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

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

SPRINGFIELD, Mo., Oct. 16, 2013 (GLOBE NEWSWIRE) -- Guaranty Federal
Bancshares, Inc., (Nasdaq:GFED), the holding company (the "Company") for
Guaranty Bank, today announces the following results for its third quarter
ended September 30, 2013.

Third Quarter 2013 Financial Highlights

  oBasic and diluted earnings per common share for the quarter increased to
    $0.42 and $0.41, respectively, compared to basic and diluted loss per
    common share of $(.34) for the same quarter in 2012.
  oNet income increased to $1.3 million for the quarter compared to a net
    loss of $(717,000) for the same quarter in 2012.
  oAnnualized return on average assets increased to .85% for the quarter
    compared to (.44%) for the same quarter in 2012.
  oAnnualized return on average equity increased to 10.93% for the quarter
    compared to (5.48%) for the same quarter in 2012.
  oNet interest margin increased to 3.39% for the quarter compared to 3.34%
    for the same quarter in 2012.
  oEfficiency ratio improved to 66.88% for the quarter compared to 74.33% for
    the same quarter in 2012.
  oTransaction deposit account balances as of September 30, 2013 increased
    $29.0 million, or 8.29%, since December 31, 2012.
  oLong-term borrowings (classified as non-core funding liabilities) declined
    $30.1 million as of September 30, 2013 compared to December 31, 2012.

Net income for the third quarter ended September 30, 2013 was $1,346,000 as
compared to a net loss of $(717,000) for the same quarter in 2012. This is a
decline from the $1,568,000 earned in the second quarter of 2013. After
preferred stock dividends and accretion, diluted earnings per common share was
$0.41 for the quarter, an increase from the loss per diluted common share of
$(.34) during the same quarter in 2012 and a decrease from the $.49 per
diluted common share earned in the second quarter of 2013.

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

  Net interest income –Total net loans have declined $8.8 million since
  December 31, 2012 which has had a negative impact on interest income and net
  interest margin. Weak loan demand, combined with an extended low interest
  rate environment, has made it difficult to maintain loan balances and loan
  yield. Despite the decline in loan balances and yield, net interest margin
  has increased over the prior year quarter due to the Company's efforts to
  grow lower cost core deposits and reduce the overall cost of funds. Also,
  the Company has benefited from the elimination of $30.1 million of higher
  cost wholesale funding balances (Federal Home Loan Bank advances and
  repurchase agreements) during the nine month period ended September 30,
  2013. The average cost of funds for the quarter was .89% compared to 1.20%
  for the same quarter in 2012.

  Non-interest income – Non-interest income increased $499,000 over the prior
  year quarter. The Company experienced a reduction in losses on foreclosed
  assets for sale compared to the prior year quarter. Losses of $28,000 were
  recognized during the quarter compared to $1.0 million recognized during the
  prior year quarter. Offsetting this improvement was a reduction in gains on
  sales of tax credits and loans. The Company recognized no gains on sales of
  tax credits for the quarter, however, recorded gains on sales of tax credits
  of $282,000 during the prior year quarter. Also, due to increasing mortgage
  rates, fixed-rate mortgage volume declined resulting in a $244,000 reduction
  of income from sales of loans compared to the prior year quarter.

  Non-interest expense – Non-interest expense decreased $93,000 over the prior
  year quarter primarily due to the reduction in legal expenses associated
  with problem assets. Legal expense declined $97,000 during the quarter as
  compared to 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 $200,000 during the quarter, a decrease from the $2.6
  million recognized in the prior year quarter.The allowance for loan losses
  as of September 30, 2013 was 1.81% of gross loans outstanding (excluding
  mortgage loans held for sale) compared to 1.84% as of December 31, 2012.

  Capital – At September 30, 2013, as compared to December 31, 2012,
  stockholders' equity decreased $1.2 million, with a corresponding reduction
  in book value per common share of $.53 to $13.81.This is due to a few
  factors.First, stockholders' equity increased for the nine month period due
  to $3.3 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. As a result of increases in market interest
  rates on many debt securities during the second and third quarters, the
  banking industry has experienced a sharp decline in the value of its
  investment portfolios.The Company's unrealized gains on available-for-sale
  securities declined $2.7 million at September 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 requirements.

  Non-performing assets – Compared to December 31, 2012, the Company has
  experienced a $2.7 million increase in nonperforming assets to $22.5 million
  as of September 30, 2013.Nonperforming assets as a percentage of total
  assets was 3.52% as of September 30, 2013 compared to 3.01% as of December
  31, 2012.Reducing non-performing assets has been and will continue to be a
  significant 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
  *Professional fees expense incurred for a Registration Statement on Form
    S-1 required for the Treasury's proposed auction of the Company's
    preferred stock under the CPP.
  *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 nine months ended September 30, 2013 and 2012 is set forth below.

                                      Three Months Ended  Nine Months Ended
                                      9/30/2013 9/30/2012 9/30/2013 9/30/2012
                                      (Dollar amounts are in thousands)
                                                                 
Net income                             $1,346  $(717)  $3,866  $462
                                                                 
Add back:                                                         
Provision (credit) for income taxes   440      (466)    1,193    (578)
Income before income taxes             1,786    (1,183)  5,059    (116)
                                                                 
Add back/(subtract):                                              
Gains on investment securities        (14)     (31)     (219)    (138)
Loss on foreclosed assets held for    28       1,033    176      1,205
sale
Gain on sale of low-income housing    --      (282)    (1,441)  (282)
tax credits
Prepayment penalty on repurchase      --      --      1,510    --
agreements
Professional fees incurred with Form  --      221      --      221
S-1 filing
Loss on deposit accounts              --      --      231      --
Provision for loan loss expense       200      2,600    850      5,600
                                      214      3,541    1,107    6,606
                                                                 
Operating income                       $2,000  $2,358  $6,166  $6,490

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
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:                                           
                           Three Months Ended        Nine Months Ended
Operating Data:             9/30/2013    9/30/2012    9/30/2013    9/30/2012
                           (Dollar amounts are in thousands, except per share
                            data)
                                                               
Total interest income       $6,350     $6,847     $19,236    $20,559
Total interest expense      1,230       1,704       3,939       5,286
Net interest income        5,120       5,143       15,297      15,273
Provision for loan losses   200         2,600       850         5,600
Net interest income
afterprovision for loan    4,920       2,543       14,447      9,673
losses
Noninterest income          876         377         4,580       2,264
Noninterest expense         4,010       4,103       13,968      12,053
                                                               
Income (loss) before income 1,786       (1,183)     5,059       (116)
taxes
Provision (credit) for      440         (466)       1,193       (578)
income taxes
                                                               
Net income (loss)          $1,346     $(717)     $3,866     $462
Preferred stock dividends   199         199         596         878
and discount accretion
Net income (loss) available $1,147     $(916)     $3,270     $(416)
to common shareholders
                                                               
Basic income (loss) per     $0.42      $(0.34)    $1.20      $(0.15)
common share
Diluted income (loss) per   $0.41      $(0.34)    $1.16      $(0.15)
common share
                                                               
Annualized return on        0.85%        (.44%)     0.80%        0.09%
average assets
Annualized return on        10.93%       (5.48%)    10.21%       1.15%
average equity
Net interest margin         3.39%        3.34%        3.38%        3.37%
Efficiency ratio            66.88%       74.33%       70.27%       68.73%
                                                               
                                       As of        As of        
Financial Condition Data:               9/30/2013    12/31/2012   
                                                               
Cash and cash equivalents               $30,077    $41,663    
Investments                             105,955     102,162     
Loans, net of allowance for
loan losses9/30/2013 --                459,594     468,376     
$8,473; 12/31/2012 --
$8,740
Other assets                            44,877      48,231      
Total assets                           $640,503   $660,432   
                                                               
Deposits                                $510,724   $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                       1,700       1,034       
Total liabilities                      590,839     609,564     
Stockholders' equity                    49,664      50,868      
Total liabilities and                  $640,503   $660,432   
stockholders' equity
                                                               
Equity to assets ratio                  7.75%        7.70%        
Book value per common share             $13.81     $14.34     
Nonperforming assets                    $22,519    $19,861    

CONTACT: Shaun A. Burke, President & CEO or Carter M. Peters, CFO
         1341 W. Battlefield
         Springfield, MO 65807
         417.520.4333
 
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