-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ElYzMHfEyLVKizpcRHZS0kuqKmHrZmWTpyQuwXoWq/bqwMw0OvkZZq+vTxyWRLTW y0y4cRfC065y5ARJDlQNrg== 0000946275-00-000078.txt : 20000211 0000946275-00-000078.hdr.sgml : 20000211 ACCESSION NUMBER: 0000946275-00-000078 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000210 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GUARANTY FEDERAL BANCSHARES INC CENTRAL INDEX KEY: 0001046203 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 431792717 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23325 FILM NUMBER: 532068 BUSINESS ADDRESS: STREET 1: 1341 WEST BATTLEFIELD CITY: SPRINGFIELD STATE: MO ZIP: 65807 BUSINESS PHONE: 4175204333 MAIL ADDRESS: STREET 1: 1341 WEST BATTLEFIELD CITY: SPRINGFIELD STATE: MO ZIP: 65807 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended December 31, 1999 ----------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission number 0-23325 ------- Guaranty Federal Bancshares, Inc. --------------------------------------- (Exact name of registrant as specified in its charter) Delaware 43-1792717 - ------------------------ --------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 1341 West Battlefield Springfield, Missouri 65807 - ------------------------- --------------------- (Address of principal executive offices) (Zip Code) Telephone Number: (417) 889-2494 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ ----- Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Class Outstanding at February 4, 2000 ----- ------------------------------- Common Stock, Par Value $0.10 5,252,777 Shares GUARANTY FEDERAL BANCSHARES, INC. Form 10-Q TABLE OF CONTENTS Item Page - ---- ---- PART I. Financial Information ----------------------------- 1. Consolidated Financial Statements (Unaudited): Statements of Financial Condition 3 Statements of Income 4 Statements of Changes in Stockholders' Equity 5 Statements of Cash Flow 7 Notes to Consolidated Financial Statements 8 2. Management's Discussion and Analysis of Financial Condition and 11 Results of Operations 3. Quantitative and Qualitative Disclosures about Market Risk 19 PART II. Other Information -------------------------- 1. Legal Proceedings 21 2. Changes in Securities and Use of Proceeds 21 3. Defaults Upon Senior Securities 21 4. Submission of Matters to Vote of Security-holders 21 5. Other Information 22 6. Exhibits and Reports on Form 8-K 22 Signatures 23 2 GUARANTY FEDERAL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION DECEMBER 31, 1999 (UNAUDITED) AND JUNE 30, 1999
ASSETS 12/31/99 6/30/99 ------ -------- ------- Cash $ 2,399,141 1,656,648 Interest-bearing deposits in other financial institutions 3,918,829 8,032,473 ------------- --------- Cash and cash equivalents 6,317,970 9,689,121 Available-for-sale securities 7,415,065 8,951,175 Held-to-maturity securities 9,571,276 15,394,643 Mortgage loans held for sale 495,933 769,074 Loans receivable, net 284,446,254 263,499,778 Accrued interest receivable: Loans 1,550,749 1,459,508 Investments 118,570 297,431 Prepaid expenses and other assets 6,328,065 5,671,845 Foreclosed assets held for sale -- 101,546 Premises and equipment 6,360,380 7,365,392 ------------- --------- $ 322,604,262 313,199,513 ============= =========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ LIABILITIES Deposits $ 143,196,344 141,137,154 Federal Home Loan Bank advances 115,835,718 104,794,640 Advances from borrowers for taxes and insurance 449,201 1,195,545 Accrued expenses and other liabilities 466,060 499,221 Accrued interest payable 560,661 543,641 Income taxes payable 425,800 235,587 ------------- --------- Deferred income taxes 980,780 1,360,503 ------------- --------- 261,914,564 249,766,291 ------------- --------- STOCKHOLDERS' EQUITY Common Stock: $0.10 par value; authorized 10,000,000 shares; issued; 12/31/99 - 6,247,329 shares, 6/30/99 - 6,245,775 shares 624,733 624,578 Additional paid-in capital 47,651,050 47,366,264 Unearned ESOP shares (2,985,260) (3,100,080) Retained earnings, substantially restricted 23,906,375 23,236,009 Accumulated other comprehensive income Unrealized appreciation on available-for-sale securities, net of income taxes; 12/31/99 - $1,577,514, 6/30/99 - $2,026,448 2,022,686,038 3,438,826 ------------- --------- 71,882,936 71,565,597 Treasury stock, at cost - 12/31/99 - 898,752 shares, 6/30/99- 64 (11,193,238) (8,132,375) ------------- --------- 60,689,698 63,433,222 ------------- --------- $ 322,604,262 313,199,513 ============= ===========
See Notes to Consolidated Financial Statements 3 GUARANTY FEDERAL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF INCOME THREE AND SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998(UNAUDITED)
Three Months Ending Six Months Ending ------------------- ----------------- 12/31/1999 12/31/1998 12/31/1999 12/31/1998 ----------- ----------- ------------ ------------ INTEREST INCOME Loans $ 5,381,790 4,590,813 10,561,689 8,974,029 Investment securities 199,704 441,973 411,671 874,576 Other 150,609 150,205 320,537 268,275 ----------- ----------- ------------ ------------ 5,732,103 5,182,991 11,293,897 10,116,880 ----------- ----------- ------------ ------------ INTEREST EXPENSE Deposits 1,511,475 1,516,084 3,011,053 3,102,268 Federal Home Loan Bank advances 1,609,334 1,173,633 3,094,730 2,089,612 ----------- ----------- ------------ ------------ 3,120,809 2,689,717 6,105,783 5,191,880 ----------- ----------- ------------ ------------ Net Interest Income 2,611,294 2,493,274 5,188,114 4,925,000 Provision for Loan Losses 45,000 45,000 90,000 90,000 ----------- ----------- ------------ ------------ Net Interest Income after Provision for Loan Losses 2,566,294 2,448,274 5,098,114 4,835,000 ----------- ----------- ------------ ------------ NONINTEREST INCOME (LOSS) Service charges 287,372 221,252 559,789 427,152 Late charges and other fees 27,301 25,909 83,912 51,297 Gain (loss) on loans and investment securities 12,737 28,953 (1,849) 38,703 Income (expense) on foreclosed assets (431) (820) 12,941 (6,990) Other income (expense) (34,166) 28,126 11,358 64,166 ----------- ----------- ------------ ------------ 292,813 303,420 666,151 574,328 ----------- ----------- ------------ ------------ NONINTEREST EXPENSE Salaries and employee benefits 879,155 711,315 1,686,213 1,485,160 Occupancy 191,178 198,175 396,270 372,505 SAIF deposit insurance premiums 21,062 20,702 41,134 43,076 Data processing fees 133,560 128,099 247,299 244,417 Advertising 66,011 116,955 156,342 224,851 Other expense 257,605 329,857 554,214 544,891 ----------- ----------- ------------ ------------ 1,548,571 1,505,103 3,081,472 2,914,900 ----------- ----------- ------------ ------------ Income before Income Taxes 1,310,536 1,246,591 2,682,793 2,494,428 Provision for Income Taxes 469,017 426,162 981,176 875,896 ----------- ----------- ------------ ------------ NET INCOME 841,519 820,429 1,701,617 1,618,532 OTHER COMPREHENSIVE INCOME Unrealized appreciation on available- for-sale securities (378,732) 919,135 (752,788) 1,032,501 ----------- ----------- ------------ ------------ COMPREHENSIVE INCOME $ 462,787 1,739,564 948,829 2,651,033 =========== =========== ============ ============ BASIC EARNINGS PER SHARE $ 0.17 $ 0.15 $ 0.33 $ 0.29 =========== =========== ============ ============ DILUTED EARNINGS PER SHARE $ 0.16 $ 0.14 $ 0.33 $ 0.28 =========== =========== ============ ============
See Notes to Consolidated Financial Statements 4 GUARANTY FEDERAL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY SIX MONTHS ENDED DECEMBER 31, 1999 (UNAUDITED)
Accumulated Other Comprehensive Income ------------------ Additional Unearned Appreciation on Common Paid In ESOP Treasury Retained Available-for-Sale Stock Capital Shares Stock Earnings Securities, Net Total --------- ---------- ---------- ---------- ---------- ----------------- -------- Balance, June 30, 1999 $ 624,578 47,366,264 (3,100,080) (8,132,375) 23,236,009 3,438,826 63,433,222 Net income - - - - 1,701,617 - 1,701,617 Dividends on common stock, ($0.20 per share on 5,156,256 shares) - - - - (1,031,251) - (1,031,251) Recognition and Retention Plan (RRP) expense & Restricted Stock Plan (RSP) expense - 247,395 - - - - 247,395 Stock options exercised 155 9,200 - - - - 9,355 Dividends on RRP Stock 6,567 6,567 Treasury stock purchased - - - (3,060,863) - - (3,060,863) Release of ESOP shares - 17,499 114,820 - - - 132,319 Tax liability of RRP shares - 4,125 - - - 4,125 Change in unrealized appreciation on available- for-sale securitites, net of income taxes of $442,114 - - - - - (752,788) (752,788) --------- ---------- ---------- ---------- ---------- --------- ---------- Balance, December 31, 1999 $ 624,733 47,651,050 (2,985,260) (11,193,238) 23,906,375 2,686,038 60,689,698 ========= ========== ========== =========== ========== ========= ==========
See Notes to Consolidated Financial Statements 5 GUARANTY FEDERAL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY SIX MONTHS ENDED DECEMBER 31, 1998 (UNAUDITED)
Accumulated Other Comprehensive Income ------------------ Additional Unearned Appreciation on Common Paid In ESOP Treasury Retained Available-for-Sale Stock Capital Shares Stock Earnings Securities, Net Total --------- ---------- ---------- ---------- ---------- ----------------- -------- Balance, June 30, 1998 $ 622,804 49,016,992 (3,444,540) - 21,682,950 2,811,892 70,690,098 Net Income - - - - 1,618,532 - 1,618,532 Dividends on common stock, ($0.16 per share) - - - - (839,899) - (839,899) Dividends on RRP stock - 7,500 - - - - 7,500 Recognition and Retention Plan (RRP) expense & Restricted Stock Plan (RSP) expense - 263,534 - - - - 263,534 Stock options exercised 66 3,925 - - - - 3,991 RSP stock purchased - (2,373,065) - - - - (2,373,065) Treasury stock purchased - - - (4,280,238) - - (4,280,238) Release of ESOP shares - 52,817 229,640 - - - 282,457 Tax benefit of RRP/RSP shares - 23,554 - - - - 23,554 Change in unrealized appreciation on available- for-sale securities, net of income taxes of $606,389 - - - - - 1,032,501 1,032,501 --------- ---------- ---------- ---------- ---------- --------- ---------- Balance, December 31, 1998 $ 622,870 46,995,257 (3,214,900) (4,280,238) 22,461,583 3,844,393 66,428,965 ========= ========== ========== ========== ========== ========= ==========
6 GUARANTY FEDERAL BANCSHARES, INC CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998 (UNAUDITED)
1999 1998 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,701,617 1,618,532 Items not requiring (providing) cash: Deferred income taxes 80,825 (74,339) Depreciation 215,073 200,386 Provision for loan losses 90,000 90,000 (Gain) loss on loans and investment securities 3,975 (38,703) Loss on sale of premises and equipment 64,298 - Gain on sale of foreclosed assets (13,372) (138) Amortization of deferred income, premiums and discounts 44,519 67,416 RRP/RSP expense 247,395 263,534 Origination of loans held for sale (2,047,971) (8,443,733) Proceeds from sale of loans held for sale 2,317,137 6,011,518 Release of ESOP shares 132,318 282,457 Changes in: Accrued interest receivable 87,620 (26,059) Prepaid expenses and other assets (104,220) (115,443) Accounts payable and accrued expenses (16,141) 281,199 Income taxes payable 190,213 (236,709) ----------------- -------------- Net cash provided by (used in) operating activities 2,993,286 (120,082) ----------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES Net increase in loans (21,073,389) (25,536,974) Principal payments on available-for-sale securities 335,414 737,963 Principal payments on held-to-maturity securities 1,116,999 2,290,661 Purchase of premises and equipment (256,532) (52,326) Proceeds from sale of premises and equipment 982,174 - Purchase of available-for-sale securities (13,878) (394,554) Proceeds from maturities of held-to-maturity securities 4,700,000 1,144,371 Purchase of FHLB stock (552,000) (1,837,300) Proceeds from sale of foreclosed assets 114,918 302,562 Capitalized costs on foreclosed assets - 322 ----------------- -------------- Net cash used in investing activities (14,646,294) (23,345,275) ----------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES Tax benefit of vested RRP shares 4,125 23,554 Stock options exercised 9,355 3,991 Cash dividends paid (1,031,251) (839,899) Cash dividends received on RRP Stock 6,567 7,500 Net increase in demand deposits, NOW accounts and savings accounts 1,007,366 4,924,655 Net increase (decrease) in certificates of deposit 1,051,824 (9,090,475) Proceeds from FHLB advances 19,686,124 40,302,500 Repayments of FHLB advances (8,645,046) (3,555,540) Advances from borrowers for taxes and insurance (746,344) (501,151) RSP stock purchased - (2,373,065) Treasury stock purchased (3,060,863) (4,280,238) ----------------- -------------- Net cash provided by financing activities 8,281,857 24,621,832 ----------------- -------------- INCREASE IN CASH AND CASH EQUIVALENTS (3,371,151) 1,156,475 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,689,121 7,304,923 ----------------- -------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 6,317,970 8,461,398 ================= ==============
7 GUARANTY FEDERAL BANCSHARES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1: Conversion, Reorganization and Stock Issuance --------------------------------------------- On December 30, 1997, Guaranty Federal Bancshares, Inc. completed the conversion from a federally chartered mutual holding company, (formerly Guaranty Federal Bancshares, M. H. C.) to a Delaware-chartered stock corporation. Stockholders' equity increased to $69.5 million primarily due to the conversion in which Guaranty Federal Bancshares, Inc. exchanged 1,880,710 shares of its common stock for all the Bank's common stock not held by Guaranty Federal Bancshares, M. H. C. This exchange ratio was 1.931. In addition 4,340,812 shares at $10.00 per share were sold in the stock offering, including 344,454 shares to the employee stock ownership plan ( the "ESOP"). Total shares of common stock outstanding following the offering and exchange was 6,221,522. In April 1995 Guaranty Federal Savings and Loan Association (the "Association") reorganized from a federally chartered mutual savings and loan association into a federal mutual holding company, Guaranty Federal Bancshares, M. H. C. (the "MHC"). As part of the reorganization, the Association incorporated a de novo federally chartered stock savings bank, Guaranty Federal Savings Bank (the "Bank") and transferred most of its assets and all its liabilities to the Bank. The Bank issued 3,125,000 shares of its common stock (par value $1.00) of which 972,365 shares were sold to parties other than the MHC, thus creating a minority ownership interest in the Bank. The shares had an initial public offering price of $8 per share, resulting in gross sales proceeds of $7,778,920. Costs related to the stock issuance of $654,388 were applied to reduce the gross proceeds. Also $100,000 was transferred to the MHC for the initial capitalization in connection with reorganization. Note 2: Basis of Presentation --------------------- The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. 8 GUARANTY FEDERAL BANCSHARES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 3: Principles of Consolidation --------------------------- The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary, Guaranty Federal Savings Bank and the wholly-owned subsidiary of the Bank, Guaranty Financial Services of Springfield, Inc. Significant intercompany accounts and transactions have been eliminated in consolidation. Note 4: Earnings Per Share ------------------
For three months ended December 31, 1999 For six months ended December 31, 1999 ---------------------------------------- -------------------------------------- Income Shares Per-share Income Shares Per-share Basic EPS Income available to common stockholders $ 841,519 5,083,805 $ 0.17 $ 1,701,617 5,150,035 $ 0.33 ====== Effect of Dilutive Securities Stock Options 53,264 54,599 --------- --------- --------- Income available to common stockholders $ 841,519 5,137,069 $ 0.16 $ 1,701,617 5,204,634 $ 0.33 ========= ========= ====== =========== ========= ======
For three months ended December 31, 1998 For six months ended December 31, 1998 ---------------------------------------- -------------------------------------- Income Shares Per-share Income Shares Per-share Basic EPS Income available to common stockholders $ 820,429 5,572,548 $ 0.15 $ 1,618,532 5,628,249 $ 0.29 Effect of Dilutive Securities Stock Options 66,226 68,289 --------- --------- Income available to common stockholders $ 820,429 5,638,774 $ 0.14 $ 1,618,532 5,696,538 $ 0.28 ========= ========= ====== =========== ========= ======
Options to purchase 5,000, 16,704, 5,000 and 426,515 shares of common stock at $11.75, $12.25, $12.63 and $13.44 per share, respectively, were outstanding during the three months and six months ended December 31, 1999, but were not included in the computation of diluted EPS because the options' exercise price was greater than the average market price of the common shares. 9 GUARANTY FEDERAL BANCSHARES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 5: Benefit Plans ------------- On October 18, 1995, the Bank's stockholders voted to approve both a Recognition and Retention Plan ("RRP") and a Stock Option Plan ("SOP"). On July 22, 1998, the Company's stockholders voted to approve both a 1998 Restricted Stock Plan (" RSP") and a 1998 Stock Option Plan ("1998 SOP"). The RRP and RSP authorized shares to be issued to directors, officers and employees of the Bank. As of December 31, 1999, all of the RRP and RSP shares have been purchased and all except 2,925 shares have been awarded. The Bank is amortizing the RRP and RSP expense over each participant's vesting period and the financial statements reflect $247,395 RRP and RSP expense for the six month period ending December 31, 1999. The SOP and 1998 SOP authorized stock options on shares to be issued to officers and employees of the Bank, as of December 31, 1999 all options except those on 25,263 shares have been granted. The RRP, RSP, SOP and 1998 SOP vest over a five year period. The RRP and SOP have been adjusted to reflect the conversion, reorganization and stock issuance described in Note 1 with all vesting periods remaining unchanged. At December 31, 1999, there were 567,494 unexercised options that have been granted at prices ranging from $5.83 to $13.44 per share and 158,095 RRP and RSP shares were unvested. 10 GUARANTY FEDERAL BANCSHARES, INC. Item 2. Management's Discussion and Analysis of Financial Condition and Results ----------------------------------------------------------------------- of Operations ------------- General - ------- The accompanying Consolidated Financial Statements include the accounts of Guaranty Federal Bancshares, Inc. (the "Company"), and all accounts of its wholly owned subsidiary, Guaranty Federal Savings Bank (the "Bank") and all accounts of the wholly-owned subsidiary of the Bank, Guaranty Financial Services of Springfield, Inc. All significant intercompany transactions and balances have been eliminated in consolidation. However, because the conversion, reorganization and stock issuance of the Company, the Bank and related entities did not occur until December 30, 1997, all results prior to that date reflect the accounts of the Bank and its subsidiary. The Company realized approximately $39.2 million in net proceeds from the stock issuance of which the Company provided $19.9 million to the Bank as capital and the Company provided a loan of $3.44 million to fund the purchase of stock for the employee stock ownership plan. Other than the loan for the ESOP, most of the funds received have been invested in loans. The primary function of the Company has been to monitor its investment in the Bank, as a result, the results of operations of the Company are derived primarily from operations of the Bank. The Bank's results of operations are primarily dependent on net interest margin, which is the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities. The Bank's income is also affected by the level of its noninterest expenses, such as employee salary and benefits, occupancy expenses and other expenses. The following discussion reviews the financial condition at December 31, 1999 and the results of operations for the three months and six months ended December 31, 1999 and 1998. The discussion set forth below, as well as other portions of this Form 10-Q, 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 the Form 10-Q. 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 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; and changes in the general level of interest rates. 11 GUARANTY FEDERAL BANCSHARES, INC. Financial Condition - ------------------- The Bank's total assets increased $9,404,749, or 3.0%, from $313,199,513 as of June 30, 1999, to $322,604,262 as of December 31, 1999. Interest-bearing deposits in other financial institutions decreased $4,113,644, or 51.2% from $8,032,473 as of June 30, 1999, to $3,918,829 as of December 31, 1999, as the funds were used to fund new loans. Securities available-for-sale decreased $1,536,110, or 17.2% from $8,951,175 as of June 30, 1999, to $7,415,065 as of December 31, 1999. This is primarily due to the decrease in fair value of various equity securities. Securities held-to-maturity decreased due to maturities and principal repayments, by $5,823,367, or 37.8%, from $15,394,643 as of June 30, 1999, to $9,571,276 as of December 31, 1999. The Bank continues to hold 96,000 shares of Federal Home Loan Corporation ("FHLMC") stock with a amortized cost of $94,000 in the available-for-sale category. As of December 31, 1999, the gross unrealized gain on the stock was $4,518,000, a decrease from $5,474,000 as of June 30, 1999. Net loans receivable increased by $20,946,476, or 7.9%, from $263,499,778, as of June 30, 1999, to $284,446,254, as of December 31, 1999, and loans held-for-sale decreased by $273,141, or 35.5% from $769,074 as of June 30, 1999 to $495,933 as of December 31, 1999. Growth consisted of loans secured by both owner and non-owner occupied residential real estate, which increased by $10,293,000. In addition construction loans increased by $3,831,000. This was primarily due to an increase of $4,457,000 in loans for the construction of 1-4 family units. Growth in loans receivable is anticipated to continue and represents a major part of the Bank's planned assets growth. Allowance for loan losses increased $85,554 or 3.6% from $2,349,328 of June 30, 1999, to $2,434,882 as of December 31, 1999. The allowance increased mainly due to an increase in the provision for loan losses. The allowance for loan losses as of December 31, 1999 and June 30, 1999 was .86%, and .89% respectively, of net loans outstanding. As of December 31, 1999, the allowance for loan losses was 167.6% of impaired loans versus 259.3% as of June 30, 1999. Fair value of foreclosed assets held-for-sale decreased $101,546 from $101,546 as of June 30, 1999, to $0 as of December 31, 1999. This decrease was due to the sale of all foreclosed assets. The Bank recorded a gain of $13,372 on the sale of these assets. Deposits increased $2,059,190 or 1.5%, from $141,137,154 as of June 30, 1999, to $143,196,344 as of December 31, 1999. For the six months ended December 31, 1999, checking and passbook accounts increased by $1,007,366, or 2.1% while certificates of deposits increased by $1,051,824 or 1.1%. 12 GUARANTY FEDERAL BANCSHARES, INC. Financial Condition, continued - ------------------------------ As a result of the increase in loan demand and the repurchase of Company stock, FHLB advances increased $11,041,078 or 10.5%, from $104,794,640 as of June 30, 1999, to $115,835,718 of December 31, 1999. As of December 31, 1999, the Bank had the ability to borrow an additional $70 million from the FHLB. Advances from borrowers for taxes and insurance decreased $746,344 or 62.4% from $1,195,545 as of June 30, 1999, to $449,201 as of December 31, 1999. The majority of this decrease is due to the payment of 1999 real estate taxes from borrower's escrow accounts. Stockholders' equity (including unrealized appreciation on securities available-for-sale, net of tax) decreased $2,743,524, or 4.3%, from $63,433,222 as of June 30, 1999, to $60,689,698 as of December 31, 1999. This decrease was due to several factors. During this period a total of 256,625 shares of Company stock were repurchased in the open market at a cost of $3,060,863. In addition, dividends in the amount of $1,031,250 ($0.20 per share) were declared and payable, at September 30, 1999, to stockholders' of record as of September 7, 1999. There was also a decrease in the unrealized appreciation on available-for-sale securities of $752,788. On a per share basis, stockholders' equity increased from $11.98 as of June 30, 1999 to $12.02 as of December 31, 1999. Analysis of Core Earnings - ------------------------- The Company's profitability is primarily dependent upon net interest income, which represents the difference between interest and fees earned on loans and debt and equity securities, and the cost of deposits and borrowings. Net interest income is dependent on the difference between the average balances and rates earned on interest-earning assets and the average balances and rates paid on interest-bearing liabilities. Net income is further affected by non-interest income, non-interest expense, and income taxes. 13 The following table sets forth certain information relating to the Company's average consolidated statements of financial condition and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense annualized by the average balance of assets or liabilities, respectively, for the periods shown. Average balances were derived from average daily balances. The average balance of loans includes loans on which the Company has discontinued accruing interest. The yields and costs include fees which are considered adjustments to yields.
Six months ended Six months ended December 31, 1999 December 31, 1998 ----------------- ----------------- Average Yield/ Average Yield/ Balance Interest Cost Balance Interest Cost ------- -------- ---- ------- -------- ---- ASSETS Interest-earning: Loans $ 273,485 10,562 7.72% $ 222,614 8,974 8.06% Investment securities 12,644 412 6.52% 28,017 875 6.25% Other assets 15,541 320 4.12% 13,208 268 4.06% ----------------- -------------- ------------ ------------------ -------------- ------------ Total interest-earning 301,670 11,294 7.49% 263,839 10,117 7.67% Noninterest-earning 8,146 7,468 ----------------- ------------------ $ 309,816 $ 271,307 ================= ================== LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing: Savings accounts $ 8,478 97 2.29% $ 8,371 110 2.63% Transaction accounts 34,467 483 2.80% 26,892 378 2.81% Certificates of Deposit 95,482 2,431 5.09% 96,884 2,614 5.40% FHLB Advances 105,062 3,095 5.89% 69,274 2,090 6.03% ----------------- -------------- ------------ ------------------ -------------- ------------ Total interest-bearing 243,489 6,106 5.02% 201,421 5,192 5.16% Noninterest-bearing 4,691 3,618 ----------------- ------------------ Total liabilities 248,180 205,039 Stockholders' equity 61,636 66,268 ----------------- ------------------ $ 309,816 $ 271,307 ================= ================== Net earning balance $ 58,181 $ 62,418 ================= ================== Earning yield less costing rate 2.47% 2.51% ============ ============ Net interest income, and net yield spread on interest earning assets $ 5,188 3.44% $ 4,925 3.73% ============== ============ ============== ============ Ratio on interest-earning assets to interest-bearing liabilities 124% 131% ============== ==============
14 GUARANTY FEDERAL BANCSHARES, INC. Results of Operations - Comparison of Three Month and Six Month Periods Ended December 31, 1999 and 1998 Net income for the three months and six months ended December 31, 1999 was $841,519 and $1,701,617 as compared to $820,429 and $1,618,532 for the three months and six months ended December 31, 1998 which represents an increase in earnings of $21,090 or 2.6% for the three month period, and a increase in earnings of $83,085 or 5.1% for the six month period. Interest Income - --------------- Total interest income for the three months and six months ended December 31, 1999, increased $549,112 or 10.6% and $1,177,017 or 11.6% as compared to the three months and six months ended December 31, 1998. For the six month period ended December 31, 1999 compared to the same period in 1998, the average yield on interest earning assets decreased 18 basis points to 7.49%, while the average balance of interest earnings assets increased $37,831,000 over the same period one year ago. Interest Expense - ---------------- Total interest expense for the three months and six months ended December 31, 1999, increased $431,092 or 16.0% and $913,903 or 17.6% when compared to the three months and six months ended December 31, 1998. For the six month period ended December 31, 1999 the average cost of interest bearing liabilities decreased 14 basis points to 5.02% while the average balance increased $42,068,000, when compared to the same period in 1998. Net Interest Income - ------------------- Net interest income for the three months and six months ended December 31, 1999, increased $118,020, or 4.7% and $263,114, or 5.3% when compared to the same period in 1998. For the six month period ended December 31, 1999 the increases in average balances of interest earning assets and interest bearing liabilities discussed above contributed to the increase in net interest income by approximately $366,000. This was offset by the decrease in net earning yield by 4 basis points which resulted in a decrease in net interest income of approximately $103,000 for the same period. 15 GUARANTY FEDERAL BANCSHARES, INC. Provision for Loan Losses - ------------------------- Based primarily on the continued growth of the loan portfolio management decided to increase the allowance for loan loss reserve through a provision for loan loss of $45,000 and $90,000 for the three months and six months ended December 31, 1999, respectively, compared to $45,000 and $90,000 for the same period in 1998. The Bank will continue to monitor its allowance for loan losses and make future additions based on economic and regulatory conditions. Although the Bank maintains its allowance for loan losses at a level which it considers to be sufficient to provide for potential losses, there can be no assurance that future losses will not exceed internal estimates. In addition, the amount of the allowance for loan losses is subject to review by regulatory agencies which can order the establishment of additional loss provisions. Noninterest Income - ------------------ Noninterest income decreased $10,607, or 3.5% and increased $91,823, or 16.0% for the three months and six months ended December 31, 1999, when compared to the three months and six months ended December 31, 1998. The decrease for the three months ended December 31, 1999 was primarily due to losses on sale of premises and equipment during the period of $64,000, the increase for the six ended was primarily due to a increase in checking account service charges, which increased $132,637 or 31.1% for the six months ended December 31, 1999, when compared to the same period in 1998. Noninterest Expense - ------------------- Noninterest expense increased $43,468, or 2.9% for the three months ended December 31, 1999, and increased $166,572, or 5.7% for the six months ending December 31, 1999 when compared to the three months and six months ended December 31, 1998. In general this increase can be attributed to the overall increase in accounts served. There were no significant changes in any individual expense category. Provision for Income Taxes - -------------------------- There was a $42,855 and $105,280 increase in the provision for income taxes for the three months and six months ended December 31, 1999, as compared to the same period in 1998. This increase was due to the increase in before tax income for the three months and six months ended December 31, 1999, compared to the same period in 1998. 16 GUARANTY FEDERAL BANCSHARES, INC. Nonperforming Assets - -------------------- The allowance for loan losses is calculated based upon an evaluation of pertinent factors underlying the various types and quality of the loans. Management considers such factors as the repayment status of a loan, the estimated net realizable value of the underlying collateral, the borrower's intent and ability to repay the loan, local economic conditions and the Bank's historical loss ratios. The Bank's allowance for loan losses as of December 31, 1999, was $2,434,882 or 0.9% of loans receivable. Total assets classified as substandard or loss as of December 31, 1999, were $3,324,400 or 1.0% of total assets. Management has considered nonperforming and total classified assets in evaluating the adequacy of the Bank's allowance for loan losses. The ratio of nonperforming assets to total assets is another useful tool in evaluating exposure to credit risk. Nonperforming assets of the Bank include nonperforming loans (nonaccruing loans) and assets which have been acquired as a result of foreclosure or deed-in-lieu of foreclosure. 12/31/1999 06/30/1999 06/30/1998 (Dollars In Thousands) Nonperforming loans $ 1,455 906 1,012 Real estate acquired in settlement of loans - 101 286 ------- ----- ----- Total Nonperforming Assets $ 1,455 1,007 1,298 ======= ===== ===== Total Nonperforming Assets as a Percentage of Total Assets 0.46% 0.32% 0.50% Allowance for loan losses $ 2,435 2,349 2,191 Allowance for loan losses as a Percentage of average loans, net 0.89% 1.00% 1.24% Asset/Liability Management - -------------------------- The goal of the Bank's asset/liability policy is to manage interest rate risk so as to maximize net interest income over time in changing interest rate environments. Management monitors the Bank's net interest spreads (the difference between yields received on assets and paid on liabilities) and, although constrained by market conditions, economic conditions, and prudent underwriting standards, it offers deposit rates and loan rates designed to maximize net interest income. Management also attempts to fund the Bank's assets with liabilities of a comparable duration to minimize the impact of changing interest rates on the Bank's net interest income. Since the relative spread 17 GUARANTY FEDERAL BANCSHARES, INC. between financial assets and liabilities is constantly changing, the Bank's current net interest income may not be an indication of future net interest income. The Bank's initial efforts to manage interest rate risk included implementing an adjustable rate mortgage loan ("ARM") program beginning in the early 1980s. The ARMs have met with excellent customer acceptance. As of June 30, 1999, ARMs constituted 59.3% of the Bank's mortgage loan portfolio. As of December 31, 1999, ARMs represent 60.5% of the loan portfolio. Of the ARMs originated during the first quarter of fiscal year 2000, borrowers preferred initial fixed rate periods of three or five years. The Bank has continued to fund fixed rate loans through a program of borrowing longer-term funds from the FHLB. The Bank is also managing interest rate risk by the origination of construction loans. As of December 31, 1999, such loans made up 10.1% of the Bank's loan portfolio. In general, these loans have higher yields, shorter maturities and greater interest rate sensitivity than other real estate loans. The Bank constantly monitors its deposits in an effort to decrease their interest rate sensitivity. Rates of interest paid on deposits at the Bank are priced competitively in order to meet the Bank's asset/liability management objectives and spread requirements. As of June 30, 1999, the Bank's savings accounts, checking accounts, and money market deposit accounts totaled $46,736,183 or 33.1% of its total deposits. As of December 31,1999, these accounts totaled $47,743,549 or 33.4% of total deposits. The Bank believes, based on historical experience, that a substantial portion of such accounts represents non-interest rate sensitive, core deposits. The value of the Bank's loan portfolio will change as interest rates change. Rising interest rates will decrease the Bank's net portfolio value, while falling interest rates increase the value of that portfolio. 18 GUARANTY FEDERAL BANCSHARES, INC. Interest Rate Sensitivity Analysis - ---------------------------------- The following table sets forth as of September 30, 1999 (the most recent available), the OTS estimate of the projected changes in net portfolio value ("NPV") in the event of 100, 200, and 300 basis point ("bp") instantaneous and permanent increases and decreases in market interest rates. Dollar amounts are expressed in thousands. Estimated Net Portfolio Value NPV as % of PV of Assets BP Change ----------------------------- ------------------------ in Rates $ Amount $Change %Change NPV Ratio BP Change -------- -------- ------- ------- --------- --------- +300 60,278 (5,023) -8% 20.5% -37 bp +200 63,083 (2,218) -3% 21.0% +9 bp +100 64,880 (421) -1% 21.1% +24 bp NC 65,301 20.9% - -100 64,002 (1,299) -2% 20.2% -70 bp - -200 61,315 (3,987) -7% 19.1% -177 bp - -300 58,308 (6,993) -11% 18.0% -292 bp Computations of prospective effects of hypothetical interest rate changes are calculated by the OTS from data provided by the Bank and are based on numerous assumptions, including relative levels of market interest rates, loan repayments and deposit run-offs, and should not be relied upon as indicative of actual results. Further, the computations do not contemplate any actions the Bank may undertake in response to changes in interest rates. Management cannot predict future interest rates or their effect on the Bank's NPV in the future. Certain shortcomings are inherent in the method of analysis presented in the computation of NPV. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in differing degrees to changes in market interest rates. Additionally, certain assets, such as adjustable rate loans, which represent the Bank's primary loan product, have an initial fixed rate period typically from one to five years and over the remaining life of the asset changes in the interest rate are restricted. In addition, the proportion of adjustable rate loans in the Bank's portfolio could decrease in future periods due to refinancing activity if market interest rates remain or decrease in the future. Further, in the event of a change in interest rates, prepayment and early withdrawal levels could deviate significantly from those assumed in the table. Finally, the ability of many borrowers to service their adjustable-rate debt may decrease in the event of an interest rate increase. 19 GUARANTY FEDERAL BANCSHARES, INC. Interest Rate Sensitivity Analysis, continued - --------------------------------------------- The Bank's Board of Directors is responsible for reviewing the asset and liability policies. The Board meets quarterly to review interest rate risk and trends, as well as liquidity and capital ratios and requirements. The Bank's management is responsible for administering the policies and determinations of the Board of Directors with respect to the Bank's asset and liability goals and strategies. Liquidity and Capital Resources - ------------------------------- The Bank's primary sources of funds are deposits, principal and interest payments on loans and securities and extensions of credit from the Federal Home Loan Bank of Des Moines. While scheduled loan and security repayments and the maturity of short-term investments are somewhat predictable sources of funding, deposit flows are influenced by many factors which make their cash flows difficult to anticipate. Office of Thrift Supervision regulations require the Bank to maintain cash and eligible investments in an amount equal to at least 4% of customer accounts and short-term borrowings to assure its ability to meet demands for withdrawals and repayment of short-term borrowings. As of December 31, 1999, the Bank's liquidity ratio was 10.6%, which exceeded the minimum regulatory requirement. The Bank uses its liquidity resources principally to satisfy its ongoing commitments which include funding loan commitments, funding maturing certificates of deposit as well as deposit withdrawals, maintaining liquidity, purchasing investments, and meeting operating expenses. As of December 31, 1999, the Bank had approximately $2,354,000 in commitments to originate mortgage loans and $15,260,000 in loans-in-process on mortgage loans. These commitments will be funded through existing cash balances, cash flow from operations and, if required, FHLB advances . Management believes that anticipated cash flows and deposit growth will be adequate to meet the Bank's liquidity needs. The Company believes successful remediation of mission-critical systems has been completed in a timely manner. The Company has not experienced any significant operational or financial problems related to the Year 2000 compliance. Management presently believes that the Year 2000 Issue will not pose any future operational problems. 20 GUARANTY FEDERAL BANCSHARES, INC. PART II Item 1. Legal Proceedings - ------- ----------------- None. Item 2. Changes in Securities - ------- --------------------- Not applicable. Item 3. Defaults Upon Senior Securities - ------- ------------------------------- Not applicable. Item 4. Submission of Matters to Vote of Common Stockholders - ------- ---------------------------------------------------- The annual meeting of stockholders of the registrant was held on October 27, 1999. At the meeting the stockholders elected Wayne Barnes, Ivy Rogers, and Gregory Ostergren to three-year terms as director of the Savings Bank, while Gary Lipscomb, George Hall, Jack Barham, James Haseltine and Raymond Tripp continue to serve as directors. Also at that meeting, Baird, Kurtz & Dobson was ratified as Independent Certified Public Accountant. These same entities serve in identical capacities for the subsidiary bank of the registrant. The results of voting are shown for each matter considered. Director election: Nominee Votes For Votes Withheld - ------- --------- -------------- Wayne Barnes 4,889,524 130,776 Ivy Rogers 4,877,627 152,673 Gregory Ostergren 4,886,365 143,935 Auditor ratification: Votes For 4,941,317 Votes Against 68,580 Abstentions 20,403 21 Item 5. Other Information - ------- ----------------- None. Item 6. Exhibits and Reports on Form 8-K - ------- -------------------------------- a) Exhibits 4 Preferred Share Purchase Rights. Incorporated by reference to the Form 8-A filed on January 22, 1999 with the U.S. Securities and Exchange Commission (File No. 0-23325). 10.5 Change in Control Severance Agreements. b) Reports on Form 8-K None. 22 GUARANTY FEDERAL BANCSHARES, INC. SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has this report to be signed on its behalf by the undersigned, thereunto duly authorized. Guaranty Federal Bancshares, Inc. Signatures Date ---------- ---- /s/ James E. Haseltine February 4, 2000 - ------------------------------------------ --------------------------- James E. Haseltine President and Chief Executive Officer (Principal Executive Officer) /s/ Bruce Winston February 4, 2000 - ------------------------------------------ --------------------------- Bruce Winston Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 23 EX-10.5 2 EXHIBIT 10.5 EXHIBIT 10.5 CHANGE IN CONTROL SEVERANCE AGREEMENT THIS CHANGE IN CONTROL SEVERANCE AGREEMENT ("Agreement") entered into this 1st day of January 2000 ("Effective Date"), by and between Guaranty Federal Savings Bank (the "Bank") and James E. Haseltine (the "Executive"). WHEREAS, the Executive is currently employed by the Bank as President and is experienced in the business of the Bank; and WHEREAS, the parties desire by this writing to set forth the rights and responsibilities of the Bank and Executive if the Bank should undergo a change in control (as defined hereinafter in the Agreement) after the Effective Date. NOW, THEREFORE, it is AGREED as follows: 1. Employment. The Executive is employed in the capacity as the President of the Bank. The Executive shall render such administrative and management services to the Bank and Guaranty Federal Bancshares, Inc. ("Parent") as are currently rendered and as are customarily performed by persons situated in a similar executive capacity. The Executive's other duties shall be such as the Board of Directors for the Bank (the "Board of Directors" or "Board") may from time to time reasonably direct, including normal duties as an officer of the Bank and the Parent. 2. Term of Agreement. The term of this Agreement shall be for the period commencing on the Effective Date and ending thirty-six (36) months thereafter ("Term"). 3. Termination of Employment in Connection with or Subsequent to a Change in Control. (a) Notwithstanding any provision herein to the contrary, in the event of the involuntary termination of Executive's employment under this Agreement, absent Just Cause, in connection with, or within twenty-four (24) months after, any Change in Control of the Bank or Parent, Executive shall be paid an amount equal to two (2.0) times the Executives "base amount" as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986 ("Code"), and the costs associated with maintaining coverage under the Bank's medical and dental insurance reimbursement plans similar to that in effect on the date of termination of employment for a period of two years thereafter. Said sum shall be paid, at the option of Executive, either in one (1) lump sum not later than the date of such termination of employment or in periodic payments over the next 24 months, as if Executive's employment had not been terminated. Notwithstanding the forgoing, all sums payable hereunder shall be reduced in such manner and to such extent so that no such payments made hereunder when aggregated with all other payments to be made to the Executive by the Bank or the Parent shall be deemed an "excess parachute payment" in accordance with Section 280G of the Code and be subject to the excise tax provided at Section 4999(a) of the 1 Code. The term "change in control" shall refer to (i) the sale of all, or a material portion, of the assets of the Bank or the Parent; (ii) the merger or recapitalization of the Bank or the Parent whereby the Bank or the Parent is not the surviving entity; (iii) a change in control of the Bank or the Parent, as otherwise defined or determined by the Office of Thrift Supervision or regulations promulgated by it; or (iv) the acquisition, directly or indirectly, of the beneficial ownership (within the meaning of that term as it is used in Section 13(d) of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder) of twenty-five percent (25%) or more of the outstanding voting securities of the Bank or the Parent by any person, trust, entity or group. This limitation shall not apply to the purchase of shares by underwriters in connection with a public offering of Bank or Parent stock, or the purchase of shares of up to 25% of any class of securities of the Bank or Parent by a tax-qualified employee stock benefit plan which is exempt from the approval requirements, set forth under 12 C.F.R. ss.574.3(c)(1)(vi) as now in effect or as may hereafter be amended. The term "person" refers to an individual or a corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or any other form of entity not specifically listed herein. (b) Notwithstanding any other provision of this Agreement to the contrary, Executive may voluntarily terminate his employment within 24 months following a change in control of the Bank or Parent, and Executive shall thereupon be entitled to receive the payment described in Section 3(a) of this Agreement, upon the occurrence, or within 120 days thereafter, of any of the following events, which have not been consented to in advance by the Executive in writing: (i) if Executive would be required to move his personal residence or perform his principal executive functions more than thirty-five (35) miles from the Executive's primary office as of the signing of this Agreement; (ii) if in the organizational structure of the Bank, Executive would be required to report to a person or persons other than the Board of Directors of the Bank; (iii) if the Bank should fail to maintain Executive's base compensation in effect as of the date of the Change in Control and the existing employee benefits plans, including material fringe benefit, stock option and retirement plans; (iv) if Executive would be assigned duties and responsibilities other than those normally associated with his position as referenced at Section 1, herein; (v) if Executive's responsibilities or authority have in any way been materially diminished or reduced; or (vi) if Executive would not be reelected to the Board of Directors of the Bank or the Parent. 4. Other Changes in Employment Status. Except as provided for at Section 3, herein, the Board of Directors may terminate the Executive's employment at any time with or without Just Cause within its sole discretion. This Agreement shall not be deemed to give Executive any right to be retained in the employment or service of the Bank, or to interfere with the right of the Bank to terminate the employment of the Executive at any time. The Executive shall have no right to receive compensation or other benefits for any period after termination for Just Cause. Termination for "Just Cause" shall include termination because of the Executive's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated 2 duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of the Agreement. 5. Regulatory Exclusions. (a) If the Executive is removed and/or permanently prohibited from participating in the conduct of the Bank's affairs by an order issued under Sections 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12 U.S.C. 1818(e)(4) and (g)(1)), all obligations of the Bank under this Agreement shall terminate, as of the effective date of the order, but the vested rights of the contracting parties shall not be affected. (b) If the Bank is in default (as defined in Section 3(x)(1) of FDIA) all obligations under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties. (c) All obligations under this Agreement shall be terminated, except to the extent determined that continuation of this Agreement is necessary for the continued operation of the Bank: (i) by the Director of the Office of Thrift Supervision ("Director of OTS"), or his or her designee, at the time that the Federal Deposit Insurance Corporation ("FDIC") enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of FDIA; or (ii) by the Director of the OTS, or his or her designee, at the time that the Director of the OTS, or his or her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director of the OTS to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action. (d) If the Executive is suspended and/or temporarily prohibited from participating in the conduct of the Bank's affairs by a notice served under Section 8(e)(3) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)), the Bank's obligations under the Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may within its discretion (i) pay the Executive all or part of the compensation withheld while its contract obligations were suspended and (ii) reinstate (in whole or in part) any of its obligations which were suspended. (e) Notwithstanding anything herein to the contrary, any payments made to the Executive pursuant to the Agreement, or otherwise, shall be subject to and conditioned upon compliance with 12 USC ss.1828(k) and any regulations promulgated thereunder. 6. Successors and Assigns. (a) This Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Bank which shall acquire, directly or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all of the assets or stock of the Bank or Parent. 3 (b) The Executive shall be precluded from assigning or delegating his rights or duties hereunder without first obtaining the written consent of the Bank. 7. Amendments. No amendments or additions to this Agreement shall be binding upon the parties hereto unless made in writing and signed by both parties, except as herein otherwise specifically provided. 8. Applicable Law. This agreement shall be governed by all respects whether as to validity, construction, capacity, performance or otherwise, by the laws of the State of Missouri, except to the extent that Federal law shall be deemed to apply. 9. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. 10. Arbitration. Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration in accordance with the rules then in effect of the district office of the American Arbitration Association ("AAA") nearest to the home office of the Bank, and judgment upon the award rendered may be entered in any court having jurisdiction thereof, except to the extent that the parties may otherwise reach a mutual settlement of such issue. Further, the settlement of the dispute to be approved by the Board of the Bank may include a provision for the reimbursement by the Bank to the Executive for all reasonable costs and expenses, including reasonable attorneys' fees, arising from such dispute, proceedings or actions, or the Board of the Bank or the Parent may authorize such reimbursement of such reasonable costs and expenses by separate action upon a written action and determination of the Board following settlement of the dispute. Such reimbursement shall be paid within ten (10) days of Executive furnishing to the Bank or Parent evidence, which may be in the form, among other things, of a canceled check or receipt, of any costs or expenses incurred by Executive. 11. Confidential Information. The Executive acknowledges that during his or her employment he or she will learn and have access to confidential information regarding the Bank and the Parent and its customers and businesses ("Confidential Information"). The Executive agrees and covenants not to disclose or use for his or her own benefit, or the benefit of any other person or entity, any such Confidential Information, unless or until the Bank or tthe Parent consents to such disclosure or use or such information becomes common knowledge in the industry or is otherwise legally in the public domain. The Executive shall not knowingly disclose or reveal to any unauthorized person any Confidential Information relating to the Bank, the Parent, or any subsidiaries or affiliates, or to any of the businesses operated by them, and the Executive confirms that such information constitutes the exclusive property of the Bank and the Parent. The Executive shall not otherwise knowingly act or conduct himself (a) to the material detriment of the Bank or the Parent, or its subsidiaries, or affiliates, or (b) in a manner which is inimical or contrary to the interests of the Bank or the Parent. Executive acknowledges and agrees that the existence of this Agreement and its terms and conditions constitutes Confidential Information of the Bank, and the 4 Executive agrees not to disclose the Agreement or its contents without the prior written consent of the Bank. Notwithstanding the foregoing, the Bank reserves the right in its sole discretion to make disclosure of this Agreement as it deems necessary or appropriate in compliance with its regulatory reporting requirements. Notwithstanding anything herein to the contrary, failure by the Executive to comply with the provisions of this Section may result in the immediate termination of the Agreement within the sole discretion of the Bank, disciplinary action against the Executive taken by the Bank, including but not limited to the termination of employment of the Executive for breach of the Agreement and the provisions of this Section, and other remedies that may be available in law or in equity. 12. Entire Agreement. This Agreement together with any understanding or modifications thereof as agreed to in writing by the parties, shall constitute the entire agreement between the parties hereto. This Agreement supercedes any prior written Employment Agreement or Severance Agreements between the Executive and the Bank or the Parent. [End of Agreement] 5 In addition to the change in control severance agreement with Mr. Haseltine, Guaranty Federal Savings Bank entered into identical agreements as of the same date with the following nine employees of the bank: William Williams, Bruce Winston, Kevin Bell, Larry Cruzan, Dana Elwell, Thomas Howard, Jerry Graham, Carla Green, and Lorene Thomas. Each agreement provides for the payment of two times the employee's "base amount" (as defined in 26 U.S.C. Section 280G(b)(3)) in the event of a change in control. EX-27 3 FDS
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE QUARTERLY REPORT ON FORM 10Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL INFORMATION. 1000 6-MOS JUN-30-2000 DEC-31-1999 2,399 3,919 0 0 7,415 9,571 9,695 287,377 2,435 322,604 143,196 115,836 2,883 0 0 0 625 60,065 322,604 10,562 412 321 11,295 3,011 6,106 5,188 90 (2) 3,081 2,683 0 0 0 1,702 0.33 0.33 3.44 1,455 1,455 0 0 2,405 4 0 2,435 2,435 0 0
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