Guaranty Federal Bancshares, Inc. Announces Preliminary First Quarter 2014 Financial Results

Guaranty Federal Bancshares, Inc. Announces Preliminary First Quarter 2014
Financial Results

SPRINGFIELD, Mo., April 16, 2014 (GLOBE NEWSWIRE) -- Guaranty Federal
Bancshares, Inc., (Nasdaq:GFED), the holding company (the "Company") for
Guaranty Bank, today announces the following results for its first quarter
ended March 31, 2014.

First Quarter 2014 Financial Highlights
                               Quarter ended
                               March 31, 2014  December 31, March 31, 2013
                                                2013
                               (Dollar amounts in thousands, except per share
                                data)
Net income available to common  $1,055        $1,175      $754
shareholders
                                                           
Diluted income per common share $0.33         $0.42       $0.25
Common shares outstanding       4,260,125      2,732,355    2,732,691
Average common shares           3,239,650      2,816,906    2,967,328
outstanding , diluted
                                                           
Annualized return on average    0.83%           0.87%         0.59%
assets
Annualized return on average    9.34%           10.81%        7.47%
equity
Net interest margin             3.59%           3.63%         3.33%
Efficiency ratio                71.49%          59.50%        73.63%
                                                           
Tangible common equity to       8.80%           6.19%         6.09%
tangible assets
Tangible book value per common  $13.21        $14.04      $14.49
share
Nonperforming assets to total   2.45%           3.17%         3.01%
assets

Net income for the quarter ended March 31, 2014 was $1,301,000 as compared to
$953,000 for the same quarter in 2013. After preferred stock dividends and
accretion, diluted earnings per common share was $0.33 for the quarter, an
increase from the $0.25 earned during the same quarter in 2013.

The following key issues contributed to the first quarter results as compared
to the same period in 2013:

Net interest income – On the asset side, the Company continues to have
pressures on interest income primarily caused by weak loan demand and
increasing competition on new and existing credit relationships. The declines
in loan balances and increased competition in loan pricing has significantly
impacted the ability to maintain loan yield.However, for the first quarter,
the Company's asset yield increased to 4.34% compared to the 4.28% during the
same period in 2013.This is primarily due to the recognition of approximately
$335,000 of interest income during the quarter on the payoff of a credit
relationship that had been classified as non-accrual.

On the liability side, over the last several quarters the Company's cost of
funds improvement has played a major role in its net interest margin
expansion.Bank wide efforts to grow lower cost core deposit relationships
have been successful and allowed for planned reductions in non-core, wholesale
funding and higher cost retail certificates of deposit. The average cost of
funds for the quarter was .83% compared to 1.03% during the same period in
2013.

Non-interest income – Non-interest income declined $203,000 during the quarter
primarily due to a $263,000 decrease in the Company's gains on sales of loans
in the secondary market compared to the same period in 2013.Long-term
interest rates increased significantly during the latter half of 2013 and into
the first quarter of 2014, dramatically reducing consumer demand for long-term
secondary market mortgage loans. With mortgage interest rates expected to
remain near to or climb higher than current levels, management anticipates
that secondary market income will remain a significant challenge compared to
income recognized in recent quarters.

The quarter was also negatively impacted by the reduction in gains recognized
on its investment portfolio.The Company recognized gains of $3,000 on various
investments during the quarter compared to $89,000 in the prior year quarter.

Offsetting the decline in mortgage income and investment gains was an
improvement in losses on foreclosed assets and increased income from deposit
accounts.Losses on foreclosed assets held for sale during the quarter
amounted to $16,000 compared to $72,000 during the same period in 2013.
Service charges on deposit accounts and debit and credit card interchange
income increased a combined $56,000 during the quarter compared to the same
period in 2013.

Non-interest expense – Non-interest expense decreased $81,000 over the prior
year quarter which is attributable to a decline in salaries and employee
benefits of $87,000.This is partially due to a decline in the overall number
of staff compared to the prior year quarter and also a decline in mortgage
commissions from reduced mortgage volume noted above.

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 decline from the $400,000
recognized in the prior year quarter.In addition to the provision for loan
loss expense of $200,000 recorded by the Company, loan charge-offs of specific
loans (classified as nonperforming) exceeded recoveries by $240,000 during the
quarter.Also, the Company experienced a decline in loan balances during the
first quarter, as well as fiscal year 2013, that has reduced the allowance for
loan loss reserve requirements. The allowance for loan losses as of March 31,
2014 was 1.71% of gross loans outstanding (excluding mortgage loans held for
sale) compared to 1.65% as of December 31, 2013. Management believes the
allowance for loan losses is at a sufficient level to provide for potential
loan losses in the Bank's existing loan portfolio.

Capital – At March 31, 2014, stockholders' equity increased to $68,269,000
compared to $50,355,000 at December 31, 2013.Several factors influenced the
changes in the Company's capital position during the quarter.

First, stockholders' equity increased due to $1,055,000 in net income after
preferred stock dividends and accretion for the quarter.

Secondly, on March 7, 2014, the Company closed an underwritten offering of its
common stock. The Company raised approximately $17.2 million in gross proceeds
by issuing 1,499,999 shares of its common stock, which includes the full
exercise of the over-allotment option granted to the underwriters of 195,652
shares, at a price to the public of $11.50 per share. As of quarter end, net
proceeds from the sale of the shares, after underwriting discounts and
offering expenses incurred to date, were approximately $15.9 million. The
Company intends to use the net proceeds from the offering (i) to redeem the
remaining 12,000 shares of the Company's Series A Preferred Stock (further
discussed below) and (ii) for working capital and for general corporate
purposes, including potential future acquisitions.

Finally, as a result of decreases in market interest rates on many debt
securities during the first quarter, the Company experienced an improvement in
the value of its investment portfolio.The equity portion of the Company's
unrealized gains on available-for-sale securities increased $808,000 at March
31, 2014 as compared to December 31, 2013.

Due to the increase in stockholders' equity and the corresponding increase in
the number of common shares outstanding discussed above, the Company's capital
ratios have significantly changed.Tangible common equity as a percentage of
tangible assets increased 261 basis points to 8.80% at March 31, 2014 compared
to 6.19% at December 31, 2013.From the increase in common shares issued, the
Company experienced a reduction of $0.83 in book value per common share to
$13.21 at March 31, 2014.Finally, from a regulatory capital standpoint, all
capital ratios for both the Company and the Bank remain strong and well above
regulatory requirements.

Subsequent to quarter end, the Company received approval from the Board of
Governors of the Federal Reserve System to redeem the Company's $12 million of
Series A Preferred Stock that currently carries a coupon rate of 9.0% per
annum.The Series A Preferred Stock was originally issued to the U.S.
Department of the Treasury in January 2009 as part of their Troubled Asset
Relief Program's Capital Purchase Program and was sold to other investors in
April 2013 through a public auction.The Company has provided the holders of
the Series A Preferred Stock with a formal notice of redemption and given its
intentions to redeem on May 7, 2014.

The planned redemption will have no significant impact on the Company's
tangible common equity or tangible book value measurements.However, it will
improve the Company's net income available to common shareholders in future
quarters by eliminating all preferred stock dividends.

Nonperforming assets – The Company reduced its nonperforming assets to
$15,626,000 as of March 31, 2014 as compared to $19,670,000 at December 31,
2013. This decline during the quarter is primarily due to the payoff of a
$3,700,000 non-accrual loan relationship.The subject credit relationship had
been in nonaccrual status for approximately three years.

Nonperforming assets as a percentage of total assets was 2.45% as of March 31,
2014 compared to 3.17% as of December 31, 2013 and 3.01% as of March 31, 2013.

Reducing nonperforming assets will continue to be a significant initiative 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
  *Charge for loss on deposit accounts
  *Provision for loan losses
  *Provision for income taxes

A reconciliation of the Company's net income to its operating income for the
quarters ended March 31, 2014 and 2013 is set forth below.

                                        Quarter ended
                                        March 31, 2014   March 31, 2013
                                        (Dollar amounts are in thousands)
                                                        
Net income                               $1,301         $953
                                                        
Add back:                                                
Provision for income taxes              231             232
Income before income taxes               1,532           1,185
                                                        
Add back/(subtract):                                     
Gains on investment securities          (3)             (89)
Loss on foreclosed assets held for sale 16              72
Loss on deposit accounts                --             231
Provision for loan losses               200             400
                                        213             614
                                                        
Operating income                         $1,745         $1,799
                                                        

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 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
statements.

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
Operating Data:                              March 31, 2014  March 31, 2013
                                            (Dollar amounts are in thousands,
                                            except per share data)
                                                           
Total interest income                        $6,360        $6,419
Total interest expense                       1,101          1,428
Net interest income                         5,259          4,991
Provision for loan losses                    200            400
Net interest income afterprovision for loan 5,059          4,591
losses
Noninterest income                           817            1,020
Noninterest expense                          4,344          4,426
Income before income taxes                   1,532          1,185
Provision for income taxes                   231            232
Net income                                   1,301          953
Preferred stock dividends and discount       246            199
accretion
Net income available for common shareholders $1,055        $754
Net income per common share-basic            $0.33         $0.28
Net income per common share-diluted          $0.33         $0.25
                                                           
Annualized return on average assets          0.83%           0.59%
Annualized return on average equity          9.34%           7.47%
Net interest margin                          3.59%           3.33%
Efficiency ratio                             71.49%          73.63%
                                                           
                                            At              At
Financial Condition Data:                    March 31, 2014  December 31, 2013
Cash and cash equivalents                    $49,243       $12,303
Investments                                  99,201         97,772
Loans, net of allowance for loan losses                     
3/31/2014 - $7,761; 12/31/2013 - $7,802     446,765        465,003
Other assets                                 43,872         44,810
Total assets                                $639,081      $619,888
                                                           
Deposits                                     $491,401      $487,319
Advances from correspondent banks            52,350         55,350
Subordinated debentures                      15,465         15,465
Securities sold under agreements to          10,000         10,000
repurchase
Other liabilities                            1,596          1,399
Total liabilities                           570,812        569,533
Stockholders' equity                         68,269         50,355
Total liabilities and stockholders' equity  $639,081      $619,888
Equity to assets ratio                       10.68%          8.12%
Tangible book value per common share         $13.21        $14.04
Nonperforming assets                         $15,626       $19,670
                                                           

CONTACT: Shaun A. Burke, President and CEO
         or Carter M. Peters, CFO
         1341 W. Battlefield
         Springfield, MO 65807
         417-520-4333

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