Guaranty Federal Bancshares, Inc. Announces Preliminary 2013 Financial Results

Guaranty Federal Bancshares, Inc. Announces Preliminary 2013 Financial Results

SPRINGFIELD, Mo., Jan. 21, 2014 (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, 2013.

Fourth Quarter 2013 Financial Highlights

                               Quarter ended
                               12/31/2013      9/30/2013       12/31/2012
                               (Dollar amounts in thousands, except per share
Net income available to common  $1,175        $1,147        $1,283
Diluted income per common share $0.42         $0.41         $0.45
Common shares outstanding       2,732,355      2,732,431      2,724,941
Average common shares           2,816,906      2,819,808      2,837,483
outstanding , diluted
Annualized return on average    0.87%           0.85%           0.91%
Annualized return on average    10.81%          10.93%          11.73%
Net interest margin             3.63%           3.39%           3.55%
Efficiency ratio                59.50%          66.88%          64.76%
Tangible book value per common  $14.04        $13.81        $14.34
Nonperforming assets to total   3.17%           3.52%           3.01%

Net income for the fiscal year 2013 was $5,240,000 as compared to $1,944,000
in fiscal year 2012. After preferred stock dividends, diluted earnings per
common share was $1.58 for 2013 as compared to $.30 earned in 2012, an
increase of $1.28 (427%).

The following key issues contributed to the fourth quarter results as compared
to the same period in 2012:

  Net interest income – As a result of an environment with weak loan demand
  and continued low interest rates, the Company experienced significant
  pressures on interest income.Throughout fiscal year 2013, the declines in
  loan balances and increased competition in loan pricing has significantly
  elevated the challenge to improve or maintain loan yield.For the quarter,
  the Company's asset yield declined to 4.39% from 4.58% during the same
  period in 2012.However, the Company has been able to hold net interest
  income steady and expand its net interest margin. During the quarter, the
  Company recognized approximately $200,000 of interest income on a credit
  relationship that had been classified as non-accrual.This credit
  relationship was fully paid off during the quarter.Margin also improved due
  to the continued decline in the Company's cost of funds.Bank wide efforts
  to grow lower cost core deposit relationships have been successful allowing
  reductions in non-core, wholesale funding and higher cost retail
  certificates of deposit. The average cost of funds for the quarter was .85%
  compared to 1.11% during the same period in 2012.

  Non-interest income – Non-interest income declined $253,000 during the
  quarter primarily due to a $383,000 decrease in the Company's gains on sales
  of loans in the secondary market from the same period in 2012.Long-term
  interest rates increased substantially over the last six months of 2013,
  dramatically reducing consumer demand for long-term secondary market
  mortgage loans. With mortgage interest rates expected to remain near or
  higher than current levels, management anticipates that secondary market
  income will remain a significant challenge compared to income recognized in
  recent quarters.Offsetting the decline in mortgage income was an increase
  of $73,000 in service charges and debit/credit card income compared to the
  same period in 2012.

  Non-interest expense – Non-interest expense decreased $499,000 over the
  prior year quarter.First, the Company received proceeds on an insurance
  claim relating to a loss on deposit accounts recognized in the first quarter
  of 2013 ($231,000). As of December 31, 2013, the Company received a total of
  $291,000 on its claim representing $217,000 of the previously recognized
  loss plus $74,000 in reimbursable expenses incurred throughout 2013.These
  amounts were recognized as an offset to non-interest expense to the extent
  they were incurred in 2013.Also, impacting the quarter over quarter
  results were losses recognized during the fourth quarter of 2012 for
  settlements of two investor indemnification claims associated with six
  secondary market loans.Total 2012 expenses incurred on the settlements were

  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 $700,000 during the quarter, an increase from the $350,000
  recognized in the prior year quarter.In addition to the provision for loan
  loss expense of $700,000 recorded by the Company, loan charge-offs of
  specific loans (classified as nonperforming) exceeded recoveries by
  $1,371,000 during the quarter. Also, the Company experienced a decline in
  loan balances during fiscal year 2013 that reduced allowance for loan loss
  reserve requirements. The allowance for loan losses as of December 31, 2013
  was 1.65% of gross loans outstanding (excluding mortgage loans held for
  sale) compared to 1.84% as of December 31, 2012. Management believes the
  allowance for loan losses is at a level to be sufficient in providing for
  potential loan losses in the Bank's existing loan portfolio.

  Capital – At December 31, 2013, as compared to December 31, 2012,
  stockholders' equity decreased $513,000, with a corresponding reduction in
  book value per common share of $.30 to $14.04.This is due to a few
  factors.First, stockholders' equity increased due to $4.4 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.Additionally, as a result of increases in market interest
  rates on many debt securities during the second and third quarters of 2013,
  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 $3.3 million at December 31, 2013 as compared to
  December 31, 2012.

  Despite the reduction in stockholders' equity, the Company's tangible common
  equity as a percentage of tangible assets increased 27 basis points to 6.19%
  at December 31, 2013 compared to 5.92% at December 31, 2012.Also, the
  regulatory capital ratios for both the Company and the Bank remain strong
  and well above regulatory requirements.

  Nonperforming assets – The Company reduced its nonperforming assets to $19.7
  million as of December 31, 2013 as compared to $22.5 million at September
  30, 2013. The balance at December 31, 2013 is also a decline of $200,000
  from its level at December 31, 2012.Nonperforming assets as a percentage of
  total assets was 3.17% as of December 31, 2013 compared to 3.52% as of
  September 30, 2013 and 3.01% as of December 31, 2012.Reducing nonperforming
  assets will continue to be a significant focus of the Company.

"We are pleased with the improvement in margin and profitability given the
challenging operating environment. Our experienced team remains focused on
building profitable relationships amidst the strong competition for equitably
priced quality loans. In 2013, we were successful in reducing leverage and
wholesale funding due to core deposit growth initiatives and we are
well-positioned for growth as the economy improves," said Shaun Burke,
President and Chief Executive Officer. "Nonperforming assets have also
improved significantly since year-end. We received a payment of just over $1
million on a non-performing loan and anticipate the $2.8 million balance of
the relationship to be paid in full in the near future. These payments will
reduce nonperforming credits to a manageable level and the lowest balance for
the Company since the recession began."

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 or losses on sales of available-for-sale securities
  *Gains or 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
  *Charge for loss on deposit accounts and subsequent proceeds received on
    insurance claim
  *Prepayment penalties on early redemption of repurchase agreements
  *Provision for loan losses
  *Provision (credit) for income taxes

A reconciliation of the Company's net income to its operating income for the
quarters and years ended December 31, 2013 and 2012 is set forth below.

                         Quarter ended              Year ended
                         12/31/2013    12/31/2012   12/31/2013   12/31/2012
                         (Dollar amounts in thousands, except per share data)
Net income                $1,374      $1,482     $5,240     $1,944
Add back:                                                      
Provision (credit) for    437          447         1,630       (131)
income taxes
Income before income      1,811        1,929       6,870       1,813
Add back/(subtract):                                           
Gains on investment       (1)          (31)        (220)       (168)
Loss on foreclosed assets 99           186         275         1,391
held for sale
Gain on sale of
low-income housing tax    --          --         (1,441)     (282)
Professional fees
incurred with Form S-1    --          --         --         221
Settlements of investor
indemnification claims    --          147         --         147
associated with secondary
market loans
Loss on deposit accounts  --          --         231         --
Proceeds received on      (217)        --         (217)       --
insurance claim
Prepayment penalty on     --          --         1,510       --
repurchase agreements
Provision for loan losses 700          350         1,550       5,950
                         581          652         1,688       7,259
Operating income          $2,392      $2,581     $8,558     $9,072

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 Company may from time to time make written or oral "forward-looking
statements," including statements contained in the Company's filings with the
SEC, in its reports to stockholders and in other communications by the
Company, which are made in good faith by the Company pursuant to the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995.
When used in this prospectus, words such as "anticipates," "estimates,"
"believes," "expects," and similar expressions are intended to identify such
forward-looking statements but are not the exclusive means of identifying such

These forward-looking statements involve risks and uncertainties, such as
statements of the Company's plans, objectives, expectations, estimates and
intentions, that are subject to change based on various important factors
(some of which are beyond the Company's control). The following factors, among
others, could cause the Company's financial performance to differ materially
from the plans, objectives, expectations, estimates and intentions expressed
in such forward-looking statements:

  *the strength of the United States economy in general and the strength of
    the local economies in which we conduct operations;
  *the effects of, and changes in, trade, monetary and fiscal policies and
    laws, including interest rate policies of the Federal Reserve, inflation,
    interest rates, market and monetary fluctuations;
  *the timely development of and acceptance of new products and services and
    the perceived overall value of these products and services by users,
    including the features, pricing and quality compared to competitors'
    products and services;
  *the willingness of users to substitute competitors' products and services
    for our products and services;
  *our success in gaining regulatory approval of our products and services,
    when required;
  *the impact of changes in financial services laws and regulations
    (including laws concerning taxes, banking, securities and insurance);
  *technological changes;
  *the ability to successfully manage and integrate any future acquisitions
    if and when our board of directors and management conclude any such
    acquisitions are appropriate;
  *changes in consumer spending and saving habits;
  *our success at managing the risks resulting from these factors; and
  *other factors set forth in reports and other documents filed by the
    Company with the SEC from time to time.

Financial Highlights:                                         
                     Quarter ended                Year ended
Operating Data:       12/31/2013     12/31/2012    12/31/2013    12/31/2012
                     (Dollar amounts are in thousands, except per share data)
Total interest income $6,619       $7,047      $25,855     $27,606
Total interest        1,158         1,572        5,097        6,858
Net interest income   5,461         5,475        20,758       20,748
Provision for loan    700           350          1,550        5,950
Net interest income
after provision for   4,761         5,125        19,208       14,798
loan losses
Noninterest income    739           992          5,319        3,256
Noninterest expense   3,689         4,188        17,657       16,241
Income before income  1,811         1,929        6,870        1,813
Provision (credit)    437           447          1,630        (131)
for income taxes
Net income           $1,374       $1,482      $5,240      $1,944
Preferred stock
dividends and         199           199          795          1,076
discount accretion
Net income available
to common             $1,175       $1,283      $4,445      $868
Basic income per      $0.43        $0.47       $1.63       $0.32
common share
Diluted income per    $0.42        $0.45       $1.58       $0.30
common share
Annualized return on  0.87%          0.91%         0.82%         0.30%
average assets
Annualized return on  10.81%         11.73%        10.34%        3.67%
average equity
Net interest margin   3.63%          3.55%         3.44%         3.42%
Efficiency ratio      59.50%         64.76%        67.71%        67.66%
Financial Condition                 As of         As of         
                                   12/31/2013    12/31/2012    
Cash and cash                       $12,303     $41,663     
Investments and
interest bearing                    97,772       102,162      
Loans, net of
allowance for loan                                            
12/31/2013 - $7,802;                465,003      468,376      
12/31/2012 - $8,740
Other assets                        44,810       48,231       
Total assets                        $619,888    $660,432    
Deposits                            $487,319    $500,015    
Advances from                       55,350       68,050       
correspondent banks
Subordinated                        15,465       15,465       
Securities sold under agreements to  10,000       25,000       
Other liabilities                   1,399        1,034        
Total liabilities                   569,533      609,564      
Stockholders' equity                50,355       50,868       
Total liabilities and               $619,888    $660,432    
stockholders' equity
Equity to assets                    8.12%         7.70%         
Tangible book value                 $14.04      $14.34      
per common share
Nonperforming assets                $19,670     $19,861     

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