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Guaranty Federal Bancshares, Inc. Announces Preliminary Second Quarter 2013 Financial Results

Guaranty Federal Bancshares, Inc. Announces Preliminary Second Quarter 2013
Financial Results

SPRINGFIELD, Mo., July 15, 2013 (GLOBE NEWSWIRE) -- Guaranty Federal
Bancshares, Inc., (Nasdaq:GFED), the holding company (the "Company") for
Guaranty Bank, today announces the following results for its second quarter
ended June 30, 2013.

Second Quarter 2013 Financial Highlights

  o Basic and diluted earnings per common share for the quarter increased to
    $0.50 and $0.49, respectively, compared to basic and diluted loss per
    common share of $(0.02) for the same quarter in 2012.
  o Net income increased to $1.6 million for the quarter compared to $344,000
    for the same quarter in 2012. This is also an increase from the $953,000
    earned in the first quarter of 2013.
  o Annualized return on average assets increased to .97% for the quarter
    compared to .21% for the same quarter in 2012.
  o Annualized return on average equity increased to 12.33% for the quarter
    compared to 2.16% for the same quarter in 2012.
  o Transaction deposit account balances as of June 30, 2013 increased $25.9
    million, or 7%, since December 31, 2012.
  o Long-term borrowings (classified as non-core funding liabilities)
    decreased $30.1 million as of June 30, 2013 compared to December 31, 2012.

Net income for the second quarter ended June 30, 2013 was $1,567,000 as
compared to $344,000 for the same quarter in 2012. This is also an increase
from the $953,000 earned in the first quarter of 2013. After preferred stock
dividends and accretion, diluted earnings per common share was $0.49 for the
quarter, an increase from the loss per diluted common share of $(.02) during
the same quarter in 2012 and an increase from the $.25 per diluted common
share earned in the first quarter of 2013. 

The following were key issues that contributed to the second quarter operating
results compared to the same quarter in 2012 and the financial condition
results compared to December 31, 2012:

  Net interest income – Improvement in net interest income and margin
  continues to be a primary objective for the Company. However, economic
  conditions, weak loan demand and the prolonged low interest rate environment
  have made it difficult to increase balances in the loan portfolio. Total net
  loans have declined $7.4 million since December 31, 2012 and $14.2 million
  since June 30, 2012 which has had a negative impact on interest income and
  net interest margin. Despite the decline in loans, net interest income and
  margin have increased slightly over the prior year quarter due to the
  Company's efforts in growing core deposits and reducing non-core
  liabilities. Also, the Company has benefited from the continued repricing of
  its deposit products in the latter half of 2012 and into 2013 as well as the
  interest expense reduction from eliminating $30.1 million of wholesale
  funding balances (Federal Home Loan Bank advances and repurchase agreements)
  during the six month period ended June 30, 2013.   The average cost of funds
  for the quarter was .92% compared to 1.24% for the same quarter in 2012. 

  Non-interest income – Non-interest income increased $1.6 million during the
  quarter primarily due to the Company's gains on investments and tax credit
  assets. In May 2013, the Company sold $3.7 million of investment securities
  and low-income housing tax credits for a gain of $1.5 million. With those
  proceeds and available cash, the Company prepaid a $15 million repurchase
  agreement (bearing annual interest at 2.60%) incurring a prepayment penalty
  of $1.5 million. The prepayment has allowed the Company to significantly
  reduce higher cost, non-core funding liabilities on its balance sheet and
  eliminate future annual interest expense of $390,000.

  Non-interest expense – Non-interest expense increased $1.6 million over the
  prior year quarter primarily due to a $1.5 million prepayment penalty
  incurred on a structured transaction discussed above. All other non-interest
  expenses have been closely managed and controlled. Excluding the structured
  transaction, the Company's efficiency ratio would have been 63.30% for the
  quarter, rather than 70.29%, and would have been an improvement over the
  same quarter in 2012.   

  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 $250,000 during the quarter, a decrease from the $2.1
  million recognized in the prior year quarter. The allowance for loan losses
  as of June 30, 2013 was 1.79% of gross loans outstanding (excluding mortgage
  loans held for sale) compared to 1.84% as of December 31, 2012.

  Capital – At June 30, 2013, as compared to December 31, 2012, stockholders'
  equity decreased $2.4 million, with a corresponding reduction in book value
  per common share of $.95 to $13.39. This is due to a few factors. First,
  stockholders' equity increased for the six month period due to $2.1 million
  in net income after preferred stock dividends and accretion. However, other
  factors reduced stockholders' equity. In May 2013, the Company completed a
  $2 million repurchase of the warrant issued to the United States Department
  of the Treasury in 2009 as part of its Troubled Asset Relief Program's
  Capital Purchase Program. The Treasury no longer has any equity interest in
  the Company which eliminates any potential shareholder dilution that would
  have occurred had the warrant been exercised rather than repurchased.  Also,
  as a result of increases in market interest rates on many debt securities
  during the quarter, the Company's unrealized gains on available-for-sale
  securities declined $2.7 million at June 30, 2013 as compared to December
  31, 2012. Despite the reduction in stockholders' equity, the Company and the
  Bank's regulatory capital ratios remain strong and well above regulatory

  Non-performing assets – Compared to December 31, 2012, the Company
  experienced an improvement in nonperforming assets which were $19.7 million
  as of June 30, 2013. Nonperforming assets as a percentage of total assets
  was 3.08% as of June 30, 2013 compared to 3.01% as of December 31, 2012. The
  percentage increase is only due to the Company's decline in total
  assets. 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 sales of Missouri low-income housing tax credits
  * Prepayment penalty on repurchase agreements
  * Charge for loss on deposit accounts
  * Provision for loan loss expense
  * Provision (credit) for income taxes 

A reconciliation of the Company's net income to its operating income for the
three and six months ended June 30, 2013 and 2012 is set forth below.

                                       Three Months Ended  Six Months Ended
                                       30-Jun-13 30-Jun-12 30-Jun-13 30-Jun-12
                                       (Dollar amounts are in thousands)
Net income                              $ 1,567   $ 344     $ 2,520   $ 1,179
Add back:                                                             
Provision (credit) for income taxes     521       (192)     753       (112)
Income before income taxes              2,088     152       3,273     1,067
Add back/(subtract):                                                  
Gains on investment securities          (116)     (70)      (205)     (107)
Loss on foreclosed assets held for      76        71        148       172
Gain on sale of low-income housing tax  (1,441)   --        (1,441)   -- 
Prepayment penalty on repurchase        1,510     --        1,510     -- 
Loss on deposit accounts                --        --        231       -- 
Provision for loan loss expense         250       2,100     650       3,000
                                        279       2,101     893       3,065
Operating income                        $ 2,367   $ 2,253   $ 4,166   $ 4,132

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 a Loan Production Office in Webster
County. 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

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:                                               
                            Three Months Ended        Six Months Ended
Operating Data:             30-Jun-13    30-Jun-12    30-Jun-13    30-Jun-12
                            (Dollar amounts are in thousands, except per share
Total interest income        $ 6,467      $ 6,846      $ 12,886     $ 13,712
Total interest expense       1,281        1,732        2,709        3,582
Net interest income          5,186        5,114        10,177       10,130
Provision for loan losses    250          2,100        650          3,000
Net interest income after    4,936        3,014        9,527        7,130
provision for loan losses
Noninterest income           2,684        1,040        3,704        1,887
Noninterest expense          5,532        3,902        9,958        7,950
Income before income taxes   2,088        152          3,273        1,067
Provision (credit) for       521          (192)        753          (112)
income taxes
Net income                   $ 1,567      $ 344        $ 2,520      $ 1,179
Preferred stock dividends    198          398          397          679
and discount accretion
Net income (loss) available  $ 1,369      $ (54)       $ 2,123      $ 500
to common shareholders
Basic income (loss) per      $ 0.50       $ (0.02)     $ 0.78       $ 0.18
common share
Diluted income (loss) per    $ 0.49       $ (0.02)     $ 0.76       $ 0.17
common share
Annualized return on        0.97%        0.21%        0.78%        0.37%
average assets
Annualized return on        12.33%       2.16%        9.91%        4.33%
average equity
Net interest margin         3.42%        3.39%        3.37%        3.38%
Efficiency ratio            70.29%       63.41%       71.74%       66.16%
                                         As of        As of         
Financial Condition Data:                30-Jun-13    31-Dec-12     
Cash and cash equivalents                 $ 23,855     $ 41,663     
Investments                               109,349      102,162      
Loans, net of allowance for
loan losses 6/30/2013 --                  460,943      468,376      
$8,377; 12/31/2012 --
Other assets                              46,050       48,231       
Total assets                              $ 640,197    $ 660,432    
Deposits                                  $ 511,889    $ 500,015    
FHLB advances                             52,950       68,050       
Subordinated debentures                   15,465       15,465       
Securities sold under                     10,000       25,000       
agreements to repurchase
Other liabilities                         1,431        1,034        
Total liabilities                         591,735      609,564      
Stockholders' equity                      48,462       50,868       
Total liabilities and                     $ 640,197    $ 660,432    
stockholders' equity
Equity to assets ratio                   7.57%        7.70%         
Book value per common share               $ 13.39      $ 14.34      
Nonperforming assets                      $ 19,748     $ 19,861     

CONTACT: Shaun A. Burke, President & CEO or Carter M. Peters, CFO
         1341 W. Battlefield
         Springfield, MO 65807
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