Guaranty Federal Bancshares, Inc. Announces Preliminary 2012 Financial Results

Guaranty Federal Bancshares, Inc. Announces Preliminary 2012 Financial Results

SPRINGFIELD, Mo., Jan. 17, 2013 (GLOBE NEWSWIRE) -- Guaranty Federal
Bancshares, Inc., (Nasdaq:GFED), the holding company (the "Company") for
Guaranty Bank, today announces the following results for its quarter and year
ended December 31, 2012.

Fourth Quarter Financial Highlights

  *Earnings per common share for the fourth quarter increased to $0.45
    compared to a ($0.34) loss per common share for the third quarter of 2012
    and earnings per common share of $0.38 for the fourth quarter in 2011.
  *Net income increased to $1,482,000 for the fourth quarter of 2012 compared
    to a net loss of ($717,000) for the third quarter of 2012 and net income
    of $1,308,000 during the fourth quarter of 2011.
  *Net interest margin improved 21 basis points to 3.55% for the quarter as
    compared to the third quarter of 2012 but decreased 10 basis points
    compared to the fourth quarter in 2011.
  *Efficiency ratio improved to 64.76% for the quarter as compared to 74.33%
    for the third quarter of 2012 and 72.03% during the prior year quarter.
  *Transaction deposit account balances as of December 31, 2012 have
    increased $20.8 million, or 6%, since December 31, 2011.
  *Nonperforming assets were $19.9 million as of December 31, 2012, a
    decrease of $7.1 million from December 31, 2011.
  *Book value per common share was $14.34 as of December 31, 2012, an
    increase of $.27 as compared to December 31, 2011.

Net income for the fourth quarter ended December 31, 2012 was $1,482,000 as
compared to $1,308,000 for the same quarter in 2011.After preferred
dividends, diluted earnings per common share was $0.45, an increase from the
$0.38 per diluted common share during the fourth quarter in 2011.This was
also an increase from the ($0.34) diluted loss per common share the Company
earned during the third quarter ended September 30, 2012.

Net income for the fiscal year 2012 was $1,944,000 as compared to $3,836,000
in 2011.After preferred dividends, diluted earnings per common share was
$0.30, a decrease from the $1.01 per diluted common share earned in 2011.

The following were key issues that contributed to the fourth quarter financial
results as compared to the same quarter in 2011:

  Net interest income – A strong focus for the Company over the last several
  years has been to improve net interest margin which has been a significant
  challenge for our institution as well as the industry.A weak economy,
  increased regulation and a historically low interest rate environment has
  made it very difficult to increase earning assets, especially in the loan
  portfolio.The average cost of interest bearing deposits and other
  borrowings continues to be the primary driver in the Company's margin
  improvement.The Company has benefited during 2012 from the reduction in
  wholesale funding balances (primarily Federal Home Loan Bank (FHLB) advances
  and repurchase agreements) of approximately $40 million during the latter
  half of 2011. On the asset side, loan yield has improved relative to peer
  over the last several years, but has been negatively impacted from the
  higher level of nonaccrual loans, declining loan balances and price
  competition from local and regional competitors. Despite the challenges
  discussed, the Company has increased its margin year over year and has been
  able to hold its net interest income steady.

  Non-interest income – Non-interest income decreased $1.0 million during the
  quarter primarily due to the Company's gains on investments.During the
  fourth quarter of 2011, the Company sold approximately $28.1 million of
  available-for-sale securities for a realized gain of $1.3 million.A portion
  of the net proceeds were used to prepay two repurchase agreements totaling
  $14.75 million. Other noteworthy items for the quarter include losses of
  $186,000 that were recognized on foreclosed assets which was a decline from
  the $294,000 recognized during the prior year quarter.Also, gains on sales
  of loans in the secondary market increased $96,000 for the period compared
  to the prior year quarter due to an increase in the volume of loans sold.

  Non-interest expense – In general, non-interest expenses have been managed
  very closely and have been held to appropriate levels.The decrease of $1.2
  million for the quarter is primarily due to a $1.5 million prepayment
  penalty incurred during the prior year quarter on the prepayment of two
  repurchase agreements totaling $14.75 million (also discussed above).
  However, offsetting this item was an increase in other expense for the
  quarter due to settlements of two investor indemnification claims associated
  with six secondary market loans originated in prior years.Total costs
  incurred on the settlements were $147,000.

  Provision for loan loss expense and allowance for loan losses – Based on its
  reserve analysis and methodology, the Company recorded a provision for loan
  loss expense of $350,000 during the quarter, a decrease from the $550,000
  recognized in the prior year quarter.The allowance for loan losses as of
  December 31, 2012 was 1.84% of gross loans outstanding (excluding mortgage
  loans held for sale) compared to 2.17% as of December 31, 2011.

  Non-performing assets – The Company experienced a significant improvement in
  nonperforming assets which were $19.9 million as of December 31, 2012,
  representing a decrease of $7.1 million or 26% from December 31,
  2011.Nonperforming assets as a percentage of total assets declined from
  4.17% at December 31, 2011 to 3.01% at December 31, 2012.Reducing
  non-performing assets has been and will continue to be a primary focus of
  the Company.

Non-Generally Accepted Accounting Principle (GAAP) Financial Measures

In addition to the GAAP financial results presented in this press release, the
Company presents non-GAAP financial measures discussed below.These non-GAAP
measures are provided to enhance investors' overall understanding of the
Company's current financial performance.Additionally, Company management
believes that this presentation enables meaningful comparison of financial
performance in various periods.However, the non-GAAP financial results
presented should not be considered a substitute for results that are presented
in a manner consistent with GAAP.A limitation of the non-GAAP financial
measures presented is that the adjustments concern gains, losses or expenses
that the Company does expect to continue to recognize; the adjustments of
these items should not be construed as an inference that these gains or
expenses are unusual, infrequent or non-recurring.Therefore, Company
management believes that both GAAP measures of its financial performance and
the respective non-GAAP measures should be considered together.

Operating Income

Operating income is a non-GAAP financial measure that adjusts net income for
the following non-operating items:

  *Gains on sales of available-for-sale securities
  *Losses on foreclosed assets held for sale
  *Gains on the sales of Missouri low-income housing tax credits
  *One-time professional fees expense incurred in conjunction with a
    Registration Statement on Form S-1 filed with the SEC.This filing during
    the third quarter of 2012 was required for the Treasury's proposed auction
    of the Company's preferred stock under their Capital Purchase Program.
  *Settlements of investor indemnification claims associated with secondary
    market loans
  *Provision for loan loss expense
  *Provision (credit) for income taxes

A reconciliation of the Company's net income to its operating income for the
quarter and year ended December 31, 2012 is set forth below.

                                      Quarter ended       Year ended
                                      31-Dec-12 31-Dec-11 31-Dec-12 31-Dec-11
                                                                 
Net income                             $1,482  $1,308  $1,944  $3,836
                                                                 
Add back:                                                         
Provision (credit) for income taxes    447      241      (131)    703
Income before income taxes             1,929    1,549    1,813    4,539
                                                                 
Add back/(subtract):                                              
Gains on investment securities         (31)     (1,308)  (168)    (1,506)
Loss on foreclosed assets held for     186      294      1,391    800
sale
Gain on sale of low-income housing tax --      --      (282)    --
credits
Professional fees incurred with Form   --      --      221      --
S-1 filing
Settlements of investor
indemnification claims associated with 147      --      147      --
secondary market loans
Prepayment penalty on repurchase       --      1,531    --      1,531
agreements
Provision for loan losses              350      550      5,950    3,350
                                      652      1,067    7,259    4,175
                                                                 
Operating income                       $2,581  $2,616  $9,072  $8,714

About Guaranty Federal Bancshares, Inc.

Guaranty Federal Bancshares, Inc. (Nasdaq:GFED) has a subsidiary corporation
offering full banking services.The principal subsidiary, Guaranty Bank, is
headquartered in Springfield, Missouri, and has nine full-service branches in
Greene and Christian Counties and Loan Production Offices in Taney, Wright,
Webster and Howell Counties.In addition, Guaranty Bank is a member of the
TransFund ATM network which provides its customers surcharge free access to
over 100 area ATMs and over 1,600 ATMs nationwide.For more information visit
the Guaranty Bank website: www.gbankmo.com.

The discussion set forth above 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 this
release.When used in this release, words such as "anticipates," "estimates,"
"believes," "expects," and similar expressions are intended to identify
forward-looking statements but are not the exclusive means of identifying such
statements.Such statements are subject to risks and uncertainties.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 not 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; changes in the general level of interest rates; the effect of
regulatory or government legislative changes; technology changes; fluctuation
in inflation; and other factors set forth in reports and other documents filed
by the Company with the Securities and Exchange Commission from time to time.

Financial Highlights:                                            
                           Quarter ended               Year ended
Operating Data:             31-Dec-12       31-Dec-11   31-Dec-12   31-Dec-11
                           (Dollar amounts are in thousands, except per share
                            data)
                                                                
Total interest income       $7,047        $7,475    $27,606   $30,376
Total interest expense      1,572          1,986      6,858      9,611
Net interest income         5,475          5,489      20,748     20,765
Provision for loan losses   350            550        5,950      3,350
Net interest income after   5,125          4,939      14,798     17,415
provision for loan losses
Noninterest income          992            2,016      3,256      4,485
Noninterest expense         4,188          5,406      16,241     17,361
                                                                
Income before income taxes  1,929          1,549      1,813      4,539
Provision (credit) for      447            241        (131)      703
income taxes
                                                                
Net income                  $1,482        $1,308    $1,944    $3,836
Preferred stock dividends   199            282        1,076      1,126
and discount accretion
Net income available to     $1,283        $1,026    $868      $2,710
common shareholders
                                                                
Basic income per common     $0.47         $0.38     $0.32     $1.01
share
Diluted income per common   $0.45         $0.38     $0.30     $1.01
share
                                                                
Annualized return on        0.91%           0.80%       0.30%       0.57%
average assets
Annualized return on        11.73%          9.52%       3.67%       7.08%
average equity
Net interest margin         3.55%           3.65%       3.42%       3.31%
Efficiency ratio            64.76%          72.03%      67.66%      68.76%
                                                                
                                          As of       As of       
Financial Condition Data:                  31-Dec-12   31-Dec-11   
                                                                
Cash and cash equivalents                  $41,663   $26,574   
Investments and interest                   102,162    86,871     
bearing deposits
Loans, net of allowance for loan losses
12/31/2012 -- $8,740; 12/31/2011 --         468,376    482,664    
$10,613
Other assets                               48,231     52,397     
Total assets                               $660,432  $648,506  
                                                                
Deposits                                   $500,015  $484,584  
FHLB advances                              68,050     68,050     
Subordinated debentures                    15,465     15,465     
Securities sold under                      25,000     25,000     
agreements to repurchase
Other liabilities                          1,034      1,172      
Total liabilities                          609,564    594,271    
Stockholders' equity                       50,868     54,235     
Total liabilities and                      $660,432  $648,506  
stockholders' equity
                                                                
Equity to assets ratio                     7.70%       8.36%       
Book value per common share                $14.34    $14.07    
Nonperforming assets                       $19,861   $27,014   

CONTACT: Shaun A. Burke, President & CEO
         Guaranty Bank
         1341 W. Battlefield
         Springfield, MO 65807
         417-520-4333
 
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