonperforming loans $ 988 $ 1,012 $ 1,257
Real estate acquired in
settlement of loans 31 286 210
---------- ----------- --------
Total Nonperforming Assets $ 1,019 $ 1,298 $ 1,467
======== ========== =========
Total Nonperforming Assets
as a Percentage of Total
Assets 0.35% 0.50% .74%
Allowance for loan losses $ 2,290 $ 2,191 $ 2,177
Allowance for loan losses as a
Percentage of average loans, net 1.03% 1.24% 1.49%
</TABLE>
Asset/Liability Management
- --------------------------
The goal of the Bank's asset/liability policy is to manage interest
rate risk so as to maximize net interest income over time in changing interest
rate environments. Management monitors the Bank's net interest spreads (the
difference between yields received on assets and paid on liabilities) and,
although constrained by market conditions, economic conditions, and prudent
underwriting standards, it offers deposit rates and loan rates that maximize net
interest income. Management also attempts to fund the Bank's assets with
liabilities of a comparable duration to minimize the impact of changing interest
rates on the Bank's net interest income. Since the relative spread between
financial assets and liabilities is constantly changing, the Bank's current net
interest income may not be an indication of future net interest income.
The Bank's initial efforts to manage interest rate risk included
implementing an adjustable rate mortgage loan ("ARM") program beginning in the
early 1980s. The ARMs have met with excellent customer acceptance. As of June
30, 1998, ARMs constituted 71.0% of the Bank's mortgage loan portfolio. However
during the first and second quarter of fiscal year 1999, the general level of
long-term interest rates dropped and borrowers opted for fixed rate mortgages.
As of December 31, 1998, ARMs represent 61.6% of the loan portfolio. Of the ARMs
originated during the first and second quarter of fiscal year 1999, borrowers
preferred initial fixed rate periods of three or five years. In response to this
shift in customer preference, the Bank has continued a program of borrowing
longer-term funds from the FHLB.
18
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC..
The Bank is also managing interest rate risk by the origination of
construction loans. As of December 31, 1998, such loans made up 9.5% of the
Bank's loan portfolio. In general, these loans have higher yields, shorter
maturities and greater interest rate sensitivity than other real estate loans.
The Bank constantly monitors its deposits in an effort to decrease
their interest rate sensitivity. Rates of interest paid on deposits at the Bank
are priced competitively in order to meet the Bank's asset/liability management
objectives and spread requirements. As of June 30, 1998, the Bank's savings
accounts, checking accounts, and money market deposit accounts totaled
$36,855,202 or 26.1% of its total deposits. As of December 31, 1998, these
accounts totaled $41,779,857 or 29.6% of total deposits. The Bank believes,
based on historical experience, that a substantial portion of such accounts
represents non-interest rate sensitive, core deposits.
The value of the Bank's loan portfolio will change as interest rates
change. Rising interest rates will decrease the Bank's net portfolio value,
while falling interest rates increase the value of that portfolio.
19
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC.
Interest Rate Sensitivity Analysis
- ----------------------------------
The following table sets forth as of September 30, 1998 (the most
recent available), OTS estimate of the projected changes in net portfolio value
("NPV") in the event of 100, 200, 300, and 400 basis point ("bp") instantaneous
and permanent increases and decreases in market interest rates. Dollar amounts
are expressed in thousands.
Estimated Net Portfolio Value NPV as % of PV Assets
BP Change ----------------------------- ---------------------
in Rates $ Amount $ Change % Change NPV Ratio BP Change
- -------------- -------- -------- -------- --------- ---------
+400 bp $ 53,455 $ (1,793) -3% 20.6% +80 bp
+300 55,548 300 +1% 21.0% +114 bp
+200 56,722 1,474 +3% 21.0% +116 bp
+100 56,616 1,368 +2% 20.6% +78 bp
NC 55,248 19.8%
- -100 52,607 (2,641) -5% 18.7% -115 bp
- -200 49,805 (5,443) -10% 17.5% -237 bp
- -300 47,113 (8,135) -15% 16.3% -355 bp
- -400 44,176 (11,072) -20% 15.0% -481 bp
Computations of prospective effects of hypothetical interest rate
changes are calculated by the OTS from data provided by the Bank and are based
on numerous assumptions, including relative levels of market interest rates,
loan repayments and deposit run-offs, and should not be relied upon as
indicative of actual results. Further, the computations do not contemplate any
actions the Bank may undertake in response to changes in interest rates.
Management cannot predict future interest rates or their effect on the
Bank's NPV in the future. Certain shortcomings are inherent in the method of
analysis presented in the computation of NPV. For example, although certain
assets and liabilities may have similar maturities or periods to repricing, they
may react in differing degrees to changes in market interest rates.
Additionally, certain assets, such as adjustable rate loans, which represent the
Bank's primary loan product, have an initial fixed rate period typically from
one to five years and over the remaining life of the asset changes in the
interest rate are restricted. In addition, the proportion of adjustable rate
loans in the Bank's portfolio could decrease in future periods due to
refinancing activity if market interest rates remain or decrease in the future.
Further, in the event of a change in interest rates, prepayment and early
withdrawal levels could deviate significantly from those assumed in the table.
Finally, the ability of many borrowers to service their adjustable-rate debt may
decrease in the event of an interest rate increase.
20
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC.
Interest Rate Sensitivity Analysis, continued
- ---------------------------------------------
The Bank's Board of Directors is responsible for reviewing the asset
and liability policies. The Board meets quarterly to review interest rate risk
and trends, as well as liquidity and capital ratios and requirements. The Bank's
management is responsible for administering the policies and determinations of
the Board of Directors with respect to the Bank's asset and liability goals and
strategies. Management expects that the Bank's asset and liability policies and
strategies will continue as described above so long as competitive and
regulatory conditions in the financial institution industry and market interest
rates continue as they have in recent years.
The Bank's primary sources of funds are deposits, principal and
interest payments on loans, and securities and extensions of credit from the
Federal Home Loan Bank of Des Moines. While scheduled loan and security
repayments and the maturity of short-term investments are somewhat predictable
sources of funding, deposit flows are influenced by many factors which make
their cash flows difficult to anticipate. Office of Thrift Supervision
regulations require the Bank to maintain cash and eligible investments in an
amount equal to at least 4% of customer accounts and short-term borrowings to
assure its ability to meet demands for withdrawals and repayment of short-term
borrowings. As of December 31, 1998, the Bank's liquidity ratio was 23.4%, which
exceeded the minimum regulatory requirement.
The Bank uses its liquidity resources principally to satisfy its
ongoing commitments which include funding loan commitments, funding maturing
certificates of deposit as well as deposit withdrawals, maintaining liquidity,
purchasing investments, and meeting operating expenses. As of December 31, 1998,
the Bank had approximately $4,382,000 in commitments to originate mortgage loans
and $13,375,000 in loans-in-process on mortgage loans. These commitments will be
funded through existing cash balances, cash flow from operations and, if
required, FHLB advances . Management believes that anticipated cash flows and
deposit growth will be adequate to meet the Bank's liquidity needs.
21
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC.
Impact of Year 2000
- -------------------
Rapid and accurate data processing is essential to the Bank's
operations. Many computer programs that can only distinguish the final two
digits of the year entered (a common programming practice in prior years) are
expected to read entries for the year 2000 as the year 1900 or as the year 1980
and incorrectly attempt to compute payments, interest, delinquency and other
data. The Bank has been evaluating both information technology (computer
systems) and non-information technology systems (e.g., telephone systems, vault
timers, security systems and elevator controls). We have evaluated our risk in
three areas: (1) our own computers, (2) computers of others used by our
borrowers, depositors, and business partners, and (3) computers of others who
provide us with data processing services.
Our own computers. The Bank expects to spend approximately $205,000
($111,000 for hardware, $74,000 for software and $20,000 in consulting fees)
through June 30, 1999 to upgrade our computer systems. These upgrades are
expected to eliminate the Year 2000 risk in our computers. We do not expect to
have material costs to address this risk area after June30, 1999. As of
December31, 1998, the Bank has spent approximately $55,000 ($41,200 for
hardware, $10,000 for software, and $3,800 for consultants) to fix Year 2000
problems. We expect to be Year 2000 compliant in this risk area by June 30,
1999.
Computers of others used by borrowers, depositors, and business
partners. The Bank has evaluated most of our material borrowers and depositors
and does not believe that the Year 2000 problem should, on an aggregate basis,
impact their ability to make payments or deposits to the Bank. We believe that
most of our residential customers are not dependent on their home computers for
income and that none of our commercial customers are so large that a Year 2000
problem would render them unable to collect revenue or rent and, in turn,
continue to do business with the Bank. We have solicited our material business
partners regarding their Year 2000 readiness and are currently evaluating their
responses.
Computers of others who provide us with data processing services. This
risk is primarily focused on one third-party service bureau that provides all of
the Bank's core data processing. This service bureau advises that it has
completed program changes required for Year 2000 processing. If these program
changes are not correct before the year 2000, the Bank would likely experience
significant delays, mistakes, or failures. These delays, mistakes, or failures
could have a significant impact on the Bank's financial condition and results of
operations.
22
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC.
Impact of Year 2000, continued
- ------------------------------
Contingency Plan. The Bank is monitoring our service bureau to evaluate
whether our data processing system achieve compliance. We are serving as a
"proxy" Year 2000 test site for other financial institutions on the same system.
Such tests were completed on October 31, 1998. Currently we are reviewing the
results of our testing, Upon completion of this step we will develop a
contingency plan including a range of alternatives depending on the results of
the tests. The alternatives could range from shifting to a compliant system to
back-up for unforeseen contingencies on our current system. We currently utilize
many spreadsheet programs to compute and store data. Should our core system
fail, we will rely on paper reports generated prior to the failure by our
service bureau, as well as enter deposit and loan transactions in spreadsheets
in order to conduct business until the core system is corrected. If this
labor-intensive approach is necessary, management and our employees will become
much less efficient. However, we believe that we would be able to operate in
this manner until our existing service bureau, or their replacement, is able to
again provide data processing services. If very few financial institution
service bureaus are operating in the year 2000, our replacement costs, assuming
we could negotiate an agreement, could be material.
This discussion of the impact of the Year 2000 is a Year 2000 readiness
disclosure within the meaning of the Year 2000 Readiness and Disclosure Act.
23
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC.
PART II
Item 1. Legal Proceedings
- ------- -----------------
None.
Item 2. Changes in Securities
- ------- ---------------------
Not applicable.
Item 3. Defaults Upon Senior Securities
- ------- -------------------------------
Not applicable.
Item 4. Submission of Matters to Vote of Common Stockholders
- ------- ----------------------------------------------------
The annual meeting of stockholders of the registrant was held on
October 28, 1998. At the meeting the stockholders elected Jack L. Barham, James
E. Haseltine and Raymond Tripp to three-year terms as director of the Savings
Bank, while Gary Lipscomb, George Hall, Ivy Rogers and Wayne V. Barnes continue
to serve as directors. Also at that meeting, Baird, Kurtz & Dobson was ratified
as Independent Certified Public Accountant. These same entities serve in
identical capacities for the subsidiary bank of the registrant.
The results of voting are shown for each matter considered.
Director election:
Nominee votes for votes withheld
Jack Barham 5,280,321 46,634
James Haseltine 5,280,564 46,391
Raymond Tripp 5,276,708 50,247
Auditor ratification:
votes for 5,293,681
votes against 27,035
abstentions 6,239
24
<PAGE>
Item 5. Other Information
- ------- -----------------
None.
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
a) Exhibits
None.
b) Reports on Form 8-K
None.
25
<PAGE>
GUARANTY FEDERAL BANCSHARES, INC.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Guaranty Federal Bancshares, Inc.
Signatures Date
\S\ James E. Haseltine February 12, 1999
- ----------------------------------------------------- --------------------
James E. Haseltine
President and Chief Executive Officer
(Principal Executive Officer)
\S\ Bruce Winston February 12, 1999
- ----------------------------------------------------- --------------------
Bruce Winston
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION DERIVED FROM THE
QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL INFORMATION.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 1,031
<INT-BEARING-DEPOSITS> 7,430
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 15,104
<INVESTMENTS-CARRYING> 17,394
<INVESTMENTS-MARKET> 17,202
<LOANS> 236,366
<ALLOWANCE> 2,290
<TOTAL-ASSETS> 288,438
<DEPOSITS> 136,810
<SHORT-TERM> 81,828
<LIABILITIES-OTHER> 3,369
<LONG-TERM> 0
0
0
<COMMON> 623
<OTHER-SE> 65,806
<TOTAL-LIABILITIES-AND-EQUITY> 288,438
<INTEREST-LOAN> 8,974
<INTEREST-INVEST> 875
<INTEREST-OTHER> 268
<INTEREST-TOTAL> 10,117
<INTEREST-DEPOSIT> 3,102
<INTEREST-EXPENSE> 5,192
<INTEREST-INCOME-NET> 4,925
<LOAN-LOSSES> 90
<SECURITIES-GAINS> (7)
<EXPENSE-OTHER> 2,915
<INCOME-PRETAX> 2,494
<INCOME-PRE-EXTRAORDINARY> 2,494
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,619
<EPS-PRIMARY> .29
<EPS-DILUTED> .28
<YIELD-ACTUAL> 3.73
<LOANS-NON> 988
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,192
<CHARGE-OFFS> 17
<RECOVERIES> 25
<ALLOWANCE-CLOSE> 2,290
<ALLOWANCE-DOMESTIC> 2,290
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
