-----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, TuEyNOX70+bt5PkMVqrMNaYRdZP0Tw6VIAiUxC1p258hywjZXUGHXL+0AVMiUdXl ApAiFG3a4qvEQ1kGv8pVJw== 0000946275-00-000249.txt : 20000515 0000946275-00-000249.hdr.sgml : 20000515 ACCESSION NUMBER: 0000946275-00-000249 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 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: 627865 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 March 31, 2000 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) 520-4333 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 May 4, 2000 ----- -------------------------- Common Stock, Par Value $0.10 4,921,216 Shares GUARANTY FEDERAL BANCSHARES, INC. FORM 10-Q FOR MARCH 31, 2000 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 Results of Operations 9 3. Quantitative and Qualitative Disclosures about Market Risk 12 PART II. Other Information -------------------------- 1. Legal Proceedings 15 2. Changes in Securities and Use of Proceeds 15 3. Defaults Upon Senior Securities 15 4. Submission of Matters to Vote of Security-holders 15 5. Other Information 15 6. Exhibits and Reports on Form 8-K 15 Signatures 16 GUARANTY FEDERAL BANCSHARES, INC. FORM 10-Q FOR MARCH 31, 2000 PART I GUARANTY FEDERAL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION MARCH 31, 2000 (UNAUDITED) AND JUNE 30, 1999
ASSETS 3/31/2000 6/30/1999 --------- --------- Cash $ 1,675,379 1,656,648 Interest-bearing deposits in other financial institutions 4,716,726 8,032,473 ------------- ------------- Cash and cash equivalents 6,392,105 9,689,121 Available-for-sale securities 7,826,733 8,951,175 Held-to-maturity securities 8,569,036 15,394,643 Mortgage loans held for sale 673,835 769,074 Loans receivable, less allowance for loan losses of 3/31/00 - $2,474,972; 6/30/99 - $2,349,328 289,594,407 263,499,778 Accrued interest receivable: Loans 1,650,174 1,459,508 Investments 111,531 297,431 Prepaid expenses and other assets 6,889,931 5,671,845 Foreclosed assets held for sale 1,200 101,546 Premises and equipment, net 6,309,481 7,365,392 ------------- ------------- $ 328,018,433 313,199,513 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits $ 144,855,339 141,137,154 Federal Home Loan Bank advances 121,150,087 104,794,640 Advances from borrowers for taxes and insurance 944,670 1,195,545 Accrued expenses and other liabilities 1,324,772 499,221 Accrued interest payable 714,358 543,641 Income taxes payable 382,590 235,587 Deferred income taxes 775,021 1,360,503 ------------- ------------- 270,146,837 249,766,291 ------------- ------------- STOCKHOLDERS' EQUITY Common Stock: $0.10 par value; authorized 10,000,000 shares; issued; 3/31/00 - 6,249,737 shares, 6/30/99 - 6,245,775 shares 624,974 624,578 Additional paid-in capital 47,791,341 47,366,264 Unearned ESOP shares (2,927,850) (3,100,080) Retained earnings, substantially restricted 23,749,118 23,236,009 Accumulated other comprehensive income Unrealized appreciation on available-for-sale securities, net of income taxes; 3/31/00 - $1,452,692, 6/30/99 - $2,026,448 2,473,502 3,438,826 ------------- ------------- 71,711,085 71,565,597 Treasury stock, at cost - 3/31/00 - 1,153,052 shares, 6/30/99- 642,127 shares (13,839,489) (8,132,375) ------------- ------------- 57,871,596 63,433,222 ------------- ------------- $ 328,018,433 313,199,513 ============= =============
See Notes to Condensed Consolidated Financial Statements 3 GUARANTY FEDERAL BANCSHARES, INC. FORM 10-Q FOR MARCH 31, 2000 GUARANTY FEDERAL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF INCOME THREE AND NINE MONTHS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)
Three Months Ending Nine Months Ending -------------------------- ------------------------- 03/31/2000 03/31/1999 03/31/2000 03/31/1999 ---------- ---------- ---------- ---------- INTEREST INCOME Loans $ 5,679,216 4,689,386 16,240,905 13,663,415 Investment securities 218,118 416,485 629,789 1,291,061 Other 154,294 139,829 474,831 408,104 ----------- ----------- ----------- Total Interest Income 6,051,628 5,245,700 17,345,525 15,362,580 ----------- ----------- ----------- ----------- INTEREST EXPENSE Deposits 1,548,637 1,433,321 4,559,690 4,535,589 Federal Home Loan Bank advances 1,752,297 1,239,382 4,847,027 3,328,994 ----------- ----------- ----------- ----------- Total Interest Expense 3,300,934 2,672,703 9,406,717 7,864,583 ----------- ----------- ----------- ----------- Net Interest Income 2,750,694 2,572,997 7,938,808 7,497,997 Provision for Loan Losses 45,000 45,000 135,000 135,000 ----------- ----------- ----------- ----------- Net Interest Income after Provision for Loan Losses 2,705,694 2,527,997 7,803,808 7,362,997 ----------- ----------- ----------- ----------- NONINTEREST INCOME (LOSS) Service charges 262,954 199,084 822,743 626,236 Late charges and other fees 34,084 32,570 117,996 83,867 Gain (Loss) on loans and investment securities (3,185) 8,535 (5,034) 47,238 Income (expense) on foreclosed assets 8,716 (4,291) 21,657 (11,281) Other income 34,015 34,884 45,373 99,050 ----------- ----------- ----------- ----------- Total Noninterest income 336,584 270,782 1,002,735 845,110 ----------- ----------- ----------- ----------- NONINTEREST EXPENSE Salaries and employee benefits 837,224 802,633 2,523,437 2,287,793 Occupancy 209,104 205,476 605,374 577,981 SAIF deposit insurance premiums 7,656 20,783 48,790 63,859 Data processing fees 144,035 132,873 391,334 377,290 Advertising 117,393 107,916 273,735 332,767 Other expense 334,299 246,927 888,513 791,818 ----------- ----------- ----------- ----------- Total Noninterest Expense 1,649,711 1,516,608 4,731,183 4,431,508 ----------- ----------- ----------- ----------- Income before Income Taxes 1,392,567 1,282,171 4,075,360 3,776,599 Provision for Income Taxes 494,229 458,548 1,475,405 1,334,444 ----------- ----------- ----------- ----------- NET INCOME 898,338 823,623 2,599,955 2,442,155 OTHER COMPREHENSIVE INCOME (LOSS) Unrealized appreciation (depreciation) on available-for-sale securities (212,536) (451,431) (965,324) 581,070 ----------- ----------- ----------- ----------- COMPREHENSIVE INCOME $ 685,802 372,192 1,634,631 3,023,225 =========== =========== =========== =========== BASIC EARNINGS PER SHARE $ 0.18 0.15 0.51 0.44 =========== =========== =========== =========== DILUTED EARNINGS PER SHARE $ 0.18 0.15 0.51 0.43 =========== =========== =========== ===========
See Notes to Condensed Consolidated Financial Statements 4 GUARANTY FEDERAL BANCSHARES, INC. FORM 10-Q FOR MARCH 31, 2000 GUARANTY FEDERAL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY NINE MONTHS ENDED MARCH 31, 2000 (UNAUDITED)
Accumulated Other Comprehensive Income -------------------- Appreciation Additional (Depreciation) on Paid Unearned Retained Available-for-Sale Common Stock In Capital ESOP Shares Earnings Securities, Net Treasury Stock Total ------------ ---------- ----------- -------- --------------- -------------- ----- Balance, June 30, 1999 $ 624,578 47,366,264 (3,100,080) 23,236,009 3,438,826 (8,132,375) 63,433,222 Net income - - - 2,599,955 - - 2,599,955 Dividends on common stock, ($0.20 per share on 5,156,256 shares & $0.22 per share on 4,798,163 shares) - - - (2,086,846) - - (2,086,846) Recognition and Retention Plan (RRP) & Restricted Stock Plan (RSP): RRP and RSP expense - 371,955 - - - - 371,955 Dividends on RRP Stock - 6,567 - - - - 6,567 Tax benefit of RRP & RSP - 3,831 - - - - 3,831 Stock options exercised 396 23,455 - - - - 23,851 Release of ESOP shares - 19,269 172,230 - - - 191,499 Treasury stock purchased - - - - - (5,707,114) (5,707,114) Change in unrealized appreciation on available-for-sale securitites, net of income taxes of $566,936 - - - - (965,324) - (965,324) ----------- ----------- ----------- ----------- ----------- ----------- ----------- Balance, March 31, 2000 $ 624,974 47,791,341 (2,927,850) 23,749,118 2,473,502 (13,839,489) 57,871,596 =========== =========== =========== =========== =========== =========== ===========
See Notes to Condensed Consolidated Financial Statements 5 GUARANTY FEDERAL BANCSHARES, INC. FORM 10-Q FOR MARCH 31, 2000 GUARANTY FEDERAL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY NINE MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
Accumulated Other Comprehensive Income -------------------- Appreciation Additional (Depreciation) on Paid Unearned Retained Available-for-Sale Common Stock In Capital ESOP Shares Earnings Securities, Net Treasury Stock Total ------------ ---------- ----------- -------- --------------- -------------- ----- Balance, June 30, 1998 $ 622,804 49,016,992 (3,444,540) 21,682,950 2,811,892 - 70,690,098 Net Income - - - 2,442,155 - - 2,442,155 Dividends on common stock, ($0.34 per share) - - - (1,805,069) - - (1,805,069) Recognition and Retention Plan (RRP) & Restricted Stock Plan (RSP): RSP stock purchased - (2,373,065) - - - - (2,373,065) RRP and RSP expense - 389,338 - - - - 389,338 Dividends on RRP stock - 7,500 - - - - 7,500 Tax benefit of RRP & RSP - 23,554 - - - - 23,554 Stock options exercised 1,485 87,930 - - - - 89,415 Release of ESOP shares - 62,864 287,050 - - - 349,914 Treasury stock purchased - - - - - (7,192,271) (7,192,271) Change in unrealized appreciation on available-for-sale securities, net of income taxes of $341,263 - - - - 581,070 - 581,070 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Balance, March 31, 1999 $ 624,289 47,215,113 (3,157,490) 22,320,036 3,392,962 (7,192,271) 63,202,639 =========== =========== =========== =========== =========== =========== ===========
See Notes to Condensed Consolidated Financial Statements 6 GUARANTY FEDERAL BANCSHARES, INC. FORM 10-Q FOR MARCH 31, 2000 GUARANTY FEDERAL BANCSHARES, INC CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED MARCH 31, 2000 AND 1999 (UNAUDITED)
03/31/2000 03/31/1999 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 2,599,955 2,442,155 Items not requiring (providing) cash: Deferred income taxes (18,546) (86,523) Depreciation 342,797 315,209 Provision for loan losses 135,000 135,000 (Gain) loss on loans and investment securities 5,034 (47,238) Loss on sale of premises and equipment 64,298 - (Gain) loss on sale of foreclosed assets (13,372) 3,295 Amortization of deferred income, premiums and discounts 24,688 66,695 RRP/RSP expense 371,955 389,338 Origination of loans held for sale (3,578,374) (8,213,377) Proceeds from sale of loans held for sale 3,668,579 7,621,200 Release of ESOP shares 191,499 349,914 Changes in: Accrued interest receivable (4,766) 32,665 Prepaid expenses and other assets (358,486) (203,703) Accounts payable and accrued expenses (59,327) 192,645 Income taxes payable 147,003 84,138 ------------ ------------ Net cash provided by operating activities 3,517,937 3,081,413 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Net increase in loans (26,266,397) (40,182,514) Principal payments on available-for-sale securities 402,179 4,585,363 Principal payments on held-to-maturity securities 1,662,067 3,217,266 Purchase of premises and equipment (333,358) (318,351) Proceeds from sale of premises and equipment 982,174 - Purchase of available-for-sale securities (335,578) (501,561) Proceeds from maturities of held-to-maturity securities 4,700,000 1,330,235 Purchase of FHLB stock (859,600) (2,257,400) Proceeds from sale of foreclosed assets 114,918 330,641 Capitalized costs on foreclosed assets - 46 ------------ ------------ Net cash used in investing activities (19,933,595) (33,796,275) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Tax benefit of vested RRP shares 3,831 23,554 Stock options exercised 23,851 89,415 Cash dividends paid (1,031,250) (839,899) Cash dividends received on RRP Stock 6,567 7,500 Net increase in demand deposits, NOW accounts and savings accounts 4,524,799 6,493,972 Net increase (decrease) in certificates of deposit (806,614) (10,163,325) Proceeds from FHLB advances 38,686,124 49,092,500 Repayments of FHLB advances (22,330,677) (3,945,157) Advances from borrowers for taxes and insurance (250,875) (80,538) RSP stock purchased - (2,373,065) Treasury stock purchased (5,707,114) (7,192,271) ------------ ------------ Net cash provided by financing activities 13,118,642 31,112,686 ------------ ------------ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,297,016) 397,824 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,689,121 7,304,923 ------------ ------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 6,392,105 7,702,747 ============ ============
See Notes to Condensed Consolidated Financial Statements 7 GUARANTY FEDERAL BANCSHARES, INC. FORM 10-Q FOR MARCH 31, 2000 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1: Conversion, Reorganization and Stock Issuance --------------------------------------------- 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 $8.00 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. On December 30, 1997, the MHC completed a conversion to Guaranty Federal Bancshares, Inc. (the "Company"), a Delaware-chartered stock corporation. Stockholders' equity increased to $69.5 million primarily due to the conversion in which the Company exchanged 1,880,710 shares of its common stock for all the Bank's common stock not held by the MHC. This exchange ratio was 1.931. In addition, the Company sold 4,340,812 shares at $10.00 per share in a 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. 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. The results of operations for the period are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Form 10-K annual report for 1999 filed with the Securities and Exchange Commission. The condensed consolidated balance sheet of the Company as of June 30, 1999, has been derived from the audited consolidated balance sheet of the Company as of that date. Certain information and note disclosures normally included in the Company's annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. 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: 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 March 31, 2000, all of the RRP and RSP shares have been purchased and all except 1,925 shares have been awarded. The Bank is amortizing the RRP and RSP expense over each participant's vesting period and the financial statements reflect $371,955 RRP and RSP expense for the nine month period ending March 31, 2000. The SOP and 1998 SOP authorized stock options on shares to be issued to officers and employees of the Bank, as of March 31, 2000 all options except those on 21,263 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 8 GUARANTY FEDERAL BANCSHARES, INC. FORM 10-Q FOR MARCH 31, 2000 periods remaining unchanged. As of March 31, 2000, there were 569,086 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. Note 5: Earnings Per Share ------------------
For three months ended March 31, 2000 For nine months ended March 31, 2000 ------------------------------------- ------------------------------------ Income Average Income Average Available to Shares Available to Shares Stockholders Outstanding Per-Share Stockholders Outstanding Per-Share ------------ ----------- --------- ------------ --------------------- Basic Earnings per Share $ 898,338 4,928,861 $ 0.18 $ 2,599,955 5,076,310 $ 0.51 ======= Effect of Dilutive Securities: Stock Options 46,827 52,127 --------- --------- Diluted Earnings per Share $ 898,338 4,975,688 $ 0.18 $ 2,599,955 5,128,437 $ 0.51 ========== ========== ======= ============ ========== ======
For three months ended March 31, 1999 For nine months ended March 31, 1999 ------------------------------------- ------------------------------------ Income Average Income Average Available to Shares Available to Shares Stockholders Outstanding Per-Share Stockholders Outstanding Per-Share ------------ ----------- --------- ------------ --------------------- Basic Earnings per Share $ 823,623 5,459,586 $ 0.15 $ 2,442,155 5,572,849 $ 0.44 Effect of Dilutive Securities: Stock Options 59,808 60,618 --------- -------- Diluted Earnings per Share $ 823,623 5,519,394 $ 0.15 $ 2,442,155 5,633,467 $ 0.43 ========= ========= ====== =========== ========= ======
Options to purchase 5,000, 16,704, 5,000 and 425,483 shares of common stock at $11.75, $12.25, $12.63 and $13.44 per share, respectively, outstanding during the three months and nine months ended March 31, 2000, 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. 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 March 31, 2000 and the results of operations for the three months and nine months ended March 31, 2000 and 1999. 9 GUARANTY FEDERAL BANCSHARES, INC. FORM 10-Q FOR MARCH 31, 2000 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. Financial Condition - ------------------- The Company's's total assets increased $14,818,920 (5%) from $313,199,513 as of June 30, 1999, to $328,018,433 as of March 31, 2000. Interest-bearing deposits in other financial institutions decreased $3,315,747 (41%) from $8,032,473 as of June 30, 1999, to $4,716,726 as of March 31, 2000, as the funds were used to fund new loans. Securities available-for-sale decreased $1,124,442 (13%) from $8,951,175 as of June 30, 1999, to $7,826,733 as of March 31, 2000. This is primarily due to the decrease in fair value of various equity securities. The Bank continues to hold 96,000 shares of Federal Home Loan Mortgage Corporation ("FHLMC") stock with an amortized cost of $94,000 in the available-for-sale category. As of March 31, 2000, the gross unrealized gain on the stock was $4,518,000, a decrease from $5,474,000 as of June 30, 1999. Securities held-to-maturity decreased due to maturities and principal repayments, by $6,825,607 (44%) from $15,394,643 as of June 30, 1999, to $8,569,036 as of March 31, 2000. Net loans receivable increased by $26,094,629 (10%) from $263,499,778 as of June 30, 1999, to $289,594,407 as of March 31, 2000. Permanent mortgage loans secured by both owner and non-owner occupied residential real estate increased by $14,187,000 and construction loans increased by $5,782,000. Loan growth is anticipated to continue and represents a major part of the Bank's planned assets growth. Allowance for loan losses increased $125,644 (5%) from $2,349,328 as of June 30, 1999, to $2,474,972 as of March 31, 2000. The allowance increased due to the provision for loan losses for the period exceeding net loan charge-offs. The allowance for loan losses as of March 31, 2000 and June 30, 1999 was 0.85%, and 0.89% respectively, of net loans outstanding. As of March 31, 2000, the allowance for loan losses was 219.9% of impaired loans versus 259.3% as of June 30, 1999. Fair value of foreclosed assets held-for-sale decreased $100,346 (99%) from $101,546 as of June 30, 1999, to $1,200 as of March 31, 2000. This decrease was due to the sale of foreclosed assets. The Bank recorded a gain of $13,372 on the sale of these assets. Deposits increased $3,718,185 (3%) from $141,137,154 as of June 30, 1999, to $144,855,339 as of March 31, 2000. For the nine months ended March 31, 2000, checking and passbook accounts increased by $4,524,799 (10%) while certificates of deposits decreased by $806,614 (1%). In order to fund the increase in loan demand and the repurchase of Company stock, the Company increased borrowing from the Federal Home Loan Bank (the "FHLB") by $16,355,447 (16%) from $104,794,640 as of June 30, 1999, to $121,150,087 as of March 31, 2000. As of March 31, 2000, the Bank had the ability to borrow an additional $66 million from the FHLB. Advances from borrowers for taxes and insurance decreased $250,875 (21%) from $1,195,545 as of June 30, 1999, to $944,670 as of March 31, 2000. The majority of this decrease is due to the payment of 1999 real estate taxes from borrower's escrow accounts. 10 GUARANTY FEDERAL BANCSHARES, INC. FORM 10-Q FOR MARCH 31, 2000 Accrued expenses and other liabilities increased $825,551 (165%) from $499,221 as of June 30, 1999, to $1,324,772 as of March 31, 2000. The majority of this increase is due to a $0.22 per share dividend payable to stockholders of record March 30, 2000, totaling $1,055,596. Stockholders' equity (including unrealized appreciation on securities available-for-sale, net of tax) decreased $5,561,626 (9%) from $63,433,222 as of June 30, 1999, to $57,871,596 as of March 31, 2000. This decrease was due to several factors. During this period the Company repurchased a total of 510,925 of its outstanding shares in the open market at a cost of $5,707,114. In addition, dividends in the amount of $1,031,250 ($0.20 per share) and $1,055,596, ($0.22 per share) were declared and paid, on September 30, 1999 and April 14, 2000, to stockholders' of record as of September 7, 1999 and March 30, 2000, respectively. There was also a decrease in the unrealized appreciation on available-for-sale securities of $965,324. On a per share basis, stockholders' equity increased from $11.98 as of June 30, 1999 to $12.05 as of March 31, 2000. Results of Operations - Comparison of Three Month and Nine Month Periods Ended - -------------------------------------------------------------------------------- March 31, 2000 and 1999 - ----------------------- Net income for the three months and nine months ended March 31, 2000 was $898,338 ($0.18 per share) and $2,599,955 ($0.51 per share) as compared to $823,623 ($0.15 per share) and $2,442,155 ($0.44 per share) for the three months and nine months ended March 31, 1999, which represents an increase in earnings of $74,715 (9%) for the three month period and an increase in earnings of $157,800 (6%) for the nine month period. Interest Income Total interest income for the three months and nine months ended March 31, 2000, increased $805,928 (15%) and $1,982,945 (13%) as compared to the three months and nine months ended March 31, 1999. For the nine month period ended March 31, 2000 compared to the same period in 1999, the average yield on interest earning assets decreased three basis points to 7.59%, while the average balance of interest earnings assets increased $36,072,000. Interest Expense Total interest expense for the three months and nine months ended March 31, 2000, increased $628,231 (24%) and $1,542,134 (20%) when compared to the three months and nine months ended March 31, 1999. For the nine month period ended March 31, 2000, the average cost of interest bearing liabilities decreased one basis point to 5.06% while the average balance increased $41,039,000 when compared to the same period in 1999. The average balance of interest bearing liabilities increased $4,967,000 more than the average balance in interest earning assets. This reduction in net interest earning assets was due to the purchase of treasury stock funded by Federal Home Loan Bank borrowings Net Interest Income Net interest income for the three months and nine months ended March 31, 2000, increased $177,697 (7%) and $440,811 (6%) when compared to the same periods in 1999. For the nine-month period ended March 31, 2000, the earning yield minus the costing rate spread declined two basis points to 2.53%. Approximately $9,954,000 of the increase in earning assets and costing liabilities at a spread of 2.53% offset the added interest expense resulting from the reduction in net interest earning assets. The spread on the remaining growth of assets and liabilities offset the lower interest spread and accounts for the overall growth in net interest income. Provision for Loan Losses Based primarily on the continued growth of the loan portfolio, management decided to increase the allowance for loan losses through a provision for loan loss of $45,000 and $135,000 for the three months and nine months ended March 31, 2000, respectively, and of $45,000 and $135,000 for the same periods in 1999. 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. 11 GUARANTY FEDERAL BANCSHARES, INC. FORM 10-Q FOR MARCH 31, 2000 Noninterest Income Noninterest income increased $65,802 (24%) for the three months ended March 31, 2000 and increased $157,625 (19%) for the nine months ended March 31, 2000, when compared to the three months and nine months ended March 31, 1999. These increases were primarily due to an increase in checking account service charges, of $63,870 (32%) for the three months, and $196,507 (31%) for the nine months. Noninterest Expense Noninterest expense increased $133,103 (9%) for the three months ended March 31, 2000, and increased $299,675 (7%) for the nine months ending March 31, 2000 when compared to the three months and nine months ended March 31, 1999. 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 The provision for income taxes increased $35,681 (8%) and $140,961 (11%) for the three months and nine months ended March 31, 2000, as compared to the same period in 1999. This increase was due to the increase in before tax income for the three months and nine months ended March 31, 2000, compared to the same period in 1999. Item 3. Quantitative and Qualitative Disclosures about Market Risk - ------------------------------------------------------------------- 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 March 31, 2000, was $2,474,972 or 0.9% of loans receivable. Total assets classified as substandard or loss as of March 31, 2000, were $3,207,845 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. All dollar amounts are in thousands.
03/31/2000 06/30/1999 06/30/1998 ---------- ---------- ---------- Nonperforming loans $ 1,124 906 1,012 Real estate acquired in settlement of loans 1 101 286 ------- ----- ----- Total nonperforming assets $ 1,125 1,007 1,298 ======== ====== ===== Total nonperforming assets as a percentage of total assets 0.34% 0.32% 0.50% Allowance for loan losses $ 2,475 2,349 2,191 Allowance for loan losses as a percentage of average net loans 0.89% 1.00% 1.24%
Average Balances, Interest and Average Yields - --------------------------------------------- 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. Non-interest income, non-interest expense, and income taxes also impact net income. 12 GUARANTY FEDERAL BANCSHARES, INC. FORM 10-Q FOR MARCH 31, 2000 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. All dollar amounts are in thousands.
Nine Months ended 3/31/2000 Nine Months ended 3/31/1999 ----------------------------- ----------------------------- Average Yield/ Average Yield/ Balance Interest Cost Balance Interest Cost ------- -------- ---- ------- -------- ---- ASSETS Interest-earning: Loans $ 278,163 16,241 7.78% $ 228,377 13,663 7.98% Investment securities 12,307 630 6.83% 26,453 1,291 6.51% Other assets 14,276 475 4.44% 13,844 408 3.93% ------- ------ ----- ------- ------ ----- Total interest-earning 304,746 17,346 7.59% 268,674 15,362 7.62% Noninterest-earning 7,794 7,650 ------- ------- $ 312,540 $ 276,324 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing: Savings accounts $ 8,420 148 2.34% $ 8,414 157 2.49% Transaction accounts 34,843 752 2.88% 27,743 570 2.74% Certificates of Deposit 95,057 3,660 5.13% 95,927 3,808 5.29% FHLB Advances 109,430 4,847 5.91% 74,627 3,329 5.95% -------- ------ ----- ------- ------ ----- Total interest-bearing 247,750 9,407 5.06% 206,711 7,864 5.07% Noninterest-bearing 3,859 3,741 ------- ------- Total liabilities 251,609 210,452 Stockholders' equity 60,931 65,872 ------- ------- $ 312,540 $ 276,324 ======= ======= Net earning balance $ 56,996 $ 61,963 ======= ========= Earning yield less costing rate 2.53% 2.55% ===== ===== Net interest income, and net yield spread on interest earning assets $ 7,939 3.47% $ 7,498 3.72% ====== ===== ======== ===== Ratio on interest-earning assets to interest- bearing liabilities 123% 130% ==== ====
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 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. 13 GUARANTY FEDERAL BANCSHARES, INC. FORM 10-Q FOR MARCH 31, 2000 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 March 31, 2000, ARMs represent 61.8% of the loan portfolio. Of the ARMs originated during 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 March 31, 2000, such loans made up 10.5% 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% of its total deposits. As of March 31, 2000, these accounts totaled $51,260,982 or 35% 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. Interest Rate Sensitivity Analysis - ---------------------------------- The following table sets forth as of December 31, 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 Change --------- --------- --------- --------- ---------- ------ +300 $ 58,154 $ (7,434) -11% 19.37% -1.07% +200 61,657 (3,931) -6% 20.04% -0.40% +100 64,285 (1,303) -2% 20.43% -0.01% NC 65,588 20.44% -100 65,162 (426) -1% 19.99% -0.45% -200 62,981 (2,607) -4% 19.09% -1.35% -300 59,905 (5,683) -9% 17.95% -2.49% 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. 14 GUARANTY FEDERAL BANCSHARES, INC. FORM 10-Q FOR MARCH 31, 2000 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 March 31, 2000, the Bank's liquidity ratio was 8.9%, 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 March 31, 2000, the Bank had approximately $2,670,000 in commitments to originate mortgage loans and $13,465,000 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. Impact of Year 2000 - ------------------- 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. 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 - ------- ---------------------------------------------------- None. Item 5. Other Information - ------- ----------------- None. Item 6. Exhibits and Reports on Form 8-K - ------- -------------------------------- a) Exhibits 10.6 2000 Stock Compensation Plan b) Reports on Form 8-K None. 15 GUARANTY FEDERAL BANCSHARES, INC. FORM 10-Q FOR MARCH 31, 2000 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Guaranty Federal Bancshares, Inc. Signature and Title Date /s/ James E. Haseltine May 4, 2000 - -------------------------------------------------- ---------------------------- James E. Haseltine President and Chief Executive Officer (Principal Executive Officer) /s/ Bruce Winston May 4, 2000 - -------------------------------------------------- ---------------------------- Bruce Winston Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) EX-10.6 2 EXHIBIT 10.6 EXHIBIT 10.6 2000 STOCK COMPENSATION PLAN GUARANTY FEDERAL BANCSHARES, INC. 2000 STOCK COMPENSATION PLAN 1. Purpose of the Plan. The Plan shall be known as the Guaranty Federal ------------------- Bancshares, Inc. ("Company") 2000 Stock Compensation Plan (the "Plan"). The purpose of the Plan is to attract and retain qualified personnel for positions of substantial responsibility and to provide additional incentive to officers, directors first elected or appointed after July 22, 1998, employees and other persons providing services to the Company, or any present or future parent or subsidiary of the Company to promote the success of the business. The Plan is intended to provide for the grant of Stock Options that do not qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and Shares of Common Stock of the Company granted as Stock Awards. 2. Definitions. The following words and phrases when used in this Plan ----------- with an initial capital letter, unless the context clearly indicates otherwise, shall have the meaning as set forth below. Wherever appropriate, the masculine pronoun shall include the feminine pronoun and the singular shall include the plural. (a) "Award" means the grant by the Committee of Stock Options, Stock Awards, or any combination thereof as provided in the Plan. (b) "Board" shall mean the Board of Directors of the Company, or any successor or parent corporation thereto. (c) "Change in Control" shall mean: (i) the sale of all, or a material portion, of the assets of the Company; (ii) the merger or recapitalization of the Company whereby the Company is not the surviving entity; (iii) a change in control of the Company, 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 Company 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 Company stock, or the purchase of shares of up to 25% of any class of securities of the Company 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. The decision of the Committee as to whether a Change in Control has occurred shall be conclusive and binding. (d) "Code" shall mean the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder. (e) "Committee" shall mean the Board or the Stock Compensation Committee appointed by the Board in accordance with Section 5(a) of the Plan. 1 (f) "Common Stock" shall mean the common stock of the Company, or any successor or parent corporation thereto. (g) "Continuous Employment" or "Continuous Status as an Employee" shall mean the absence of any interruption or termination of employment with the Company or any present or future Parent or Subsidiary of the Company. Employment shall not be considered interrupted in the case of sick leave, military leave or any other leave of absence approved by the Company or in the case of transfers between payroll locations, of the Company or between the Company, its Parent, its Subsidiaries or a successor. (h) "Company" shall mean Guaranty Federal Bancshares, Inc., the parent corporation of the Savings Bank, or any successor or Parent thereof. (i) "Director" shall mean a member of the Board of the Company, or any successor or parent corporation thereto. (j) "Director Emeritus" shall mean a person serving as a director emeritus, advisory director, consulting director, or other similar position as may be appointed by the Board of Directors of the Savings Bank or the Company from time to time. (k) "Disability" means any physical or mental impairment which renders the Participant incapable of continuing in the employment or service of the Savings Bank or the Parent in his then current capacity as determined by the Committee. (l) "Effective Date" shall mean the date of Board adoption of the Plan. (m) "Employee" shall mean any person employed by the Company or any present or future Parent or Subsidiary of the Company. (n) "Fair Market Value" shall mean: (i) if the Common Stock is traded otherwise than on a national securities exchange, then the Fair Market Value per Share shall be equal to the mean between the last bid and ask price of such Common Stock on such date or, if there is no bid and ask price on said date, then on the immediately prior business day on which there was a bid and ask price. If no such bid and ask price is available, then the Fair Market Value shall be determined by the Committee in good faith; or (ii) if the Common Stock is listed on a national securities exchange, then the Fair Market Value per Share shall be not less than the average of the highest and lowest selling price of such Common Stock on such exchange on such date, or if there were no sales on said date, then the Fair Market Value shall be not less than the mean between the last bid and ask price on such date. (o) "Stock Option" or "Option" shall mean an option to purchase Shares granted pursuant to the Plan which option is not intended to qualify under Section 422 of the Code providing the holder of such Option with the right to purchase Common Stock. (p) "Optioned Stock" shall mean stock subject to an Option granted pursuant to the Plan. (q) "Optionee" shall mean any person who receives an Option pursuant to the Plan. 2 (r) "Parent" shall mean any present or future corporation which would be a "parent corporation" as defined in Sections 424(e) and (g) of the Code. (s) "Participant" means any Director first elected or appointed after July 22, 1998, officer or Employee of the Company or any Parent or Subsidiary of the Company or any other person providing a service to the Company who is selected by the Committee to receive an Award, or who by the express terms of the Plan is granted an Award. (t) "Plan" shall mean the Guaranty Federal Bancshares, Inc. 2000 Stock Compensation Plan. (u) "Retirement" shall mean termination of service in all capacities as an Employee, Director and Director Emeritus following attainment of not less than age 55 and completion of not less than ten years of Service to the Company or the Savings Bank. Service to the Company or the Savings Bank rendered prior to the Effective Date shall be recognized in determining eligibility to meet the requirements of Retirement under the Plan. (v) "Savings Bank" or "Bank" shall mean Guaranty Federal Savings Bank, or any successor corporation thereto. (w) "Share" shall mean one share of the Common Stock. (x) "Stock Award" means an Award granted to a Participant pursuant to Section 12 of the Plan. (y) "Subsidiary" shall mean any present or future corporation which constitutes a "subsidiary corporation" as defined in Sections 424(f) and (g) of the Code. 3. Shares Subject to the Plan. Except as otherwise required by the --------------------------- provisions of Section 10 hereof, the aggregate number of Shares with respect to which Awards may be made pursuant to the Plan shall not exceed *25,000 Shares. The maximum number of Shares reserved hereby for Stock Awards is 7,125. The maximum number of Shares reserved hereby for purchase pursuant to the exercise of Options granted under the Plan is the difference between (i) 25,000, and (ii) the number of Shares granted pursuant to Stock Awards. Such Shares may either be from authorized but unissued shares or shares purchased in the market for Plan purposes. If an Award shall expire, become unexercisable, or be forfeited for any reason prior to its exercise, new Awards may be granted under the Plan with respect to the number of Shares as to which such expiration has occurred. 4. Six Month Holding Period. Subject to vesting requirements, if ------------------------ applicable, except in the event of death or disability of the Optionee, a minimum of six months must elapse between the date of the - -------- * Not to exceed 1% of shares outstanding as of date of Board adoption. 3 grant of an Option and the date of the sale of the Common Stock received through the exercise of such Option. 5. Administration of the Plan. -------------------------- (a) Composition of the Committee. The Plan shall be administered by the Board of Directors of the Company or a Committee which shall consist of not less than two Directors of the Company appointed by the Board and serving at the pleasure of the Board. All persons designated as members of the Committee shall meet the requirements of a "Non-Employee Director" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, as found at 17 CFR ss.240.16b-3. (b) Powers of the Committee. The Committee is authorized (but only to the extent not contrary to the express provisions of the Plan or to resolutions adopted by the Board) to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, to determine the form and content of Awards to be issued under the Plan and to make other determinations necessary or advisable for the administration of the Plan, and shall have and may exercise such other power and authority as may be delegated to it by the Board from time to time. A majority of the entire Committee shall constitute a quorum and the action of a majority of the members present at any meeting at which a quorum is present shall be deemed the action of the Committee. In no event may the Committee revoke outstanding Awards without the consent of the Participant. The President of the Company and such other officers as shall be designated by the Committee are hereby authorized to execute written agreements evidencing Awards on behalf of the Company and to cause them to be delivered to the Participants. For Awards of Stock Options, such agreements shall set forth the Option exercise price, the number of shares of Common Stock subject to such Option, the expiration date of such Options, and such other terms and restrictions applicable to such Award as are determined in accordance with the Plan or the actions of the Committee. (c) Effect of Committee's Decision. All decisions, determinations and interpretations of the Committee shall be final and conclusive on all persons affected thereby. 6. Eligibility for Awards. The Committee shall from time to time ------------------------ determine the officers, Directors, and employees and other persons who shall be granted Awards under the Plan, the number of Awards to be granted to each such Participant. In selecting Participants and in determining the number of Shares of Common Stock to be granted to each such Participant, the Committee may consider the nature of the prior and anticipated future services rendered by each such Participant, each such Participant's current and potential contribution to the Company and such other factors as the Committee may, in its sole discretion, deem relevant. Participants who have been granted an Award may, if otherwise eligible, be granted additional Awards. 7. Term of the Plan. The Plan shall continue in effect for a term of ---------------- ten (10) years from the Effective Date, unless sooner terminated pursuant to Section 14 hereof. No Option shall be granted under the Plan after ten (10) years from the Effective Date. 8. Terms and Conditions of Stock Options. Stock Options may be ------------------------------------- granted by the Committee from time to time in its sole discretion and in accordance with the Plan. Stock Options granted pursuant to the Plan shall be evidenced by an instrument in such form as the Committee shall from time 4 to time approve. Each Stock Option granted pursuant to the Plan shall comply with, and be subject to, the following terms and conditions: (a) Option Price. The price per Share at which each Stock Option granted by the Committee under the Plan may be exercised shall not, as to any particular Stock Option, be less than the Fair Market Value of the Common Stock on the date that such Stock Option is granted. (b) Payment. Full payment for each Share of Common Stock purchased upon the exercise of any Stock Option granted under the Plan shall be made at the time of exercise of each such Stock Option and shall be paid in cash (in United States Dollars), Common Stock or a combination of cash and Common Stock. Common Stock utilized in full or partial payment of the exercise price shall be valued at the Fair Market Value at the date of exercise. The Company shall accept full or partial payment in Common Stock only to the extent permitted by applicable law. No Shares of Common Stock shall be issued until full payment has been received by the Company, and no Optionee shall have any of the rights of a stockholder of the Company until Shares of Common Stock are issued to the Optionee. (c) Term of Stock Option. The term of exercisability of each Stock Option granted pursuant to the Plan shall be not more than ten (10) years from the date each such Stock Option is granted. (d) Exercise Generally. Except as otherwise provided by Section 9 of the Plan or by action of the Committee at the time of the grant of a Stock Option, Stock Options granted will be first exercisable at the rate of 20% on the one year anniversary of the date of grant and 20% annually thereafter during such periods of service as an Employee, Director or Director Emeritus. The Committee may impose additional conditions upon the right of any Optionee to exercise any Stock Option granted hereunder which is not inconsistent with the terms of the Plan. (e) Cashless Exercise. Subject to vesting requirements, if applicable, an Optionee who has held a Stock Option for at least six months may engage in the "cashless exercise" of the Option. Upon a cashless exercise, an Optionee shall give the Company written notice of the exercise of the Option together with an order to a registered broker-dealer or equivalent third party, to sell part or all of the Optioned Stock and to deliver enough of the proceeds to the Company to pay the Option exercise price and any applicable withholding taxes. If the Optionee does not sell the Optioned Stock through a registered broker-dealer or equivalent third party, the Optionee can give the Company written notice of the exercise of the Option and the third party purchaser of the Optioned Stock shall pay the Option exercise price plus any applicable withholding taxes to the Company. (f) Transferability. A Stock Option granted pursuant to the Plan shall be exercised during an Optionee's lifetime only by the Optionee to whom it was granted and shall not be assignable or transferable otherwise than by will or by the laws of descent and distribution. 9. Effect of Termination of Service, Disability, Death and Retirement ------------------------------------------------------------------ on Stock Options. - ----------------- (a) Termination of Service. Except as may be specified by the Committee at the time of grant of an Option, in the event that any Optionee's service with the Company shall terminate for any reason, other than Disability, death or Retirement, all of any such Optionee's Stock Options, and all of any such Optionee's rights to purchase or receive Shares of Common Stock pursuant thereto, shall automatically terminate on (A) the earlier of (i) or (ii): (i) the respective expiration dates of any such Stock 5 Options, or (ii) the expiration of not more than three (3) months after the date of such termination of service; or (B) at such later date as is determined by the Committee at the time of the grant of such Award based upon the Optionee's continuing status as a Director or Director Emeritus of the Savings Bank or the Company, but only if, and to the extent that, the Optionee was entitled to exercise any such Stock Options at the date of such termination of service. In the event that a Subsidiary ceases to be a Subsidiary of the Company, the employment of all of its employees who are not immediately thereafter employees of the Company shall be deemed to terminate upon the date such Subsidiary so ceases to be a Subsidiary of the Company. (b) Disability or Retirement. Except as may be specified by the Committee at the time of grant of an Option, in the event that any Optionee's service with the Company shall terminate as the result of the Disability or Retirement of such Optionee, all such Stock Options shall become immediately 100% exercisable and such Optionee may exercise any Stock Options granted to the Optionee pursuant to the Plan at any time prior to the respective expiration dates of any such Stock Options. (c) Death. Except as may be specified by the Committee at the time of grant of an Option, in the event of the death of an Optionee, any Stock Options granted to such Optionee shall become immediately 100% exercisable and may be exercised by the person or persons to whom the Optionee's rights under any such Stock Options pass by will or by the laws of descent and distribution (including the Optionee's estate during the period of administration) at any time prior to the respective expiration dates of any such Stock Options. (d) Stock Options Deemed Exercisable. For purposes of this Section, any Stock Option held by any Optionee shall be considered exercisable at the date of termination of service if any such Stock Option would have been exercisable at such date of termination of service without regard to the Disability or death of the Participant. (e) Termination of Stock Options. Except as may be specified by the Committee at the time of grant of an Option, to the extent that any Stock Option granted under the Plan to any Optionee whose service with the Company terminates shall not have been exercised within the applicable period set forth in this Section, any such Stock Option, and all rights to purchase or receive Shares of Common Stock pursuant thereto, as the case may be, shall terminate on the last day of the applicable period. 10. Recapitalization, Merger, Consolidation, Change in Control and -------------------------------------------------------------- Other Transactions. - ------------------- (a) Adjustment. Subject to any required action by the stockholders of the Company, within the sole discretion of the Committee, the aggregate number of Shares of Common Stock for which Options may be granted hereunder, the number of Shares of Common Stock covered by each outstanding Option, the number of Shares subject to Stock Awards, and the exercise price per Share of Common Stock of each such Option, shall all be proportionately adjusted for any increase or decrease in the number of issued and outstanding Shares of Common Stock resulting from a subdivision or consolidation of Shares (whether by reason of merger, consolidation, recapitalization, reclassification, split-up, combination of shares, or otherwise) or the payment of a stock dividend (but only on the Common Stock) or any other increase or decrease in the number of such Shares of Common Stock effected without the receipt or payment of consideration by the Company (other than Shares held by dissenting stockholders). 6 (b) Change in Control. All outstanding Awards shall become immediately exercisable in the event of a Change in Control of the Company, as determined by the Committee. In the event of such a Change in Control, the Committee and the Board of Directors will take one or more of the following actions to be effective as of the date of such Change in Control: (i) provide that such Options shall be assumed, or equivalent options shall be substituted, ("Substitute Options") by the acquiring or succeeding corporation (or an affiliate thereof), provided that: the shares of stock issuable upon the exercise of such Substitute Options shall constitute securities registered in accordance with the Securities Act of 1933, as amended, ("1933 Act") or such securities shall be exempt from such registration in accordance with Sections 3(a)(2) or 3(a)(5) of the 1933 Act, (collectively, "Registered Securities"), or in the alternative, if the securities issuable upon the exercise of such Substitute Options shall not constitute Registered Securities, then the Optionee will receive upon consummation of the Change in Control transaction a cash payment for each Option surrendered equal to the difference between (1) the Fair Market Value of the consideration to be received for each share of Common Stock in the Change in Control transaction times the number of shares of Common Stock subject to such surrendered Options, and (2) the aggregate exercise price of all such surrendered Options, or (ii) in the event of a transaction under the terms of which the holders of the Common Stock of the Company will receive upon consummation thereof a cash payment (the "Merger Price") for each share of Common Stock exchanged in the Change in Control transaction, to make or to provide for a cash payment to the Optionees equal to the difference between (A) the Merger Price times the number of Shares of Common Stock subject to such Options held by each Optionee (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of all such surrendered Options in exchange for such surrendered Options. (c) Extraordinary Corporate Action. Notwithstanding any provisions of the Plan to the contrary, subject to any required action by the stockholders of the Company, in the event of any Change in Control, recapitalization, merger, consolidation, exchange of Shares, spin-off, reorganization, tender offer, partial or complete liquidation or other extraordinary corporate action or event, the Committee, in its sole discretion, shall have the power, prior or subsequent to such action or event to: (i) appropriately adjust the number of Shares of Common Stock subject to each Option, the Option exercise price per Share of Common Stock, and the consideration to be given or received by the Company upon the exercise of any outstanding Option; (ii) cancel any or all previously granted Options, provided that appropriate consideration is paid to the Optionee in connection therewith; and/or (iii) make such other adjustments in connection with the Plan as the Committee, in its sole discretion, deems necessary, desirable, appropriate or advisable. (d) Acceleration. The Committee shall at all times have the power to accelerate the exercise date of Options previously granted under the Plan. Except as expressly provided in Sections 10(a) and 10(b) hereof, no Optionee shall have any rights by reason of the occurrence of any of the events described in this Section 10. 7 11. Time of Granting Options. The date of grant of an Option under the ------------------------ Plan shall, for all purposes, be the date on which the Committee makes the determination of granting such Option. Notice of the grant of an Option shall be given to each individual to whom an Option is so granted within a reasonable time after the date of such grant in a form determined by the Committee. 12. Stock Awards. The Committee may make grants of Stock Awards, which ------------ shall consist of the grant of some number of Shares of Common Stock, to a Participant upon such terms and conditions as it may determine to the extent such terms and conditions are consistent with the following provisions: (a) Grants of the Stock Awards. Stock Awards may only be made in whole shares of Common Stock. Stock Awards may only be granted from Shares reserved under the Plan and available for award at the time the Stock Award is made to the Participant. (b) Terms of the Stock Awards. The Committee shall determine the dates on which Stock Awards granted to a Participant shall vest and any terms or conditions which must be satisfied prior to the vesting of any Stock Award or portion thereof. Any such terms or conditions shall be determined by the Committee as of the date of grant. As promptly as practicable after a determination is made that a Stock Award is to be made, the Committee shall notify the Participant in writing of the grant of the Stock Award, the number of Shares covered by the Stock Award, and the terms upon which the Shares subject to the Stock Award may be earned. The date on which the Committee makes its award determination or the date the Committee so notifies the Participant shall be considered the date of grant of the Stock Awards as determined by the Committee. The Committee shall maintain records as to all grants of Stock Awards under the Plan. Except as otherwise provided by the terms of the Plan or by action of the Committee at the time of the grant of the Stock Awards, the Stock Awards will be first exercisable at the rate of 20% on the one year anniversary of the date of grant and 20% annually thereafter during such periods of service as an Employee, Director or Director Emeritus. (c) Termination of Employment or Service (General). Unless otherwise determined by the Committee, upon the termination of a Participant's employment or service for any reason other than Retirement, Disability or death, a Change in Control, or Termination for Cause, any Stock Awards in which the Participant has not become vested as the date of such termination shall be forfeited and any rights the Participant had to such Stock Awards shall become null and void. (d) Termination of Employment or Service (Retirement). Unless otherwise determined by the Committee, in the event of a Participant's Retirement, any Stock Awards in which the Participant has not become vested as of the date of Retirement shall immediately become 100% earned and non-forfeitable as of the Participant's date of Retirement and shall be distributed as soon as practicable thereafter. (e) Termination of Employment or Service (Disability or Death). Unless otherwise determined by the Committee, in the event of a termination of the Participant's service due to Disability or death, all unvested Stock Awards held by such Participant shall immediately become 100% earned and non- forfeitable as of the date of such termination and shall be distributed as soon as practicable thereafter. (f) Change in Control. Unless otherwise determined by the Committee, in the event of a Change in Control, any Stock Awards in which the Participant has not become vested as of the date of 8 such Change in Control shall become immediately 100% earned and non-forfeitable on the date of the Change in Control and shall be distributed to the Participant as soon as practicable thereafter. (g) Termination of Employment or Service (Termination for Cause). In the event of the Participant's Termination for Cause, all Stock Awards in which the Participant had not become vested as of the effective date of such Termination for Cause shall be forfeited and any rights such Participant had to such unvested Stock Awards shall become null and void. Termination for Cause is defined at 12 C.F.R. 563.39(b)(l) and shall be determined within the sole discretion of the Board. (h) Maximum Individual Award. No individual Employee shall be granted an amount of Stock Awards which exceeds 25% of all Stock Awards eligible to be granted under Section 3 of the Plan. In no event shall Stock Awards granted to non-employee Directors in the aggregate under this Plan exceed more than 25% of the total number of Shares authorized for delivery under Section 3 of the Plan. (i) Issuance of Certificates. As soon as practicable after the date of grant with respect to shares of Common Stock pursuant to a Stock Award, the Company shall cause to be issued a stock certificate, registered in the name of the Participant to whom such Stock Award was granted, evidencing such Shares; provided, that the Company shall not cause such a stock certificate to be issued unless it has received a stock power duly endorsed in blank with respect to such Shares. Each such stock certificate shall bear the following legend: "The transferability of this certificate and the shares of stock represented hereby are subject to the restrictions, terms and conditions (including forfeiture provisions and restrictions against transfer) contained in the Guaranty Federal Bancshares, Inc. 2000 Stock Compensation Plan and award agreement entered into between the registered owner of such shares and Guaranty Federal Bancshares, Inc. A copy of the Plan and award agreement is on file in the office of Guaranty Federal Bancshares, Inc., located at 1341 West Battlefield, Springfield, Missouri 65807. Such legend shall not be removed until the Participant becomes vested in such Shares pursuant to the terms of the Plan and award agreement. (j) Non-Transferability. A Stock Award shall not be transferable by a Participant, and during the lifetime of the Participant, Stock Awards may only be earned by and paid to the Participant who was notified in writing of the Stock Award by the Committee pursuant to Section 12(b). No Participant or beneficiary shall have any right in or claim to any assets of the Plan, nor shall the Company be subject to any claim for benefits hereunder. (k) Payment of Dividends. A Participant or beneficiary shall also be entitled to receive, with respect to each such Share distributed, a payment equal to any cash dividends and the number of Shares of Common Stock equal to any stock dividends, declared and paid with respect to a Share of the Common Stock if the record date for determining shareholders entitled to receive such dividends falls between the date the relevant Stock Award was granted and the date the relevant Stock Award or installment thereof is issued. Such cash dividend amounts shall be held in arrears and distributed to such Participant, less applicable income tax withholding, upon the earning of the applicable Stock Award. 9 (l) Voting of Stock Awards. After a Stock Award has been granted and such Stock Award has been issued in the form of Common Stock, but for which the Shares covered by such Stock Award have not yet been vested and earned to the Participant pursuant to the Plan, the Participant shall be entitled to vote such Shares of Common Stock which the Stock Awards cover subject to the rules and procedures adopted by the Committee for this purpose. (m) Form of Distribution. All Stock Awards, together with any Shares representing stock dividends, shall be distributed in the form of Common Stock. One share of Common Stock shall be given for each Stock Award earned. Payments representing cash dividends (and earnings thereon) shall be made in cash. Notwithstanding anything within the Plan to the contrary, upon a Change in Control whereby substantially all of the Common Stock of the Company shall be acquired for cash, all Stock Awards, together with any Shares representing stock dividends associated with Stock Awards, shall be, at the sole discretion of the Committee, distributed as of the effective date of such Change in Control, or as soon as administratively feasible thereafter, in the form of cash equal to the consideration received in exchange for such Common Stock represented by such Stock Awards. (n) Regulatory Exceptions. No Stock Awards shall be distributed, however, unless and until all of the requirements of all applicable law and regulations shall have been fully complied with, as determined by the Committee. 13. Modification of Options. At any time and from time to time, the ------------------------ Board may authorize the Committee to direct the execution of an instrument providing for the modification of any outstanding Option, provided no such modification, extension or renewal shall confer on the holder of said Option any right or benefit which could not be conferred on the Optionee by the grant of a new Option at such time, or shall not materially decrease the Optionee's benefits under the Option without the consent of the holder of the Option, except as otherwise permitted under Section 14 hereof. 14. Amendment and Termination of the Plan. ------------------------------------- (a) Action by the Board. The Board may alter, suspend or discontinue the Plan at any time within its sole discretion. (b) Change in Applicable Law. Notwithstanding any other provision contained in the Plan, in the event of a change in any federal or state law, rule or regulation which would make the exercise of all or part of any previously granted Option unlawful or subject the Company to any penalty, the Committee may restrict any such exercise without the consent of the Optionee or other holder thereof in order to comply with any such law, rule or regulation or to avoid any such penalty. 15. Conditions Upon Issuance of Shares; Limitations on Option ----------------------------------------------------------------------- Exercise; Cancellation of Option Rights. - ---------------------------------------- (a) Shares shall not be issued with respect to any Option granted under the Plan unless the issuance and delivery of such Shares shall comply with all relevant provisions of applicable law, including, without limitation, the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, any applicable state securities laws and the requirements of any stock exchange upon which the Shares may then be listed. 10 (b) The inability of the Company to obtain any necessary authorizations, approvals or letters of non-objection from any regulatory body or authority deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares issuable hereunder shall relieve the Company of any liability with respect to the non-issuance or sale of such Shares. (c) As a condition to the exercise of an Option, the Company may require the person exercising the Option to make such representations and warranties as may be necessary to assure the availability of an exemption from the registration requirements of federal or state securities law. (d) Notwithstanding anything herein to the contrary, upon the termination of employment or service of an Optionee by the Company or its Subsidiaries for "cause" as defined at 12 C.F.R. 563.39(b)(1) as determined by the Board of Directors, all Options held by such Optionee shall cease to be exercisable as of the date of such termination of employment or service. (e) Upon the exercise of an Option by an Optionee (or the Optionee's personal representative), the Committee, in its sole and absolute discretion, may make a cash payment to the Optionee, in whole or in part, in lieu of the delivery of Shares of Common Stock. Such cash payment to be paid in lieu of delivery of Common Stock shall be equal to the difference between the Fair Market Value of the Common Stock on the date of the Option exercise and the exercise price per share of the Option. Such cash payment shall be in exchange for the cancellation of such Option. Such cash payment shall not be made in the event that such transaction would result in liability to the Optionee or the Company under Section 16(b) of the Securities Exchange Act of 1934, as amended, and regulations promulgated thereunder. 16. Reservation of Shares. During the term of the Plan, the Company --------------------- will reserve and keep available a number of Shares sufficient to satisfy the requirements of the Plan. 17. Unsecured Obligation. No Participant under the Plan shall have -------------------- any interest in any fund or special asset of the Company by reason of the Plan or the grant of any Option under the Plan. No trust fund shall be created in connection with the Plan or any grant of any Option hereunder and there shall be no required funding of amounts which may become payable to any Participant. 18. Withholding Tax. The Company shall have the right to deduct from ---------------- all amounts paid in cash with respect to the cashless exercise of Options under the Plan any taxes required by law to be withheld with respect to such cash payments. Where a Participant or other person is entitled to receive Shares pursuant to the exercise of an Option or the receipt of Shares pursuant to a Stock Award, the Company shall have the right to require the Participant or such other person to pay the Company the amount of any taxes which the Company is required to withhold with respect to such Shares, or, in lieu thereof, to retain, or to sell without notice, a number of such Shares sufficient to cover the amount required to be withheld. 19. No Employment Rights. No Director, Employee or other person shall --------------------- have a right to be selected as a Participant under the Plan. Neither the Plan nor any action taken by the Committee in administration of the Plan shall be construed as giving any person any rights of employment or retention as an Employee, Director or in any other capacity with the Company, the Savings Bank or other Subsidiaries. 11 20. Governing Law. The Plan shall be governed by and construed in ------------- accordance with the laws of the State of Missouri, except to the extent that federal law shall be deemed to apply. 12 EX-27 3 FDS
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL INFORMATION. 1000 9-MOS JUN-30-2000 MAR-31-2000 1,675 4,717 0 0 7,827 8,569 9,111 292,743 2,475 328,018 144,855 121,150 4,141 0 0 0 625 57,247 328,018 16,241 630 475 17,346 4,560 9,407 7,939 135 (5) 4,731 4,075 2,600 0 0 2,600 0.51 0.51 3.47 1,124 1,124 0 0 2,349 9 0 2,475 2,475 0 0
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